Australia: Water extraction licence processes to be crystal clear in the Northern Territory

Work has begun immediately on implementing the recommendations, supported with an additional $1.8 million in funding in 2018-19 to ensure these critical reforms are progressed.

The Northern Territory Government has released an independent report on the review of water extraction licences granted between 30 August 2012 and 30 August 2016 which has set the foundations for reforms to water policy and practices in the Northern Territory.

On 27 November 2017, the Northern Territory Government released the Report of the Independent Review of Water Extraction Licences (July 2017) which was prepared by the independent review panel commissioned earlier in the year to fulfil a key election commitment of the Labor Gunner Government to review water extraction licences issued under the Country Liberal Party (CLP) Government.

Independent review scope and assessment approach

As we have previously discussed, the Panel, which consisted of Dr Annette Davison as Water Auditor and Megan Dyson as Judicial Chair, was asked to review the application, assessment and approval processes for identified water extraction licences issued between 30 August 2012 and 30 August 2016 (the period when the CLP Government was in office) and to:

  • assess whether grants of new or increased water entitlements were made in compliance with the Water Act 1992, the Water Regulations and relevant government policies;
  • incorporate (and have regard to as part of the assessment approach) an assessment by an independent water science expert of whether best practice evidence-based science was available to decision-makers when assessing the relevant applications for water extraction licences;
  • undertake a legal review to determine whether best practice evidence-based scientific analysis was sought and duly considered in relation to each application for a water extraction licence; and
  • assess whether any matters extraneous to the Act or Regulations were considered during the assessment and approval process for each water licence.
  • The Terms of Reference required that the assessment of the identified water extraction licences involve consideration of the following elements:
  • Legislation, Water Allocation Plan (WAP) and government policies: whether the process adhered to the requirements outlined in the Water Act and Regulations, the relevant WAP or draft WAP, for a declared Water Control District, or the existing NT Water Allocation Planning Framework where there is no WAP and the relevant government policies;
  • Expert advice: whether the approval of the water licence application and entitlement was consistent with advice provided by the former Department of Land Resource Management's scientists and expert practitioners during the assessment and approval process;
  • Community comments: the extent to which comments received from the community were considered during the assessment and approval process;
  • Water volume: whether the volume of water applied for and allocated was considered in relation to both the intended use set out in each licence application, and the sustainable yield of the relevant source of water;
  • Separation of power: whether there was demonstrated separation of the decision making powers between the former Department of Land Resource Management, the Controller of Water Resources and the Minister in granting each new and increased licence entitlement; and
  • Further investigation: whether there is any evidence regarding the making of the grant which indicates that there should be a further investigation of the grant process.
  • To assist the Panel, Dr Glenn Harrington provided a selection of individual licence grants and scientific advice as to whether best practice evidence-based science was available to decision makers when assessing the relevant water extraction licence applications.

Findings

The Panel's findings were based upon two essential lines of inquiry which were used to address the Terms of Reference.

Firstly, the Panel considered whether the overall administrative approach to deciding water extraction licences was appropriate. In this regard, the Panel considered whether processes and procedures existed to support administrative decision-making, such as template documents, checklists, data bases, record management and other practices, and whether the decision-making was informed by an appropriate scientific approach. This was determined from a review of "licence packages" which were provided by the Department of Environment and Natural Resources for each of the licences reviewed. These packages contained all information that had been provided to the Controller of Water Resources for the purposes of the Controller's consideration and determination of each licence application. This was supplemented by further information from the Department where clarification was sought by the Panel.

Secondly, the Panel considered whether an appropriate process was applied to each licence grant under review. This involved consideration of the extent to which the Department's practices and procedures were applied to each licence grant, and the extent to which requirements of Water Act, and those necessary for good administrative decision-making, had been achieved in each licence grant.

The Panel found that most requirements of the Water Act were met with only minor departures from the statutory requirements and best practice decision-making which, in the Panel's opinion, would be unlikely to have warranted a licence decision being set aside on the basis that it had been improperly made.

The Panel did however, identify various deficiencies in aspects of the grant process, or the process as applied to individual licence decisions, the most significant of which included (amongst others):

  • possible rigid application of policy and/or taking irrelevant considerations into account;
  • lack of evidence that the Controller took into account relevant considerations, or of how such considerations were taken into account;
  • lack of accuracy of Ministerial briefing for section 30 Water Act review;
  • lack of evidence of important procedural steps being followed for Notice of Intention (NoI); and
  • lack of evidence of assessment or consideration of NoI comments; and
  • significant departure from timeframes stipulated in the Water Act.

A complete list of the deficiencies identified by the Panel along with the number of files to which the deficiency applied, an explanation and examples for each are outlined in the Panel's Summary of Assessment of Water Licence Decisions which was released along with the Report.

In its Report, the Panel acknowledged that some of the administrative deficiencies identified for the review period had, to some extent, been improved by the Water Act Licensing and Permits System (WALAPS) which was introduced at the end of the review period. Notwithstanding this, the Panel provided recommendations in relation to various aspects that would benefit from further improvement.

Recommendations

The Panel recommended that the following be developed and implemented within 6 to 12 months to address those approaches which the Panel perceived as having a significant area of risk the grant process:

  • Develop checklist and process for preparing Controller's brief;
  • Develop checklist for receipt and processing of licence application;
  • Develop and implement formal processes for assessment of licence application;
  • Develop and implement processes to ensure NoI requirements fulfilled and evidenced;
  • Develop process to ensure licence conditions are consistent with the Statement of Decision (SoD) and application;
  • Ensure licence durations are consistent with Water Act;
  • Formalise first in first served (FIFS) practices;
  • Review practice of issuing licences with Annual Announced Allocation conditions in areas with limited water trading opportunity;
  • Develop best practice in administrative decision-making;
  • Improve systems to ensure sound document control;
  • Improve systems to ensure sound record management;
  • Develop policy for preparing SoD and prepare SoD template;
  • Document integrated model-based assessment procedures and improve reporting on inherent uncertainties;
  • Undertake a comprehensive hydrochemistry and environmental isotope assessment of the Mereenie Aquifer System;

The Panel recommended that the following be developed and implemented within 1 to 2 years to address those approaches which the Panel perceived as having a modest degree of risk to the grant process:

  • Improve processes for communicating and publishing licence decisions;
  • Develop policy and assessment process for own motion grants;
  • Develop formal process for preparing Ministerial briefing for section 30 Water Act review;
  • Formalise key approaches to water allocation;
  • Develop, recalibrate or refine key models; and
  • Establish local pumping rules for the Oolloo Aquifer.

The Panel recommended that the following be developed and implemented within 1 to 3 years to address those approaches and frameworks which the Panel perceived as providing a lesser degree of risk to the grant process and can be modified over a longer time-frame:

  • Commit to ongoing monitoring and investigations.

What next?

It is understood that work has begun immediately on implementing the recommendations, supported with an additional $1.8 million in funding in 2018-19 to ensure these critical reforms are progressed.

Accompanying the Report, the Government released a table which summarises each of the recommendations in the Report and what action has been, or will be, undertaken to satisfy each. While the Department has stated that it has completed several of the recommendations, those which remain "under development" include (amongst others):

  • the development of a risk-based assessment guideline for addressing factors relating to water availability and any adverse effects likely to be created from granting the licence; and
  • a FIFS policy and procedure detailing the application of FIFS and the treatment of applications for new and amended (increased) licences and renewals with increase. The Department has noted that this is an area where an open debate about reform and options of an alternative policy approach to allocations may be warranted in a particular area.

RELATED KNOWLEDGE

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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