COAG Response to National Water Commission Report:
“Australian Water Reform 2009, Second Biennial Assessment of
Progress in Implementation of the National Water Initiative”
Background
The National Water Commission’s (NWC) Australian Water Reform 2009, Second Biennial
Assessment of Progress in Implementation of the National Water Initiative (Biennial
Assessment) comes at a critical time for water reform in Australia. The impacts of climate
change and prolonged drought have placed increased pressure on water systems in southern
Australia and reinforce the importance of good water management in order to provide
certainty for investment and the environment.
The Biennial Assessment finds that since 2004 there has been significant progress against
many objectives in the National Water Initiative (NWI). There is also considerable work
underway to improve water management in Australia. This work is helping to address many
of the areas identified in the Biennial Assessment as requiring further attention.
In the Murray-Darling Basin (MDB), the Intergovernmental Agreement on Murray-Darling
Basin Reform (IGA) implements historic governance, institutional and planning reform.
Agreed at the July 2008 COAG meeting, the IGA provides for the establishment of
co-operative planning and management arrangements for the Basin’s water and other natural
resources. As a result of the IGA, all MDB jurisdictions have been providing information to
the Murray-Darling Basin Authority (MDBA) to support the development of the Basin Plan,
which is due for release in 2011. The Basin Plan will contribute directly to further
implementation of NWI commitments in the Basin, and include setting enforceable
sustainable diversion limits for surface water and groundwater resources.
There has also been good progress in water market reform, to the extent that Australia is
currently recognised as a world leader in this area. Under the Water Act 2007 (Cwlth) (Water
Act), market rules and some charge rules that apply in the MDB have now been finalised.
There has also been good progress in most jurisdictions to implement the necessary
institutional, regulatory and administrative arrangements to enable water trade. These
reforms have improved market depth and market efficiency by freeing up water trade and
improving charging arrangements, resulting in tangible, on-the-ground benefits for both the
environment and for individual water access entitlement holders. Over 2008–2009,
Australian water markets saw 1,800 GL of entitlement traded (from a total tradeable pool of
24,911 GL) and 2,158 GL of water allocation traded, giving a total market value of $2.8
billion1. There is no doubt that water trade is helping irrigators, urban areas and governments
acting on behalf of the environment to cope with variable water availability.
1
NWC (2009) Australian Water Markets Report 2008-2009
1
Nationally, there is also a considerable body of work already underway under the auspices of
COAG. The 2008–2011 COAG Work Program on Water includes a wide range of actions to
accelerate implementation of the NWI. All jurisdictions continue to contribute to delivering
against this work program. Once implemented, actions in the work program will address a
number of the areas identified as requiring further reform in the Biennial Assessment.
Notable achievements in implementation of the work program to date include commitments
to improving trade processing times in the MDB, the development of strategies to improve
water and wastewater services in remote communities and address skills shortages, and the
release of the National Urban Water Planning Principles and the NWI Pricing Principles.
Significant progress has been made to improve urban water supply security, including
investment in rainfall-independent supply options such as desalination and recycling.
Investment in public urban water supply infrastructure reached $8.1 billion in 2008–2009
alone.
Against this backdrop, the Biennial Assessment articulates where more work is needed on the
part of all governments if the full benefits of water reform are to be realised. COAG has
agreed that the focus of the response to the Biennial Assessment should be on measures to
achieve the following four priority outcomes:
1. An end to all overallocation and overuse in both surface and groundwater systems;
2. Improved environmental condition and management of environmental watering;
3. The further removal of barriers to water trade with the objective of increasing
competitive neutrality to assist entitlement trades; and
4. Better engagement with communities and other key stakeholders on the
implementation of water reforms.
This paper presents priority actions to address these outcomes. The actions proposed in this
paper are not intended in any way to diminish or overlap the important reform work already
underway within the MDB. Rather, they are an opportunity to build on this effort by
committing to a small set of further initiatives to redress what are agreed to be major
impediments to the successful implementation of the NWI.
Implementation
Progress in implementing these actions is to be monitored by the Water Reform Committee
(WRC).
All parties agree to implement the actions in this paper taking account of work currently
underway. Where relevant, data and information that is already available will be used as an
input for completing these actions.
Where legislative change is required to meet an action, parties will use best endeavours to
enact necessary legislative change as soon as possible.
Proposed response to Outcomes 1 and 2
2
Outcome 1: An end to all over-allocation and overuse in both surface and groundwater systems
Biennial Assessment Findings 1.1–1.5, 1.7–1.10, 2.1, 2.3–2.5, 3.5–3.7, 5.1–5.3, 5.6, 5.7, 6.8,
10.8
Outcome 2: Improved environmental condition and management of water for the environment
Biennial Assessment Findings 4.1–4.3, 4.6, 4.7, 4.9, 5.6
Actions in the following areas are proposed in response to Outcomes 1 and 2:
 addressing overallocation and overuse;
 actions to improve the quality and NWI-consistency of water plans;
 actions to finalise plans, and revise key existing plans, in a timely way;
 actions to implement plans better, including environmental water management; and
 a national report card for water planning and management to keep track of progress.
Rationale
The NWI requires substantial progress towards adjusting all overused2 systems to
sustainable levels by the end of 2010. The Biennial Assessment found that water systems
identified as overallocated or overused include, to varying degrees, pathways to return those
systems to environmentally sustainable levels of extraction. However, the assessment also
found that surface water systems may be under-represented in current assessments of
overuse and that very few, if any, overused systems have been successfully transitioned to
environmentally sustainable levels of extraction.
As a policy objective of the NWI, it is critical that our understanding of the status of water
systems with respect to overuse is improved and where required, measures put in place to
return overused systems to environmentally sustainable levels of extraction. It is also critical
that steps are taken to ensure that more systems do not become overused.
In the MDB, the establishment of new sustainable diversion limits under the Basin Plan and
the development of new plans by jurisdictions in line with the Basin Plan are expected to
address this issue. There is no similar mechanism outside of the Basin.
Across Australia improved compliance and enforcement—as agreed by COAG—will assist
in ensuring use is limited to allowed extraction limits.
Many of the issues identified in the Biennial Assessment can be addressed by developing and
implementing better water plans. Key issues identified in the Biennial Assessment include
the need to reduce the risk of environmental harm, improve the quality of plans, complete
and review plans in a timely manner and improve transparency and reporting.
The Biennial Assessment also identified a number of areas for improving the delivery of
water plans, including improved monitoring, measuring and metering, and greater
compliance and enforcement.
2
The NWI Policy Guidelines for Water Planning and Management recognise overuse as being situations where
the total volume of water actually extracted in a particular system at a given time exceeds the sustainable water
extraction regime for that system.
3
The NWI Policy Guidelines for Water Planning and Management (the Planning Guidelines)
provide a sound basis for the development of water plans that meet NWI requirements. The
guidelines are not mandatory, and are designed to be improved in the light of experience
with the development of case studies and tools that address specific aspects of planning. For
example, methods to estimate future climate change impacts on water resources, assess
surface and groundwater connectivity and enable Indigenous participation in planning can
supplement the guidelines in time.
While the Biennial Assessment raised concerns about the overall quality and timeliness of
water plan development, it is difficult to draw conclusions about specific plans without a
consistent reporting framework. Instituting a National Water Planning Report Card (Report
Card) on the status of water plans and their implementation, evaluated with reference to the
Planning Guidelines, would allow a more objective discussion on the quality of existing
plans (or equivalent) across jurisdictions and their implementation, and identify areas for
future improvement.
