SEPP Waters Discussion Paper
VICWATER SUBMISSION
JULY 2015
Suite 1, Level 6, 2 Collins Street, Melbourne, Victoria 3000
P: (03) 9639 8868
F: (03) 9639 8860
vicwater@vicwater.org.au
www.vicwater.org.au
ABN 46 541 210 712
VicWater SEPP Waters
Discussion Paper Submission
July 2015
Thank you for the opportunity to respond to the SEPP Waters discussion paper. SEPP Waters will be a
critical regulatory policy document for water corporations, and will have significant influence over water
corporation investment decisions, infrastructure costs and ultimately customers’ bills for the life of the
policy. There is significant interest in the review among water corporations and a strong desire to improve
the SEPP and bring SEPP Waters into line with a contemporary risk-based approach to regulation.
In order to prepare this water industry submission, VicWater held a workshop on 30 June 2015 attended
by approximately 20 officers from water corporations across Victoria. During the workshop attendees
responded to the Discussion Paper’s twenty questions, as well as raising broader questions regarding the
approach and objectives of the review (these are discussed first, leading into the twenty discussion paper
questions).
The process of the SEPP Waters Review
Water corporations note that the process to develop a new SEPP Waters has commenced without a
thorough review of the current SEPP (SEPP WoV). As a result, it is not clear how the current SEPP has
performed in the eyes of the community, the EPA, Government, license holders and ultimately what
environmental outcomes have been achieved. A review is critical to defining the problem(s) that need to
be addressed by the new SEPP, set objectives for the new SEPP and identifying areas that require a
particular focus. In VicWater’s view, such a review would have identified two key issues:
 How to bring SEPP into the era of risk-based regulation?
 How should the SEPP combine its discrete functions of setting pollution targets with promoting
efficient and effective environmental outcomes that reflect community desires for continual
improvement in environmental performance?
Shortcomings of the current SEPP WoV/GoV
Water corporations’ experience with the current SEPP is characterised by the regulator’s strong emphasis
on the impact of licensed discharges on beneficial uses with limited consideration of: (1) the current state
of the receiving waters, (2) the catchment-wide threats and impacts on the receiving waters, (3) how
threats are evolving, and (4) the overall most efficient and effective way of improving stream condition
and protecting beneficial uses.
The emphasis on licensed discharge combined with the SEPP objective of continual improvement has
resulted the regulator equating continual improvement with a reduction in discharge to the point of 100%
land based reuse. If requested by the DELWP review team, water corporations can provide examples of
the regulator opting for the infrastructure option with significantly higher capital cost, operating cost,
chemical use and electricity use because it has the lowest discharge and mixing zone. The regulator’s
focus on discharge may have been an effective approach at the time the current SEPP was developed.
However, this approach is becoming decreasingly effective as the marginal cost of additional reductions
in the volume and load of outflow will continue to increase and the marginal environmental benefit will
become progressively less.
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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Despite the current SEPP providing for offsets and more flexible approaches, water corporations have
been disappointed by the lack of clarity about the decision-making rules that are applied, and the slow
uptake of flexible approaches by the regulator. Consequently water corporations perceive a failure of the
SEPP to encourage the most efficient and effective environmental outcomes.
This is illustrated in a recent statement by the EPA that offsets are a temporary substitute for
infrastructure upgrades, rather than a permanent solution. Such a message undermines the significant
investment recently made in developing an offsets framework and reinforces an increasing-cost decliningbenefit licensed discharge-based approach to achieving SEPP objectives.
The implementation of the current SEPP has focused on inflexible licensed discharge conditions at the
expense of flexible solutions. This has proven to be a low cost model for the regulator but a high-cost
model for the license holder. It also ignores or marginalises opportunities to optimise investment to
achieve broader environmental outcomes. The lack of improvement of Victoria’s water ways after ten
years of the current SEPP can be partly attributed to the strong focus on licensed discharges rather than
tackling diffuse or unlicensed sources of pollution. Changing this emphasis is a significant priority for
water corporations during the SEPP Waters Review.
Strengths of the current SEPP WoV/GoV
The greatest strength of the SEPP WoV framework is the clarity that it provides the economic regulator
when considering investments with an environmental benefit. Although treatment plant upgrades are
likely to be a less efficient and effective means of protecting beneficial uses in the future, water
corporations recognise that many such upgrades have been necessary and worthwhile in the past. The
clear line of sight between the water plan framework and SEPP WoV have made these investments
possible.
Question 1:
What is your understanding of your roles and responsibilities under Water SEPPs?
