Final Report
Water Management Partnership Agreements
October 2011
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Contents
Executive Summary.................................................................................................................... 3
Recommendations ..................................................................................................................... 5
Background ................................................................................................................................ 6
Context ....................................................................................................................................... 6
The CRC Water Management Partnerships: Report on Performance 2009 .......................... 6
COAG Decision ....................................................................................................................... 7
Enhancing Commonwealth accountability ........................................................................ 7
Scope of water reform obligations .................................................................................... 8
Amend existing reform milestones to address the technical drafting issues ................... 8
Consistency of the WMPAs and the IGA FFR. .................................................................... 8
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Executive Summary
The 2008 Murray-Darling Basin Reform Intergovernmental Agreement (Murray-Darling IGA)
was negotiated by the Commonwealth and Basin jurisdictions to progress further the
objectives of the National Water Initiative, implement the reforms necessary to meet the
current needs of the Murray-Darling Basin and, in the long term, protect and enhance its
social, environmental and economic values. The Murray-Darling IGA commits Governments
to a new culture and practice of ‘Murray-Darling Basin wide’ management through new
structures and partnerships.
The Murray-Darling IGA was signed prior to the finalisation of the Intergovernmental
Agreement on Federal Financial Relations (IGA FFR). The WMPAs establish the mechanism
for leveraging state performance on reforms, while ensuring value for money for the State
Priority Projects. The responsibility for assessing the performance of the parties under the
WMPA was given to the COAG Reform Council (CRC).
The CRC Water Management Partnerships: Report on Performance 2009 (CRC 2009
Report—released in September 2010) made a series of recommendations to improve the
performance reporting framework of the WMPAs. Consistent with the CRC and Heads of
Treasuries review recommendations, COAG on 13 February 2011 agreed to complete
appropriate improvements to the Murray-Darling Basin WMPAs, to be completed in the
second half of 2011. As at October 2011, COAG was yet to respond formally to the CRC
2009 Report recommendations.
The Commonwealth and States have agreed to explore the development of an outcomesbased approach for water infrastructure funding. The proposed framework is intended to
provide an alternative funding vehicle for state-led projects that enhance water use
efficiency and secure water for the government’s commitment to ‘bridge the gap’.
In response to the CRC recommendations, the Steering Group tasked by COAG to complete
the appropriate improvements:

noted the Commonwealth has developed additional reform and reporting
milestones which have been included in the CRC’s 2010 report;

agreed that the Basin States considered that it was not appropriate to develop
formally and adopt additional milestones part way through the operation of the
agreements;

noted that given the bilateral nature of the WMPAs, it would take significant
negotiation to achieve the technical drafting recommendations by the CRC, for little
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apparent net benefit in terms of progressing Murray-Darling Basin reform or policy
objectives; and