The Report Card, like the Planning Guidelines, will recognise differing legislative and
administrative arrangements for water resource management in each jurisdiction, as well as
differences in the nature of systems across Australia, including unregulated, regulated,
surface water and groundwater systems.
The first National Water Planning Report Card will report on all water systems as a
transparent summary of the quality of water plans across Australia. It is acknowledged that
water plans are generally reviewed every five to ten years and in some cases it may not
always be feasible or desirable to adjust plans in the period between Report Cards. Therefore
subsequent Report Cards will report on all water systems and should describe how
management arrangements and their implementation have changed since the previous Report
Card, including actions in response to changes in system condition or resource availability.
The National Water Planning Report Card will be a stand-alone, enduring report published
biennially by or on behalf of COAG. To minimise the reporting burden on NWI parties,
inputs provided by parties for other supporting purposes will be used to the fullest extent
possible.
In the case of MDB jurisdictions, the MDBA will accredit new water plans under the Basin
Plan. This accreditation will satisfy the requirements of the Report Card.
The successful management of environmental water (whether rules- or entitlement-based) is
clearly linked to the development of high-quality water plans. The successful management of
environmental water to achieve articulated environmental outcomes is linked to the
establishment of accountable environmental water managers3. To assist with environmental
water management, a framework for the systematic identification of high conservation value
aquatic ecosystems (HCVAE) is under development.
3
In regulated systems, environmental water outcomes could be delivered by a combination of rules based and
actively managed environmental water. In unregulated or groundwater systems, the environmental water
manager may the person who authorises the water plan and is accountable for its delivery.
4
As noted by the Biennial Assessment (NWC Finding 4.6), there is potential for
inefficiencies, and a need to improve communication and alignment between the
environmental water management initiatives operating within and across jurisdictions, at a
federal, state and local level. Within the MDB, the Basin Plan Environmental Watering Plan
will provide a basis for coordinating the delivery of environmental water.
There may also be scope for improving the integration of environmental watering objectives
with wider natural resource management activities. For example, riparian revegetation, the
re-snagging of rivers and streams, designation of buffer zones along watercourses, control of
feral and invasive pests and weeds, and land-use planning coordination could all be better
integrated with environmental water delivery to ensure the best environmental outcomes.
The Biennial Assessment found that best available information in water plans is often
focused on the physical condition of the water resource, with limited description of
ecological conditions and socioeconomic factors, and inadequate identification of the steps
which will be taken to fill knowledge gaps. The understanding of ecological responses to
changes in flow regime is also often under-developed. Two actions to address information
needs are currently being developed: the National Hydrologic Modelling Strategy and the
National Water Knowledge and Research Strategy.
New action 1
An independently completed National Water Planning Report Card to be published by or on
behalf of COAG, reporting progress with the development and implementation of water
plans in all water resource systems4 with reference to the Planning Guidelines. The first
National Water Planning Report Card will be prepared and published by the NWC by the
end of December 2011.5 Subsequent reports will be published every two years by a process
to be determined following the COAG review of the NWC in 2011. Reports will provide a
succinct evaluation of the status of each water plan, including against the following
indicators:
a. overuse status and whether there is a pathway to return to a sustainable water
extraction regime;
b. inclusion of clearly identified and measurable outcomes;
c. facilitation of water trade (absence of trade barriers, meeting service standards for
trade, etc);
d. integration of mining, forestry and other water intercepting activities within the water
planning and entitlements system where appropriate;
e. surface water/groundwater connectivity;
f. accountable environmental water management arrangements, together with a
comprehensive environmental watering plan (or other appropriate environmental
water management arrangement);6
4
Where a water system does not have a corresponding water plan, the National Water Planning Report Card
will report whether a water plan will be developed for that system. Where a jurisdiction determines that a water
plan will not be developed for a particular system the reasons for that decision (including whether a risk
assessment has been undertaken) will be reported in the National Water Planning Report Card.
5
The NWC will consult with all jurisdictions on the Report Card methodology.
6
It is acknowledged that environmental water management arrangements differ depending on whether
environmental water is provided through rules or as entitlement-based water. It is also acknowledged that
where an environmental watering plan is developed, that this plan may be in a separate document to the
relevant water plan. The Report Card will be flexible enough to cater for differing arrangements.
5
g. the adequacy of monitoring, compliance and enforcement provisions; and
h. planning for climate change and extremes in inflows or recharge that may occur
during the planning cycle.
In addition, the report will assess the adequacy of stakeholder engagement in planning
processes and the extent to which identified outcomes have been achieved during the
reporting period.
New action 2
To improve understanding and promote transparency of groundwater and surface water
system condition, resource availability, extraction and environmental water requirements:
(a) Develop and agree, within twelve months of agreement by COAG,7 a framework for
the identification of water systems where use is in excess of sustainable water
extraction regimes8 or, where a plan is not in place, at potential risk thereof.9 10 11
(b) Within twelve months of finalising the framework in 2(a), the Commonwealth to
undertake and publish a reliable peer-reviewed risk assessment against the
framework for every water plan area (or water system where a plan is not in place),
based on available information.12 The risk assessment will be updated biennially.
(c) For those systems outside the MDB13 identified as having use in excess of
sustainable water extraction regimes or at potential risk thereof, within six months of
the publication of the risk assessment above:
o each State and Territory to report to WRC on steps being taken to ensure that
there are no additional water rights issued until an effective water plan or other
necessary measures are in place, including those that may be provided for in
existing water plans;14
o each State and Territory to publish a timetable for returning those systems to
within their sustainable water extraction regimes; and
o the above reports to be in a common format allowing compilation into a national
timetable and report to be published by the WRC.
New Action 3
All jurisdictions to publicly identify environmental water management arrangements, specify
the authority and accountabilities of entities responsible for managing environmental water,
and publish annual reports accounting for their management of environmental water
including outcomes achieved. The first report will encompass the 2009–2010 water year and
7
All jurisdictions agree to settle the framework by the end of 2011.
The sustainable water extraction regime is determined through the water resource planning process in
accordance with the Planning Guidelines.
9
The framework will draw on the risk module under the Planning Guidelines where relevant. At a minimum
and for each water system, the framework should allow assessment and reporting on: (i) whether or not a water
plan is in place and risk assessments undertaken by jurisdictions in reaching judgements about whether a plan
is required; (ii) the system water balance; (iii) ecological assets within the system (identified in both the
corresponding water plan and through other means such as application of the HCVAE framework); (iv)
environmental water requirements; and (v) system condition.
10
The framework methodology will take into account the sustainable diversion limits set by the Basin Plan
when assessing systems in the MDB.
11
The development of the framework, and the assessment against it, will be funded by the Commonwealth. All
jurisdictions will provide relevant data at their own cost.
12
Risk assessments undertaken under the Water Management Partnership Agreements and the 2008–2011
COAG Work Program on Water (item 8, identified groundwater systems) will be used to inform assessments.
13
It is assumed that the Basin Plan will deal with ‘overuse’. This action builds on water management
partnership agreements in the MDB.
14
Nothing here suggests that a water plan must be amended.
8
6
will be published by 30 June 2011. Reports for future water years shall be published within
6 months of the close of each water year.
Continued implementation of existing reforms