All water corporations are committed to promoting the objectives of SEPP waters, to protect and improve
the quality of Victoria’s waters while providing for economic and social development. Specific roles,
responsibilities and interests under SEPP Waters vary among water corporations, they include:
Being regulated as a licensed waste discharger

Having an interest in protecting beneficial uses that water corporation relies on, for example in
potable water supply catchments

Melbourne Water are a water way manager in addition to being a licensed discharger and drinking
water supplier.
 Rural Water Corporations manage drainage systems in intensive agricultural areas
During the VicWater workshop, a number of delegates question why water corporations are singled out
separately to other license holders in section 1.4 of the discussion paper. There is no basis within SEPP
WoV for water corporations to be considered as separate to other license holders. Water corporations
support a risk-based approach to regulation, such that the regulator is required to focus its activities
where they will achieve the greatest benefit, whilst applying consistent and clear processes.
Question 2: What aspects of Water SEPPs does your organisation currently use? How could Water
SEPPs be improved to assist your organisation’s day-to-day operations and longer-term
strategic planning?
VicWater Submission
SEPP Waters Discussion Paper
July 2015
Page 1
Water corporations primarily interact with SEPP through the licensed discharge framework. The
discussion points below suggest ways to improve water corporations’ interaction with the SEPP in their
capacity as licensed dischargers with an interest in overall catchment health and are in no particular
order:
Water corporations support the greater emphasis on diffuse sources of water pollution in the new
SEPP Waters
o
The discrete impact of various forms of catchment development on the beneficial uses are
very poorly understood. The lack of data on these impacts contributes to the focus on
licensed discharges
 The SEPP should promote source protection as the first step in drinking water protection rather
than costly drinking water treatment
o
A number of water supplies are in developed catchments. There is a need to protect
beneficial uses from the impacts of development and provide for investment that identifies
and targets specific risks
Local government’s accountability for managing onsite waste water systems should be reinforced
in line with the Guidelines for Planning Permit Applications in Open, Potable Water Supply
Catchment Areas
The SEPP should strengthen environmental protections through the planning scheme, by
considering the water quality impacts (and ways they can be mitigated or offset) of all forms of
development, not just onsite waste water
 Greater recognition of the impact of climate variability on discharge regimes in inland
environments.
 The SEPP must clarify the objective to achieve continual improvement. Although laudable, this
objective has been misused (by being applied to discharges) and has consequently undermined
achievement of efficient and effective outcomes
The SEPP should address stormwater quantity and speed in addition to water quality. Recent
research highlights the damage of flushing (erosion, sediment, habitat destruction) during storm
events

The SEPP should provide alternative (risk-based) approaches to benchmark rules such as 1in5
o
o
Benchmark rules are particularly problematic when applied to the discharge focus and the
need to continually improve
Benchmark give rise to the curious scenario whereby a wet weather release from a treatment
plant that is operating within its license conditions to considered to be ‘in breach’ by the
regulator
Clause 35 is a critical determinant of water corporation activities and expenditure. Clause 35
requires urgent revision to provide for a risk-based approach with process guidance for
implementation and rules for decision-making by the regulator
The decision-making rules and processes for the regulator must be absolutely explicit within the
attainment section of the new SEPP
A number of participants in the VicWater workshop expressed the view that the lack of significant
progress on two priority issues: offsets for infrastructure upgrades and clarifying responsibility for
managing septic tanks are not due to deficiencies in the current SEPP. Rather, a lack of lack of
clarity about the decision-making rules that are applied, and the slow uptake of flexible approaches
by the regulator.
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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Question 3: Do you have any concerns about the proposed working title of State Environment
Protection Policy (Waters)? If so, what are they?
Water corporations have no concerns with this proposal.
Question 4:
What is the best way to reflect what is feasible versus what is aspirational in the context
of a 10-year policy cycle?
Water corporations’ experience with the current SEPP is that it did not effectively combine aspiration and
feasible targets.
A fundamental role of the SEPP, which is strongly supported by water corporations, is to set measurable
targets with objective parameters for compliance. However, the aspirational objective of achieving
continuous improvement cannot be applied to all compliance targets (for example discharges from
treatment plants) in a blanket fashion without risking perverse environmental, social and economic
outcomes.
As discussed above, the regulator’s implementation of the current SEPP has seen a strong emphasis on
the impact of licensed discharges on the beneficial uses identified in the receiving waters. The
aspirational objective of achieving continuous improvement has been overlaid on this singular emphasis
on licensed discharges such that the regulator has applied ever stringent standards to licensed
discharges. Thus water corporations must invest ever greater amounts in treatment plant upgrades to
achieve marginal reductions to discharges with little consideration of: the underlying condition of the
receiving waters, the net benefit to the beneficial uses and the cost-effectiveness of the investment.
