The Murray-Darling Basin Authority (MDBA) has released a draft of the proposed Basin Plan required by the Water Act 2007 (Cth) (Water Act).
A 20-week consultation period has commenced with a final plan expected to be adopted in 2012.
The draft Basin Plan relates to the management of water resources in the Murray-Darling Basin and provides for limits on the quantity of water that may be taken from the basin's water resources.
In 2010, the MDBA released a guide to the proposed Basin Plan. The guide proposed that maximum long-term annual average water use be cut by 3000-4000 gigalitres. Now the draft Basin Plan proposes a cut of 2750 gigalitres by 2019.
More than 1000 gigalitres has already been cut as a result of government acquisitions of water rights. The Australian Government intends to achieve the remaining cuts with further purchases of water rights, in buybacks and water savings resulting from infrastructure projects. In that case, it would not be necessary to reduce the average annual allocations of existing water rights in order to achieve the proposed cut.
The government has indicated that funding for infrastructure projects will now be prioritised over buybacks of water rights. Buyback spending for the remainder of 2011 and 2012 will focus on targeted purchases and the development of a program for subsystem retirements and reconfigurations. The government is not considering general tenders in the southern connected system prior to 2013.1
The 2750 gigalitre target is to be reassessed in 2015 in light of an evaluation of the Basin Plan's effects, changes to infrastructure and river management, and developments in scientific knowledge. Notably, the Australian Government proposes to work with the States to improve river management efficiency and this includes a review of Murray-Darling Basin Agreement and other elements of the regulatory framework.
The MDBA's 2010 guide attracted considerable controversy, triggering two federal parliamentary inquiries.2 A similarly robust debate can be expected around the draft Basin Plan. We anticipate that the following issues will arise in the consultation phase:
- Triple-bottom-line approach - Various stakeholders have argued that the Basin Plan ought to be based on an equal weighting of social, economic and environmental outcomes. This is likely to remain a key issue. There has been a long-running argument over the extent to which the Water Act permits social and economic factors to be taken into account, in addition to environmental factors.
As the Commonwealth has no enumerated constitutional power over the control and management of inland waterways, the Water Act relies predominantly on the Commonwealth's external affairs power to implement international agreements, including conventions on biological diversity and protecting wetlands as habitat for waterfowl. In 2010, Minister Burke released legal advice from the Australian Government Solicitor entitled The Role of Social and Economic Factors in the Basin Plan which stated:
"The overarching objective of the Act and the Plan is to give effect to relevant international agreements"3, and that the key agreements "establish a framework in which environmental objectives have primacy".4
The Basin Plan can only take socio-economic analysis into account "subject to" implementing the international agreements.5 Any Basin Plan that is inconsistent with the international agreements will be at risk of being struck down by the High Court. Nevertheless, Minister Burke has said that social, economic and environmental outcomes must be optimised.6
- Assessment and trade-offs - There will be significant interest in the data and modelling in relation to social, economic and environmental outcomes. Stakeholders will also be keen to understand how trade-offs between these competing factors were taken into account in determining the 2750 gigalitre target and how they will be addressed in the 2015 reassessment.
There may be debate about whether it would be prudent to start with a lower volumetric target and increase it after the 2015 reassessment only if the environmental outcomes have not been achieved and the additional social and economic cost of achieving them can be justified.
- Environmental asset management - In delivering environmental objectives, the management of environmental assets may be at least as important as cutting water use. It could be argued that greater emphasis should be placed on environmental outcomes rather than a volumetric target.
- Environmental watering plan - The Water Act requires this plan to specify the overall environmental objectives and how they are to be achieved. However, at this stage, there are no long-term watering plans. The States are to develop them within two years after the Basin Plan commences. Without these plans, questions will arise about the basis for the 2750 gigalitre target.
- Reassessment - It is proposed that the 2750 gigalitre target be reassessed in 2015. There may be some discussion about whether any reassessments should be time-based, volume-based or outcomes-based.
- Water trading rules - These proposed rules will start coming into operation from 1 July 2013 and will have a significant impact on existing frameworks and processes. State governments, irrigation infrastructure operators and other participants in water markets will take a keen interest in these rules.
We have been closely involved in every key development in the Commonwealth water regulatory regime since the initial consultations leading up to the Water Act. We would be pleased to discuss the draft Basin Plan and advise in relation to submissions.
1Australian Government Response to the House of Representatives Standing Committee on Regional Australia Committee Report: Of droughts and flooding rains: Inquiry into the impact of the Guide to the Murray-Darling Basin Plan in Regional Australia, November 2011, page 9.
2The House of Representatives Standing Committee on Regional Australia released its report, Of drought and flooding rains: Inquiry into the impact of the Guide to the Murray-Darling Basin Plan, on 2 June 2011. The Senate Legal and Constitutional Affairs References Committee released its report, A Balancing Act: provisions of the Water Act 2007, on 10 June 2011.
3The Role of Social and Economic Factors in the Basin Plan, AGS, 25 October 2010, Paragraphs 2 and 9.
4The Role of Social and Economic Factors in the Basin Plan, AGS, 25 October 2010, Paragraph 23.
5Paragraph 21(4)(b) of the Water Act.
6Minister Burke's speech to the House of Representatives about Murray-Darling Basin reform on 24 November 2011.
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