Development of additional tools, methodologies, modules, or case studies for the
Planning Guidelines by the end of 2011 (NWC Recommendation 1.7 refers) to address
the need to:
o take account of likely climate change within plans (NWC Recommendation 1.3
refers);
o measure and establish thresholds for surface and groundwater connectivity (NWC
Recommendation 2.1 refers);
o manage interception by plantations and by stock and domestic use (NWC
Recommendation 1.5 refers);
o develop best practice guidance on environmental water planning, management
(including environmental water shepherding) and monitoring (NWC
Recommendations 4.5 and 4.7 refer);
o support the delivery of environmental water at all priority assets to ensure the
best possible environmental outcomes can be achieved by developing
complementary (or aligning existing) NRM plans and activities at the asset
location; and
o engage Indigenous people in water planning (NWC Recommendation 1.4 refers).
Implementation of work being developed

Jurisdictions utilise the Planning Guidelines when developing all future plans and plan
revisions, incorporating principles within the guidelines to:
o include specific and measurable outcomes in all water plans (NWC
Recommendations 1.6 and 4.1 refer);
o return overused systems to within their sustainable water extraction regimes
o treat surface and groundwater as highly connected unless studies demonstrate
otherwise (NWC Recommendation 2.1 refers);
o better integrate water use by forestry, mining and other extractive activities into
the water planning process (NWC Recommendation 6.6 refers);
o address the identification, risks, thresholds and management actions required for
interception activities as per guidelines (NWC Recommendation 1.5 refers);
o establish accountable environmental water managers (NWC Recommendation 4.4
refers; see also new action 1);
o based on risk assessments and best practice modelling, ensure that water plans
adequately address the likely impacts of future climate change, including extreme
flow events in areas where these may occur; and
o effectively engage stakeholders, including Indigenous people, in water planning
(NWC Recommendation 1.4 refers).