Water corporations support the principle of continuous improvement to the protection of beneficial uses.
However, this should be achieved by applying a risk-based approach to protecting beneficial uses in an
efficient and effective manner.
Question 5: Do you support the proposed SEPP (Waters) objective of “this policy is to protect and
improve the quality of Victoria’s waters while providing for economic and social
development”? Why?
Water corporations note that some of the policy principles in the current SEPP are proposed to be
transferred into an overarching policy objective with reference to the policy principles established under
the Act. Water corporations support this proposal.
Question 6: Do you support the need to balance economic and social development with overall
protection and improvement of water quality for Victoria’s water environments? Why?
Question 7: What are the challenges of balancing economic and social development with protecting
and improving water quality? How should we manage the appropriate trade-offs between
them?
A combined response to questions 6 and 7.
The lack on an effective mechanism to balance economic, social and environment objectives is a key
area of improvement for the new SEPP. Water corporations believe that a risk-based approach to
protecting priority beneficial uses and a flexible approach to mitigating the impact of water corporation
activities (for example offsets) offers the best approach to optimising triple bottom line outcomes.
However, effectively balancing economic, social and environmental outcomes raises a number of
challenges, primarily:
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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Who decides on the appropriate balance?
What does the decision-maker consider?
How is the regional context taken into account?
None of these challenges can be resolved without significant changes to the high-level policy settings and
the implementation framework contained in the current SEPP, including creating a clearer role of policy
setter (the decider/decision-maker above) and effectively segregating that from the regulator.
Another important consideration in balancing economic, social and environment objectives is the strong
link between environmental health and public health outcomes. The current SEPP gave little
consideration to this link. Water corporations note that a top priority for the EPA inquiry is to consider the
appropriate role for the EPA in relation to public health issues. A greater role for the EPA in this regard
may provide a stronger foundation for the new SEPP Waters.
Question 8: Do you foresee any problems or opportunities that may arise from creating one consistent
SEPP to apply to all Victorian waters? Are there other options for streamlining the policies
that we should consider?
There is strong support among water corporations for this proposal. Integrating the groundwater and
surface water SEPPs reflects the water cycle and provides for interventions to be identified at the
appropriate stage of the water cycle.
Question 9:
Are there any specific types of water environments, for example, a wastewater treatment
lagoon, where you think beneficial uses should not be protected?
Water corporations seek every opportunity to cost-effectively optimise the environmental performance of
their assets, for example by installing a wetland in a treatment plant to contain spills. However, they will
be less likely to pursue these opportunities if there is a risk that primary operation of the asset (i.e. to
contain spills) will be restricted by the regulator.
Question 10: Do you think the current measures for classifying surface water and groundwater
segments are still appropriate? Are there other measures that should be explored?
VicWater understands that Southern Rural Water will provide extensive feedback on this matter.
Question 11: Are there any problems with the spatial arrangements or segment boundaries in the
existing Water SEPPs? If so, what are they?
Question 12: What do you think are the advantages or problems with the new approach to segments
and sub-segments?
Question 13: Are there any features of the landscape that you would like to see as a standalone
segment or sub-segment?
A combined response to questions 10, 11, 12, and 13.
The purpose of the segments is to assist the definition and protection of beneficial uses. However, strict
definition of segments and beneficial uses is at odds with the development and implementation of a riskbased framework.
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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The Review of SEPP WoV should take the opportunity to redefine segments such that they contribute to
risk-based approach to managing water quality impacts rather than becoming another mechanisms for
the regulator to place obligations on water corporations to fund activities that are beyond their traditional
functions. An example is the requirement of Southern Rural Water to monitoring nutrient discharges from
the Macalister Irrigation District (MID) and implement a nutrient reduction program. Whilst
acknowledging that this is a legitimate use of the powers within the current SEPP, VicWater is unaware
of a catchment-wide risk assessment that identified the MID as the primary source of nutrients into the
Gippsland Lakes. VicWater is also unaware of the regulator applying these powers to other diffuse
discharges, for example discharges from any municipal council’s urban stormwater network.
Question 14: Do you believe that all beneficial uses set out in Table 2 should still be protected under
the new SEPP (Waters)? Where do you think a beneficial use would not apply? Why?