noted that an outcomes framework is being pursued and the costs of reopening and
renegotiating the WMPAs to achieve consistency with the IGA FFR, would likely
outweigh the relatively small benefits of increased consistency across the
agreements.
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Recommendations
It is recommended that the Steering Group submit this report to COAG.
It is further recommended that COAG:
a) note that the Commonwealth has developed additional reform and reporting
milestones for inclusion in the CRC’s 2010 report and future reports;
b) agree that new reform actions and milestones are not developed for the Basin
jurisdictions;
c) note that the costs of reopening and renegotiating the WMPAs would likely
outweigh the relatively small benefits of increased consistency with IGA FFR;
d) note that an outcomes framework is being developed; and
e) agree that no further work be undertaken to improve the WMPAs at this time.
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Background
The 2008 intergovernmental Agreement on Murray-Darling Basin Reform (Murray-Darling
IGA) was negotiated by the Commonwealth and Basin jurisdictions to progress further the
objectives of the National Water Initiative, implement the reforms necessary to meet the
current needs of the Murray-Darling Basin, and in the long term protect and enhance its
social, environmental and economic values. The Murray-Darling IGA commits Governments
to a new culture and practice of ‘Murray-Darling Basin wide’ management through new
structures and partnerships.
Key elements of the Murray-Darling IGA are the establishment of Commonwealth-State
Water Management Partnership Agreements (WMPAs) to provide funds for State Priority
Projects and the implementation of agreed institutional and governance arrangements to
provide autonomy to the Murray-Darling Basin Authority to prepare a Basin Plan and deliver
programs within the Basin. The latter included the reform of the Murray-Darling Basin
Ministerial Council and Basin Officials Committee, and a limited referral of state powers to
the Commonwealth to be implemented through the Water Act 2007.
The Murray-Darling IGA was signed prior to the finalisation of the Intergovernmental
Agreement on Federal Financial Relations (IGA FFR). The WMPAs establish the mechanism
for leveraging state performance on reforms, while ensuring value for money for the State
Priority Projects. The responsibility for assessing the performance of the parties under the
WMPA was given to the COAG Reform Council (CRC).
Context
The CRC Water Management Partnerships: Report on Performance 2009
The CRC in the Water Management Partnerships: Report on Performance 2009 (CRC 2009
Report –released in September 2010) made two recommendations on improving the
performance reporting framework.
Recommendation 4—Priority improvements to the performance reporting framework
The COAG Reform Council recommends that COAG:

agree that the Commonwealth and the Basin States should:
- prescribe water reform milestones for the Commonwealth
- prescribe a fuller set of water reform milestones, for all parties as appropriate, to
reflect the range of water reform outcomes intended to be progressed under the
Agreement on Murray-Darling Basin Reform
- amend existing reform milestones to address the technical drafting issues identified
by the council, including the need for consistency in defining key concepts
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
agree that these matters should be progressed by:
- specifying milestones for each reporting period from 2010 to 2014, preferably before
the end of 2010
- using the variation provisions to update Schedule 1 to each Water Management
Partnership, or otherwise by establishing a multilateral implementation plan for this
purpose.
Recommendation 5—Broader consistency with the federal financial relations framework
The COAG Reform Council recommends that COAG note that the Water Management Partnerships
are not fully consistent with the conventional format and design principles for National Partnerships,
as established under the Intergovernmental Agreement on Federal Financial Relations.
COAG Decision
In February 2011 the Council of Australian Governments (COAG) agreed to complete
appropriate improvements to the Murray-Darling Basin WMPAs identified in CRC reports, to
be completed in the second half of 2011. This work was to be undertaken by a working
group of senior COAG Officials (the Steering Group).
This task was undertaken as a part of a range of reviews to consider improvements to the
governance and performance reporting framework and to tackle deficiencies in the design
of current agreements identified by the Heads of Treasuries Review and reports of the CRC
to reinforce COAG’s commitment to performance and public accountability.
The CRC recommendations on the WMPAs can be categorised into four key areas:
 enhancing Commonwealth accountability;
 increasing the scope of water reform obligations;
 amending existing reform milestones to address the technical drafting issues; and
 fostering consistency of the WMPAs with the requirement of the IGA FFR.
Enhancing Commonwealth accountability
The CRC’s 2009 Report found that the WMPAs do not specify reform actions and milestones
for the Commonwealth (section 6.1.1 refers). The CRC report recommended
(Recommendation 4) that a fuller set of reform milestones be prescribed for the
Commonwealth (as well as States).
In response to the recommendations, the Commonwealth agreed to develop and nominate
additional reform and reporting milestones for inclusion in the CRC’s 2010 report.
These new milestones were considered by the Water Reform Committee on 10 February
2011 and provided to the CRC on 9 March 2011. The Commonwealth’s first report against
these milestones was provided to the CRC on 9 May 2011.
The additional milestones are intended to deliver improved Commonwealth performance
information and public accountability in respect to water reforms committed to under the
Murray-Darling IGA. In particular, the Commonwealth provided additional reporting on:
compliance and enforcement, the National Water Market System, and implementation of
the Murray-Darling Basin Plan.
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The new milestones for the Commonwealth are consistent with the COAG February 2011
recommendation and objectives of the Steering Group process.
Scope of water reform obligations
The CRC report recommended (Recommendation 4) that the Commonwealth and Basin
States collaboratively develop reform actions and milestones, covering the full range of
reforms envisaged by the Murray-Darling IGA. The CRC further recommended that in
developing new reform actions and milestones, and in refining existing ones, the
Commonwealth and the Basin jurisdictions consider disaggregating milestones into more
specific interim and final milestones covering a five-year period.
Basin jurisdictions considered that developing extra reform actions and milestones would
require renegotiating agreements that are currently being implemented but would not
guarantee improved outcomes given the advanced stage of implementation.
The Commonwealth and States have agreed to explore the development of an
outcomes-based approach for water infrastructure funding. The proposed framework is
intended to provide an alternative funding vehicle for state-led projects that enhance water
use efficiency and secure water for the government’s commitment to ‘bridge the gap’.
Amend existing reform milestones to address the technical drafting issues
The CRC identified a number of issues with the WMPAs of a more technical nature that it
considered could be improved through amendments to the WMPAs. These
recommendations involved Basin States and the Commonwealth negotiating amendments
to Schedule 1 of each WMPA, as allowed under WMPA cl. 16.4.
One of the key elements of the CRC recommendation was redrafting to achieve for
consistency in defining key concepts between WMPAs. A number of other technical issues
were also identified with individual WMPAs.
Given the bilateral nature of the WMPAs, it would take significant negotiation to achieve the
consistency recommended by CRC, for little apparent net benefit in terms of progressing
Murray-Darling Basin reform or policy objectives.
Consistency of the WMPAs and the IGA FFR.
The format and content of the WMPAs is defined by the Murray-Darling IGA. A fuller
description of all the outcomes being sort under the Murray-Darling IGA is included earlier,
but major outcomes of the Murray-Darling IGA, negotiated by Basin jurisdictions and the
Commonwealth were to: arrange the limited text referral of state powers for the MurrayDarling Basin to the Commonwealth; and provide funds for State Priority Projects.
The WMPAs were developed in the context of these negotiations, and are designed to
deliver significant infrastructure efficiency improvements through State Priority Projects.
Reforms were included in the WMPAs on the basis that they were pre-existing COAG or
Ministerial Council commitments that could be achieved by individual Basin States. There
were no reward payments for the achievement of reforms under these agreements, but the
IGA provided for withholding payment of project funds if reform milestones were not met.
Each WMPA was negotiated bilaterally between the Commonwealth and the Basin State
concerned. All WMPAs were finalised between late 2009 and early 2010.
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The IGA FFR was being considered by COAG at the same meetings as the Murray-Darling
IGA. While the Murray-Darling IGA makes reference to the IGA FFR, Part 4 of the agreement
specifies in detail a unique format for the WMPAs.
The CRC noted that the WMPAs are inconsistent with the format and principles for National
Partnerships specified in the IGA FFR. For example, the WMPAs do not set payments as
National Partnerships do, and they are not published on the Ministerial Council for Federal
Financial Relations web site (a requirement for all National Partnerships).
The CRC proposes that this inconsistency be considered ‘some time after mid-2011’ (Section
6.2.3). To address these inconsistencies, Basin States and the Commonwealth would need
to negotiate significant restructuring of the WMPAs.
Though the WMPAs are not published on the Ministerial Council for Federal Financial
Relations website, they are publicly available on the website of the Commonwealth
Department of Sustainability, Environment, Water, Population and Communities
(http://www.environment.gov.au/water/australia/coag/partnership-agreements.html).
The bilateral nature of the WMPAs is a prescribed action set out in Part 4 of the IGA, and it
took significant negotiation from all governments to arrive at the agreed text in the WMPAs.
All bilateral agreements are public and available to all jurisdictions.
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