Implement the National Framework for Water Compliance and Enforcement, through
implementation plans as endorsed by COAG (NWC Recommendation 3.6 refers).
7

Implement state and territory plans in accordance with the National Framework for NonUrban Water Metering (NWC Recommendation 3.4 refers).15

Implement the National Hydrologic Modelling Strategy as a pathway towards developing
the modelling platform for water planning.16

Implement the National Water Knowledge and Research Strategy, 17 including
consideration of better coordinated research efforts in the MDB.

Continue to work with BOM to implement national water accounting (NWC
Recommendation 3.1 refers).
Proposed response to Outcome 3
Outcome 3: The further removal of barriers to water trade with the objective of increasing
competitive neutrality to assist entitlement trades
Biennial Assessment Findings 4.4, 6.1, 6.2, 7.2, 7.7, 7.14, 10.2
Rationale
While the Biennial Assessment finds that significant volumes of water entitlements and
allocations are being reallocated through Australian water markets,18 and that initiatives such
as the National Water Market System (NWMS) and service standards will improve trade, it
also finds there is room for further improvements.
The Water Act establishes a process under which the MDBA will establish trading rules in
the MDB. These trading rules will be enshrined in enforceable legislation as part of the
Basin Plan. As part of this process, the Australian Competition and Consumer Commission
(ACCC) has released draft advice on trading rules, and has provided its final advice
document to the MDBA. If fully implemented, it is expected that the ACCC’s rules advice
will address many of the MDB market issues identified in the Biennial Assessment. The
actions below avoid duplicating matters likely to be addressed by the trading rules in the
MDB.
Entitlement reform and unbundling (both from land and into an access, delivery and use
right) remains incomplete in most jurisdictions (NWC Finding 6.2 and 7.7). Reforms under
the Commonwealth-State Water Management Partnership Agreements will address these
issues in some areas of the MDB,19 but outside of high-priority water systems, the intended
extent and timeframe for implementation of NWI-consistent water access entitlements is
uncertain.
15
Jurisdictions' capacity to implement this National Framework may vary depending on resource availability
and cost recovery arrangements.
16
Subject to agreement on final content.
17
Subject to agreement on final content.
18
Biennial Assessment, page 131
19
In pursuing further unbundling, it is recognised that the individual characteristics of some groundwater and
unregulated systems means that full unbundling (from land and into an access, delivery and use right) may not
always be appropriate.
8
The Biennial Assessment found that the 4% limit on water entitlement trading has distorted
patterns of water trade out of irrigation areas (including interstate trade) and complicated
interstate collaboration in other areas of water reform (NWC Findings 4.4 and 7.2) 20. It also
found that artificial barriers to water trade are impeding flexible adjustment decisions by
individual entitlement holders (NWC Finding 10.2). The Basin Plan trading rules are
expected to deal with barriers to trade in the MDB.
Access to and dissemination of market information is critical to the efficient functioning of
the market, as are low-cost, timely trade transactions. The NWMS and the ACCC’s draft
trading rules advice aim to improve market information disclosure.
New action 4
Outside of the MDB, jurisdictions to ensure that by the end of 2012:21 22
(a) water access entitlement holders participating in a trade are required to report to
approval authorities or registers, at the time of seeking trade approval or
registration, the agreed price and volumes for all trades of water access
entitlements and water allocations;
(b) approval authorities and registers require pricing information to be provided as a
condition of seeking approval and registration; and
(c) water price information is disclosed to the market in a timely fashion.
Continued implementation of existing reforms

All jurisdictions to abide by their NWI commitment to not implement new barriers to
water trade23 (NWI paragraph 60 (v) refers).

Basin jurisdictions agree to examine further steps to improve and simplify interstate
entitlement trade (including tagged trade), reporting to WRC by end June 201124 (NWC
Recommendation 7.6 refers).
South Australia’s position is that the 4% limit should be removed immediately. Consistent with the
May 2009 Water for the Environment Agreement between the Victorian and Commonwealth Governments, the
Victorian position is that subject to a review of progress on the modernisation project, Victoria will begin to
phase out the 4% cap on permanent water trades from irrigation districts from July 2011, with a view to
removing the cap entirely by 2014. NSW has removed the 4% limit through legislative amendment. NSW's
view is that there remains provision for it to reinstate the limit, and that this is consistent with the NWI, but at
this point of time it does not intend to do so.
21
These actions are consistent with the ACCC’s draft trading rules advice to the MDBA.
22
Where compliance with these actions requires legislative change, jurisdictions agree to use their best
endeavours to enact such legislation within the timeframe. In the interim, jurisdictions agree to implement
administrative measures to accurately reveal as much price information as possible. Timing determined in order
to be consistent with delivery of the National Water Market System (scheduled to be delivered in September
2012).
23
It is recognised that restrictions on trade may be required to manage physical, environmental and
hydrological constraints.
24
In examining this issue, jurisdictions should, among other things, consider the development of the NWMS
and the Frontier Economics report of November 2009, entitled “Changing extraction location between water
systems – ‘tagging’ and alternatives”. The report is available on request from the ACCC.
20
9

COAG to endorse a revision of the scope of the NWI Pricing Principles, such that the
principles may also be applied by jurisdictions in areas where the Water Act 2007
(Cwlth) applies (NWC Recommendations 8.2, 8.8 and 8.9 refer).

In recognition that there is incomplete NWI-consistent entitlement reform,25 jurisdictions
to develop and publish by March 2011 (on relevant departmental websites) schedules for
the priority completion of NWI-consistent entitlement reform, consistent with the
Planning Guidelines. Schedules will include timeframes for unbundling water
entitlements from land and into their constituent parts on a priority catchment/area basis,
where this is feasible and beneficial (NWC Recommendation 7.2 refers).
o Where decisions are made against further unbundling, the reasons for this should
be made public (NWC Recommendation 7.2).
o Where fixed-term or other types of entitlements are demonstrably necessary,
jurisdictions articulate why and where such arrangements are to be made (NWC
Recommendation 6.2).

