Australia: Water Planning and Management – Preparing for the Application of New Charging Rules

Maddocks Sustainability & Climate Change Update
Last Updated: 7 April 2010

By Maddocks Sustainability and Climate Change Team

The Murray-Darling Basin (Basin) is the catchment area for the Murray and Darling Rivers and their tributaries, extending from north of Roma in Queensland to Goolwa in South Australia. It supports Australia's most important agricultural region and has 16 wetlands that are recognised under the Ramsar Convention on Wetlands of International Importance.

There is evidence that the Basin's water resources are seriously over-allocated (that is, more entitlements have been issued than can be sustained) and over-used (more water is allocated to irrigators or other users within a given period than can be sustained). Mismanagement of the Basin's limited resources coupled with the effects of climate change have placed the Basin in a precarious situation. Availability of water resources from the Basin is declining, ecosystems are being threatened and the livelihoods of those dependent upon the Basin are at risk. A failure to ensure the sustainable use of the Basin's resources could further jeopardise one of Australia's most precious assets.

The unsustainable use of water resources in the Basin is sought to be addressed through the Commonwealth's Water Act 2007 (Act). Among the various rules that are anticipated by the Act to achieve this objective are the water charge rules for water planning and management charges (Rules). These Rules relate to charges levied by government departments and other agencies to recover the costs of water planning and water management activities. They are aimed at improving transparency of water planning and water management activities and the associated costs and charges. In particular, the Rules seek to:

  • provide water users and water market participants with information to better understand the water planning and management charges they face and why the charges are levied
  • provide water users and policymakers with better information about water planning and water management activities being undertaken, the costs incurred, any charges levied and the extent of cost recovery
  • facilitate comparability of activities, costs and charges across jurisdictions where such comparisons are appropriate.

On 10 July 2009, the ACCC provided its final advice on the Rules to the Minister for Climate Change and Water, Penny Wong. The Rules are expected to be adopted by the Minister in April 2010.

Scope of application

The Rules will apply if:

  • A charge relates to a water planning or water management activity or activities undertaken with respect to water resources in the Basin.
  • The water planning or management activities are carried out by or on behalf of government.

The Act does not define water planning and water management activities or charges for those activities. Therefore, the definition of these terms will be based on their ordinary meaning.

The Rules will apply to water planning and management charges currently imposed by or on behalf of government departments and agencies across the Basin. They will also cover new water planning and management charges.

Definition of water planning and management activities

In its advice to the Minister, the ACCC explained that water planning and management activities refer to a broad range of activities aimed at supporting water use while maintaining the health of natural ecosystems. They include activities necessary to support harvesting, storage, supply, delivery, use, drainage and disposal of water and management of adverse environmental impacts of use.

Some water planning and management activities may be undertaken predominantly to benefit the environment, others may be directed at generating economic benefits for water users and yet others may be motivated by a combination of environmental and economic objectives.

Activities that fall within the scope of the water planning and management activities covered by the Rules include:

  • administration of water entitlements
  • development of plans and frameworks to allocate water
  • activities to address the impact of water use
  • water industry regulation
  • monitoring and evaluating water quality and water levels.

Entities engaged in water planning and management activities

The Rules impose the water charging obligations on the 'person' (or agency) responsible for 'determining' the charge in question. The ACCC advice clarifies that:

  • The meaning of 'determining' will be broadly interpreted to refer to a final, binding decision regarding the charge payable, but will not necessarily require a formal process.
  • In cases where there are multiple entities involved in the charging process, including one that determines the charge and another that imposes or collects the charge, the entity that makes the charging determination will be subject to the Rules.

The types of entities that are likely to be covered by the Rules include:

  • State government departments that are involved in water allocation, water efficiency and water quality monitoring programs.
  • Catchment Management Authorities, which are responsible for the co-ordination of natural resource management in their respective catchment areas.
  • Regulators responsible for setting water Prices

Guidelines

It will be necessary for government departments and agencies that are involved in water planning and management activities to assess charges they impose for such activities on a case-bycase basis to determine whether or not the Rules apply. This will not always be a straightforward exercise. Nevertheless, guidelines are being developed by the ACCC to help entities in this regard.

Core obligation

Publication of information

The core publication under the Rules is the publication of information regarding water planning and management charges. The information that must be published includes:

  • the amount of the charge
  • the legislative, contractual or other authority for the charge
  • a description of the process applied in determining the charge, including the cost allocation principles and whether the charge has been the subject of consultation
  • the class of persons by whom the charge is payable
  • the person to whom or agency to which the charge is payable
  • when the charge is payable and, if payable by instalments, the number of instalments and intervals at which they are payable
  • a description of the water planning and water management activity or activities to which the charge relates

Timing of publication

The Rules set out when the charging information must be published. In summary:

  • The Rules provide for a transitional period, which runs from the commencement date of the Rules until 30 June 2010.
  • For existing charges that took effect before the commencement date of the Rules and apply for a period that ends after the transitional period, information must be published on or before 30 June 2010.
  • For charges that take effect after the commencement date but before the end of the transitional period, information must be published by the end of the transitional period (i.e. 30 June 2010) or no later than three months after the date on which the charge takes effect, whichever is the later date.
  • For charges that take effect after the transitional period, the information must be published before the charge takes effect.

Changes to a charge that result in a change to the name, description or amount of the charge will require publication afresh.

Place for publication

Information must be published on the internet site of the person (or agency) that determined the charge, or the person or agency to which the charge is payable, provided that the information is kept up-to-date. Alternatively, if the person or agency determining the charge does not have an internet site, the information can be published in the Australian Government Gazette.

The information must also be made available during business hours at the principal place of business of the person or entity that determined the charge or the person to whom or agency to which the charge is payable.

In addition, a notice must be published in a newspaper or newspapers circulating generally in the area where any person liable to pay the charge resides or carries on a business. The notice must describe where the information required under the Rules is available.

Proposed voluntary Framework

The ACCC has also proposed that a voluntary reporting framework be established for water planning and management activities, which would apply more broadly to water planning and water management activities undertaken across Australia. Such a framework would require jurisdictions to report annually to the ACCC information about water planning and water management activities and costs and revenue collected through charges for these activities. Under the proposed framework, the ACCC would prepare an annual report summarising information provided by reporting jurisdictions. It is hoped that, over time, information identified and reported through this framework would inform future policy and regulatory developments concerning cost recovery for water planning and water management activities.

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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.

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