Water reform
Water reform in Australia took a step forwards with the August 2003 announcement of COAG's National Water Initiative. The history of reform goes back to the development in 1994 of a strategic framework.
Strategic framework
The reform of Australia's water management regulation began in 1994 with a strategic framework encompassing economic, environmental and social objectives being developed and agreed by the Council of Australian Governments (COAG). More particularly, the framework embraces:
- pricing reform based on consumption-based pricing and full cost recovery;
- the reduction or elimination of cross-subsidies and making subsidies transparent;
- the clarification of property rights;
- the allocation of water to the environment;
- the adoption of trading arrangements; and
- public consultation and participation.
2005 was set down as the target date for completion of the reform program. Interim deadlines for major components of the reform package were also set, including:
- 1998 – urban water pricing; institutional reform
- 2001 – rural water pricing; environmental water allocations to stressed rivers
- 2005 – environmental water allocations to all river systems and
groundwater.
As the reforms have progressed, these deadlines have also been extended.
The broad formulation of the framework has allowed reforms to progress on several fronts. A number of federal government agencies are involved in either monitoring the progress of reforms in the States or Territories or contributing to the development of the scientific knowledge that underpins the decisions made by government and government agencies responsible for implementing the reforms.
National Competition Policy
In April 1995, COAG decided to bring the water reform program within the umbrella of National Competition Policy and the jurisdiction of the National Competition Council (NCC).
The NCC conducts annual assessments of Governments' compliance with all NCP and related reform obligations. To assist each assessment, the Council prepares a framework in advance of the assessment outlining the issues it will consider. In December 2001, COAG officials agreed to prioritise national water reform commitments across the 2002 to 2005 assessments.
The focus of the 2003 assessment (completed in June 2003) was on urban water pricing and cost recovery, institutional reform, intrastate trading arrangements, integrated catchment management and water quality reforms.
The 2004 assessment focuses on rural water pricing and cost recovery, interstate trading arrangements and progress with implementing environmental allocations. For more, see the 2004 framework.
A full assessment across all aspects of reform will be carried out in 2005.
In addition to the broad reform issues, the NCC also reviews specific actions taken by a State or Territory government in implementing the strategic framework.
Research
The 1994 strategic framework has forced governments to rethink how they manage water.
Up until now, water has been regarded primarily as a resource that sustains human development in towns and cities, as well as Australia's farming and agriculture industries. It is also plays a vital role in the resources industry.
However, water is also essential to protect and sustain complex ecosystems, such as the Murray Darling Basin and the Coorong wetlands in South Australia. Over the years, water management practices have led to damage of these systems. The progress of regulatory water reform has focussed scientific efforts in identifying how much water needs to be returned to river systems, not only to repair past damage but to ensure the future health of the rivers.
The reforms have also required a rethink of water as a tradeable commodity with inherent value. In addition to many scientific papers on river and river catchment health, the CSIRO Land and Water Unit has written a number of research papers on how to value water and what a water trading system should look like. Land and Water Australia, a research and development corporation within the Commonwealth Agriculture, Fisheries and Forestry portfolio, continues to conduct various research projects focussed on water management.
On a broader level, the Wentworth Group of Concerned Scientists has written two documents on the broader reform agenda. Comprised of eminent scientists from different disciplines, including ecology, palaeontology, geomorphology and agricultural science, the 'Blueprint for a Living Continent' and 'Blueprint for a National Water Plan' suggest a way forward in developing a truly national approach to water management, environmental protection, biodiversity conservation and sustainable resource use.
The National Water Initiative
On 29 August this year, COAG announced the 'National Water Initiative' – a $500 million package aimed at restoring environmentally sustainable flows to the Murray-Darling Basin, Australia's agricultural heartland.
Under this Initiative, the Commonwealth will contribute $200 million, NSW and Victoria will each contribute $115 million, South Australia will contribute $65 million, and the Australian Capital Territory will contribute $5 million to a series of measures intended to:
- improve the security of water rights by effectively equating them to property rights;
- create a nationally compatible system of water entitlements;
- ensure water is put to best use by creating and encouraging trading in a water market encompassing the entire Murray-Darling Basin;
- restore over-allocated river systems to environmentally sustainable levels; and
- encourage water conservation in cities.
The details of the Initiative, and how these goals are to be achieved, are to be settled over the next six months and will be presented to the first COAG meeting in 2004.
For links of interest, go to our Energy and Resources LawLinks.