Western Australia and the Northern Territory to use best endeavours to introduce and
pass legislation to enable the implementation of NWI-consistent water access
entitlements (and water planning in Western Australia) by the end of 2010 or as soon as
possible thereafter (NWC Recommendation 6.1 refers).
Proposed response to Outcome 4
Outcome 4 - Better engagement with communities and other key stakeholders on the
implementation of water reforms
Biennial Assessment Findings 1.4, 1.6, 1.13, 6.7, 10.4
Rationale
A range of concerns are expressed in the Biennial Assessment about the level of awareness in
communities about water reform, and the need for improved coordination of reform
measures. Various actions to improve engagement are included in the water planning
guidelines which, if implemented, will contribute to achieving this outcome. However,
further opportunities exist to better communicate water reform objectives and actions, and to
share learning and knowledge between jurisdictions.
New action 5
Jurisdictions to publish information on how they will implement the risk assignment
provisions of the NWI within 16 weeks of the release of the proposed Murray-Darling Basin
Plan.
Continued implementation of existing reforms

25
The MDBA to provide for stakeholder engagement in the development of the Basin Plan,
including in relation to socio-economic information, in-line with its requirements under
the Water Act 2007 (Cwlth).
NWI Paragraphs 28–34.
10

The Commonwealth to continue to actively communicate its approach to Water for the
Future, including buybacks and infrastructure investments, using regional stakeholder
forums and other appropriate means (NWC Recommendations 4.3 and 10.2 refer).

All jurisdictions to utilise the stakeholder engagement measures of the Planning
Guidelines when undertaking stakeholder engagement.