Water corporations broadly support the beneficial uses set out in table 2. However, there are
opportunities to tidy up their representation, for example the beneficial use “human consumption after
appropriate treatment” could be redefined as “human consumption” to place a greater emphasis on the
role of catchment health in providing low-cost potable water, rather than relying on high-cost treatment
options. This amendment would be consistent to the multi-barrier approach outlined in the Safe Drinking
Water Regulations.
Question 15: What method or approach could be used to apply the beneficial uses to segments and
sub-segments?
Question 16: Are there any additional beneficial uses that you believe should be protected? Are there
any that you think should no longer be protected? Why?
A combined response to questions 15 and 16.
Under the current SEPP, beneficial uses appear to be arbitrarily targeted for protection with little
consideration of any link to catchment-wide outcomes. The Review of SEPP Waters should redefine the
role of beneficial uses so they promote catchment-wide outcomes and underpin a risk-based approach
to intervention.
An attempt has been made to apply a more rigorous process to determining beneficial uses in the
schedules of the current SEPP. However, there are inconsistencies and peculiarities in these lists. There
is a requirement to reconfirm the status of these beneficial uses that are carried over to the Schedules
of new SEPP Waters and make any necessary additions to the list, including identifying additional human
health beneficial uses. VicWater is able to facilitate a water corporation review process at a later stage
of this Review.
Question 17: What do you think about the current indicators, the approach for deriving objectives and
the proposed changes?
Water corporations support alignment with national standards.
VicWater notes that the SEPP Waters Scientific Advisory Panel is overseeing the development of the
indicators and objectives and recommends that the development of indicators and objectives gives
particular consideration to the linkage between public health and environmental condition. In January
2015, VicWater wrote to DELWP to recommend a dedicated public health expert be included in the
Independent Scientific Advisory Panel.
VicWater is able to facilitate a water corporation review of those indicators when they are available.
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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Question 18: How have nutrient load targets been useful in driving environmental investment
outcomes? Would you like to see a different approach, and if so, what might that be?
Both nutrient concentration and load targets are relevant to aquatic ecosystems and can be effective in
driving environmental investment outcomes. However, they are only effective if applied through a
catchment-wide, risk-based framework that partitions and attributes responsibility for all the sources of
the total nutrient load. As applied through the current framework, that emphasises discharges but
ignores other sources of pollution in the catchment, the nutrient load targets risk further becoming a
mechanism by which significant investment is made with little overall benefit to water quality.
Question 19: What is the preferred method for management of at-risk areas? Are there activities that
need greater intervention or regulation? What would the intervention be, for example,
voluntary or mandatory codes of practice, regulation via licensing?
Question 20: What do you think the role of SEPP (Waters) should be in identifying and filling knowledge
gaps over the life of the policy? How can we assure an adaptive approach within SEPP
(Waters)?
A combined response to questions 19 and 20.
The lack of a risk-based trigger and an adaptive (but robust) framework for intervention is a significant
shortcoming of the current SEPP.
Although the current SEPP sets clear targets and provides for an adaptive approach (for example to the
use of offsets), in practice, there has been too much focus on licensed discharges. Subsequently,
success has come to be characterised as a reduction in discharges, rather than prioritising all threats to
receiving waters and identifying the most efficient and effective to achieve broader river health objectives.
Rectifying this shortcoming is critical to the success of the new SEPP Waters, since the marginal cost of
additional reductions in discharge volumes will continue to increase and the marginal environmental
benefit will become progressively less.
The new SEPP Waters should provide for a framework that includes the following characteristics:

Clear objectives and targets that are linked to catchment-wide outcomes that can be updated to
reflect changing circumstances
 Linking priority segments and beneficial uses to clear triggers for intervention
 Identifying and targeting the most significant sources of pollution in the catchment

Clear segregation between the policy/strategy setting role, implementing role and the regulatory
role
 Clear roles and responsibilities among all parties
Targeting lowest community cost solutions
 Targeting interventions as close to the source as possible
Robust processes
Adequate resourcing
 Maximizing interdisciplinary and cross-agency cooperation
 A robust evaluation framework tied to the objectives, targets and catchment-wide outcomes.
VicWater Submission
SEPP Waters Discussion Paper
July 2015
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The EPA’s development of the Management of Dairy Effluent Guidelines provides a case study for
targeting water pollution at its source. The new SEPP Waters should emphasise and facilitate these types
of initiatives in preference to targeting licensed discharges and creating more prescribed segments (such
as the MID).
VicWater Submission
SEPP Waters Discussion Paper
July 2015
Page 7