The following elements that appear earlier in this paper will also contribute to achieving
this outcome:
o annual public reporting of environmental water management and use
arrangements including outcomes achieved;
o a National Water Planning Report Card to be published biennially, which
includes an assessment of the adequacy of stakeholder engagement in relation to
each water plan;
o a peer-reviewed risk assessment for every water plan area or water system (where
a plan is not in place) that is updated and published biennially;
o a public timetable for returning overused systems outside the MDB to sustainable
water extraction regimes;
o utilisation of the stakeholder engagement and transparency provisions of the
Planning Guidelines;
o development of tools, methodologies and modules to assist jurisdictions in
implementing the Planning Guidelines on matters including the engagement of
Indigenous people;
o collection and disclosure of water price information; and
o public release of rationale for decisions not to further unbundle water
entitlements from land and into their constituent parts.
11
Key Findings of the Biennial Assessment
No.
Biennial Assessment Finding
Priority Outcome 1) an end to all overallocation and overuse in both surface and
groundwater systems
1.1
1.2
1.3
1.4
1.5
1.7
1.8
1.9
1.10
The Commission considers that progress in the development and commencement of
statutory water plans is now critically inadequate, with over 40% of the total scheduled water
plans yet to commence, although as noted in this chapter, there are limitations to reporting
on progress of water planning on the basis of the number of plans completed. The ACT is
the only jurisdiction to have commenced all of its scheduled plans. Despite improving its
water planning to deliver some outcomes of the NWI, WA is yet to prepare legislation to
enable NWI-consistent statutory water plans. If the current rate of progress across Australia
continues, most of the remaining scheduled plans will not commence until well after the 2009
NWI commitment. Delays in the delivery of the NWI-consistent water plans necessarily mean
delays in many other benefits of the NWI. [Recommendation 1.1]
The presentation of ‘best available’ information in many water plans is often focussed on the
physical condition of the water resource, with limited description of ecological conditions and
socioeconomic factors. Where information gaps have been identified in a water plan, there is
too little explanation of the specific data and knowledge required or steps in place to gather
that information, or of how it will assist the development or revision of plans.
[Recommendation 1.2]
There are some good examples where water plans have incorporated latest information on
climate change; however, this is not widespread, particularly where water plans were
developed several years ago. The Commission acknowledges that some jurisdictions, for
example NSW and Qld , plan to incorporate climate change scenarios into their future water
plans.[Recommendation 1.3]
There is scope to improve the transparency of water plans by clearly stating the nature of
trade-offs between competing users, communicating this to stakeholders and the community
and the planning process, and better reflecting those trade-offs on the decisions to allocate
water between various users and the environment. [no relevant recommendation]
As also found in Chapter 6 (Finding 6.8), while the NWI recognises through special clause 34
the potential for further policies and measures beyond the agreement for minerals and
energy industries, the circumstances in which they would apply are not defined and identified
in a consistent and transparent manner. Little progress has been made in the five years
since the signing of the NWI in fleshing out the special provisions for the minerals and
related industries. As a consequence, there remains limited integration of those industries
with broader water markets and water planning processes, despite the potential for
considerable benefits in many cases. [Recommendation 6.6]
Across most jurisdictions, progress continues to be slow in identifying and addressing
significant interception of surface and groundwater. There is no evidence that parties, other
than SA, have formally identified interception activities in water systems or articulated policy
responses that will enable full implementation of their NWI commitments to deal with water
interception. [Recommendation 1.5]
Management objectives in water plans are often too general to be able to be measured and
assessed to determine the success of the plan. Furthermore, plans provide very limited or no
explanation of how the ‘best available’ information was used to determine the objectives, or
what assumptions were made. [Recommendation 1.6]
The Commission considers that, in general, rules for consumptive and non-consumptive
water provisions are sufficiently well defined in water plans. However rules do not always
deal adequately with interception (refer to Finding 1.7), nor periods of exceptionally low
inflows (refer to Finding 1.10) [Recommendations 1.7 and 1.8].
The difficult recent seasonal conditions have revealed that many water plans have not
adequately defined how systems will be operated during unanticipated sequences of low
inflows. [Recommendation 1.8]
12
No.
Biennial Assessment Finding
2.1
The Commission finds that all jurisdictions have commenced assessments of connectivity, as
required under the NWI. The Commission appreciates that each jurisdiction takes a different
approach to assessment and management of its water resources, in line with its assessment
of management needs. However, applying different thresholds of significance, and hence
differing thresholds that trigger integrated management, risks undermining confidence in
water planning and entitlements, particularly in areas where entitlements can be traded
across borders. [Recommendation 2.1]
Where plans have been developed, Qld, NSW, SA, the ACT and the NT account for the
potential connectivity of surface water and groundwater resources in the determination of the
sustainable extraction limits. Other jurisdictions have commenced the development of plans
that will set out integrated management arrangements. [Recommendation 2.1]
All jurisdictions have made some progress in developing integrated management
arrangements for some connected systems. However, the continuing slow progress in rolling
out the enabling water plans, and failure to adequately address overallocation in some
systems, are inhibiting widespread adoption of integrated surface water and groundwater
management. [Recommendation 2.1]
The quality of data on Australia’s groundwater resources is particularly poor, and more
resources need to be devoted to improving it.
The quality of metering and monitoring of groundwater extractions is variable.
The National Ground Water Action Plan is helping to improve the quality of data on
groundwater resources. [Recommendation 2.2]
While the recent finalisation of the pattern approvals standards for non-urban application
meters is an important step, considerable work remains to develop nationally standardised
approached to meter installation and testing, and to implement the standards.
[Recommendation 3.4]
While the development of implementation plans is progressing well, resource constraints will
have a major impact on the jurisdictions' abilities to deliver expanded and accurate metering
in accordance with the plans. [Recommendation 3.4]
The Commission finds that compliance and enforcement activities to ensure that users do
not extract more than their allocated volumes of water vary considerably across Australia,
and that adoption of national principles to guide compliance and enforcement efforts may
disseminate best practice and build community confidence, especially across state borders.
[Recommendation 3.6]
From its assessment of jurisdictions’ water management legislation, the Commission finds
that most jurisdictions do not specifically define the NWI terms ‘overallocation’, ‘overuse’ and
‘environmentally sustainable levels of extraction’ in their legislation. However, with the
exception of the Northern Territory and Western Australia, water management frameworks
generally provide for the identification of overallocated and overused systems and measures
for their recovery. [Recommendation 5.1]
Since March 2008, COAG officials have been working to develop national guidelines on the
concepts of overallocation, overuse and sustainable yield, including case studies to assist
their application in planning processes. The Commission considers it important and urgent
that a shared national understanding of these concepts is developed. Progress to date has
been too slow. However it is also important that, pending completion of this work,
jurisdictions do not delay further practical actions to address overallocation and overuse.
[Recommendation 5.1]
Typically, the status of most water systems in relation to overallocation and overuse is not
stated explicitly in water plans. This is a serious flaw in such plans. The community needs to
know which systems are overallocated, not least for planning and investment purposes.
[Recommendation 5.2]
In systems where overallocation and/or overuse have not been established, jurisdictions are
implementing a range of water recovery initiatives to address environmental decline.
However, many water recovery initiatives are not always linked to clear targets for
environmentally sustainable levels of extraction, or embedded in planning processes. This
can reduce certainty for entitlement holders, and potentially compromise levels of community
support. [Recommendation 5.3]
2.3
2.4
2.5
3.5
3.6
3.7
5.1
5.2
5.3
5.6
13
No.
Biennial Assessment Finding
5.7
While efforts have been made, evidence suggests that limited real progress has been made
in reducing the number of systems identified as overallocated and overused. On the basis of
this Biennial Assessment, the Commission is disappointed to conclude that this central
requirement of water reform will not be met. [Recommendation 5.4]
6.8
While the NWI Agreement recognises (through special clause 34) the potential for further
policies and measures beyond the agreement for minerals and energy industries, the
circumstances in which they would apply are not defined and identified in a consistent and
transparent manner. Little progress has been made in the five years since the signing of the
NWI in fleshing out the special provisions for the minerals and related industries. As a
consequence, there has been little integration of those industries with broader water markets
and water planning processes, despite the potential for considerable benefits in many cases
[Recommendation 6.6]
10.8 Diverging environmental purchase programs from the most cost-effective water purchasing
strategy by offering price premiums for water entitlements in targeted areas prior to
investments in irrigation system renewal, or only allowing purchases from such targeted
areas, is unlikely to be effective in practice and risks distorting water market outcomes. If
environmental purchasers pay above the market price, less water will be recovered for the
environment. [Recommendation 10.4]
Priority Outcome 2) Improved environmental condition and management of environmental
water
4.1
4.2
4.3
4.6
4.7
4.9
5.6
The Commission finds that, while there has been an increase in the use of scientifically
reviewed and holistic methods to determine environmental water requirements, some
jurisdictions still do not use methods that are holistic, well documented, or independently
peer reviewed. This is likely to detract from the quality of assessments and reduce public
confidence in the results. [Recommendation 4.1]
There has been an improvement in the availability of scientific tools and information to
provide an evidence basis for establishing environmental water requirements in water plans.
It will be important that such tools are now adopted and applied routinely in water planning.
[Recommendation 4.1]
Despite statutory recognition of environmental water in all jurisdictions, the Commission
remains concerned about the security of environmental water access entitlements and rulesbased environmental water, particularly in conditions of intense or prolonged drought. There
have been cases in which ad-hoc decisions have reduced the security of environmental
flows. [Recommendation 4.1]
There is potential for confusion and inefficiencies to arise due to a lack of communication
and alignment between Commonwealth, state, and local programs aimed at environmental
improvement, with respect to both environmental water and catchment health initiatives.
[Recommendation 4.5]
Environmental water managers require specific environmental objectives within water plans
to guide water delivery and support monitoring, evaluation and adaptive management. [no
recommendation relevant]
The majority of water plans lack detailed monitoring, evaluation and reporting protocols
linked to the delivery of environmental water and the intended outcomes. [Recommendation
4.7]
In systems where overallocation and/or overuse have not been established, jurisdictions are
implementing a range of water recovery initiatives to address environmental decline.
However, many water recovery initiatives are not always linked to clear targets for
environmentally sustainable levels of extraction, or embedded in planning processes. This
can reduce certainty for entitlement holders, and potentially compromise levels of community
support. [Recommendation 5.3]
14
No.
Biennial Assessment Finding
Priority Outcome 3) The further removal of barriers to water trade with the objective of
increasing competitive neutrality to assist entitlement trades
4.4
6.1
6.2
7.2
7.7
7.14
8.3
8.14
10.2
The Commission supports continued buybacks, including major purchases, as a strategic
approach to improving environmental outcomes and adjusting to the new sustainable
diversion limits that will be developed under the new Murray-Darling Basin Plan. The
Commission does not support the use, by states, of barriers to water trade to attempt to
constrain environmental purchases and desirable adjustment. [Recommendation 4.3]
Most jurisdictions have undertaken significant legislative reforms to enable the
implementation of NWI-consistent water access entitlements. However, Western Australia
and the Northern Territory are notable cases where legislative reform has not been finalised.
[Recommendation 6.1]
As a result of incomplete implementation of entitlement reforms, there are water users in
each jurisdiction who do not yet benefit from the additional security provided by NWIconsistent water access entitlements. To date, implementation has concentrated on highpriority water systems. In remaining systems, the intended extent of implementation of NWIconsistent water access entitlements and the timeframe for such reform are uncertain.
[Recommendation 6.2]
The annual 4% limit on water entitlement trading out of an irrigation area is being reached in
regions in several basin states, with a wide range of undesirable consequences. The
Commission considers that the 4% limit has impeded the use of buyback programs to assist
in returning overallocated water systems to sustainable levels of extraction; unfairly and
arbitrarily penalised willing sellers of irrigation entitlements; distorted patterns of water trade
out of irrigation areas (including interstate trade); inhibited desirable and necessary structural
change; and complicated interstate collaboration in other areas of water reform.
[Recommendation 7.1]
It is commonly thought that unbundling water from land is largely complete. However, the
Commission finds that, while significant progress has been made in the process of
unbundling, additional reform is required in most states. [Recommendation 7.2]
Even though tagged trade was agreed as the preferred approach in relation to interstate
trading arrangements, the introduction of tagged interstate entitlement trade has not been
accompanied by an increase in interstate entitlement trade. The Commission considers that
facilitating and promoting interstate entitlement trade is an important next step in water
market reform. [Recommendation 7.6]
There has not been sufficient progress in the movement towards consistent urban water
pricing policies. However, draft national pricing principles have been developed which apply
to both urbna and rural water. These principles apply to recovery of capital expenditure,
setting urban water tariffs, recovery of costs of water planning and management activities,
and pricing for recycled water and stormwater reuse. [Recommendation 8.2 and 8.8].
The Commonwealth Water Act 2007 gives insufficient powers to the Minister to progress
water planning and management charge rules in the way envisaged in the NWI, as it
required a regulated water charge to be imposed for the water charge rules to apply, As the
current application of charges in each state differs, the rules would not apply consistently to
all activities or water users in the Murray-Darling Basin, making it difficult to achieve NWI and
Basin water charging objectives and principles consistently across the basin.
[Recommendation 8.9].
Water markets play a critical role in facilitating structural adjustment by providing entitlement
holders with flexible opportunities to make their own business adjustment decisions. Artificial
barriers to water trade impede flexible adjustment decisions by individual entitlement holders.
Barriers to water trade have also hindered efforts to address overallocation, and facilitate
adjustment, through the Commonwealth buyback program. Such purchases assist
adjustment by reducing the gap between current diversion levels and new lower sustainable
diversion limits that can be anticipated in the new Basin Plan. [Recommendation 10.2]
15
No.
Biennial Assessment Finding
Priority Outcome 4) better engagement with communities and other key stakeholders on the
implementation of water reforms
1.4
1.6
1.13
6.7
10.4
There is scope to improve the transparency of water plans by clearly stating the nature of
trade-offs between competing users, communicating this to stakeholders and the community
in the planning process, and better reflecting those trade-offs on the decisions to allocate
water between various users and the environment. [no relevant recommendation]
It is rare for Indigenous water requirements to be explicitly included in water plans, and most
jurisdictions are not yet engaging Indigenous people effectively in water planning processes.
The Commission notes that Indigenous groups are, at their own initiative, currently
developing the capacity to participate more fully in water planning processes.
[Recommendation 1.4]
Considering the magnitude of the task ahead, the Commission observes that the MDBA has
had a disappointingly slow start, with an intergovernmental delay in appointing authority
members and growing pressure on timelines to complete the development of the Basin Plan.
Effective community consultation is crucial to the basin planning process. There is a risk that
the pressure on timelines may affect the quality of that consultation. The Commission
supports the MDBA's work to develop strategies to engage the community in the preparation
of the Basin Plan. [Recommendation 1.9]
Water to meet Indigenous social, spiritual and customary objectives is rarely clearly specified
in water plans. It appears often to be implicitly assumed that these objectives, where
considered at all, can be met by rules-based environmental water provisions.
[Recommendation 6.5]
A variety of national, state and region-specific additional structural adjustment measures are
in place across rural Australia. There is a risk that they may be uncoordinated, ineffective
and/or counter-productive, particularly where they attempt to artificially constrain adjustment.
[Recommendation 10.3]
Key Associated Recommendations of the Biennial Assessment
No.
1.1
1.2
1.3
1.4
1.5
1.6
Biennial Assessment Recommendation
The immediate acceleration of the development and commencement of water plans
to allow water users to realise the full benefits of NWI reforms, balancing this
however against plan quality, and particularly the quality of community consultation.
As plans approach their renewal date, jurisdictions review existing water plans to
identify information gaps. Identified gaps should be prioritised [using pre-defined
criteria] and addressed effectively and the results of new research should be
incorporated into new and existing plans
All future water plans consider explicitly the impacts of climate change on water
resources and the environment, and are sufficiently resilient to accommodate a
broad range of climate change outcomes.
The Commission recommends that all jurisdictions develop and publish processes
for effective engagement of Indigenous people in water planning. Parties should
ensure that all new water plans (including statutory reviews of existing water plans)
provide for Indigenous access to water resources by at least incorporating
Indigenous social, spiritual and customary objectives and strategies for achieving
those objectives. Jurisdictional processes should also make clear how Indigenous
groups can pursue their legitimate economic objectives.
To reduce the potential for further erosion of security of existing water access
entitlements, the Commission recommends that significant and potentially significant
water interception activities be immediately identified and quantified, and a process
for addressing them clarified within the next six months. This will enable jurisdictions
to meet their commitment to include any proposals for additional water interception
activities above an agreed threshold size into existing water access entitlement
regimes by no later than 2011
To enable consistent reporting, water plan objectives need to be made specific and
measurable where this is not already the case
16
No.
1.7
1.8
2.1
3.1
3.4
3.6
4.1
4.2
4.4
4.5
4.7
4.8
6.6
8.2
8.8
Biennial Assessment Recommendation
Jurisdictions and national agencies further invest (taking account of work already
underway through the COAG work program) in best practice guidelines, streamlined
processes and training to improve the quality, the effectiveness of the processes,
and the resilience and community acceptance of water plans.
All existing and new plans to be tested to ensure that they clearly define how water
will be allocated to various categories of users and the environment under the full
range of inflow conditions (including sequences of dry years), and to ensure that
plans adequately specify how systems will be operated in times of extremely low
water availability. This should include publicly defining the exceptional
circumstances in which a plan would be suspended or qualified, the processes and
principles then to be followed, and the arrangements for reinstatement of plans
when conditions improve.)
Until standards are established, agree to treat surface and groundwater systems as
highly connected
Jurisdictions to now give attention to how they will proceed with the implementation
of water accounting standards, drawing lessons from the water accounting pilot
projects.
Completion and implementation of jurisdictional plans in accordance with the
National Framework for Non-Urban Water Metering.26
Further exploration of the extent of non-compliance, and the potential for greater
coherence and coordination of water enforcement across jurisdictions by means of
national principles to guide compliance and enforcement efforts and to improve
cross-border consistency— Note this is covered by the COAG in-principle
agreement to the National Framework for Water Compliance and Enforcement and
to finalise the Framework in mid-2010.
All jurisdictions put in place systematic and transparent processes to determine
environmental water outcomes and requirements. All water plans should clearly
specify environmental outcomes, and fully define environmental watering protocols
and operational activities to meet these outcomes under the full range of inflow
scenarios, including those that may arise as a result of climate change.
All decisions to reduce the security of environmental water in exceptional
circumstances such as intense or prolonged drought should be made transparent,
including the decision-making process and the decision-making evidence and
reasoning;
Governments publicly identify environmental water holders and environmental water
managers within their jurisdictions and clearly specify their authority, responsibilities
and accountabilities. Where accountabilities are blurred, they should be clarified.
Greater consideration be given to improving alignment and integration of programs
for recovery and management of environmental water. This alignment and
integration should be pursued across jurisdictions, geographical scales, and across
land and water management, to identify and capture synergies and optimise
outcomes.
Entitlements and rules-based mechanisms designed to achieve environmental water
objectives in water plans be accompanied by detailed monitoring and evaluation
protocols addressing both outputs and environmental outcomes. The protocols
should be based on science, resourced adequately, implemented fully, and
reviewed independently.
The development of a national water science strategy that is focused on supporting
environmental watering, to complement the broader National Water Knowledge and
Research Strategy.
NWI-consistent water access entitlements be defined for the minerals, petroleum
and other industrial sectors
NWI parties move quickly to endorse the draft national NWI pricing principles at
Ministerial Council level and implement those principles as soon as is practical.
Investment (including for irrigation infrastructure) should be consistent with NWI
26
COAG agreed at its November 2009 meeting that state implementation plans were to be finalised in
December 2009 and the national implementation plan by June 2010.
17
No.
8.9
Biennial Assessment Recommendation
commitments relating to full cost recovery, and the draft NWI pricing principles on
recovery of capital.
Once agreed, the NWI pricing principles for water planning and management be
implemented within the MDB.
18