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Focus: The federal election: water reform issues

21 September 2004

In brief: Water reform has emerged as a significant issue in the 2004 federal election campaign. Partner Grant Anderson and Lawyer Alistair Newton consider two key election policies relating to water: the Howard Government's Securing Australia's Water Future and the Australian Labor Party's Saving the Murray River.

The National Water Initiative

In June 2004, the Council of Australian Governments agreed to implement a National Water Initiative (NWI) to develop a 'nationally compatible, market, regulatory and planning-based system of managing surface and groundwater resources for rural and urban use that optimises economic, social and environmental outcomes' (see Focus: Water , June 2004). The NWI was hailed as a significant step forward in national water reform. Two important election policies, outlined below, build on the foundation formed by the NWI process.

The Howard Government's Securing Australia's Water Future

The Howard Government released its key long-term water policy, Securing Australia's Water Future, on 13 September 2004. The centrepiece of the policy is the establishment of a $2 billion Australian Water Fund. Investments made by the Australian Water Fund are to further the objectives of the Living Murray Initiative and the NWI.

The primary purposes of the Water Fund are to:

  • direct $1.6 billion to projects aimed at accelerating the implementation of new water technologies and practices (primarily to improve environmental river flows, on-farm water efficiency, recycling and re-use of stormwater and 'grey' water, irrigation infrastructure and water-efficient house design);
  • lift the capacity to measure, monitor and manage water resources;
  • implement a nationally consistent system for collecting and processing water-related data, a strategic assessment of groundwater resources, community-based planning and conservation initiatives, and a water-efficiency labelling scheme (including the promotion of a six-star rating for household water appliances); and
  • reward communities that demonstrate a culture of wise water usage through the yet-to-be-announced $200 million 'Water Wise Communities' policy.

The Howard Government's proposal also calls for the establishment of a National Water Commission to drive the broader water reform agenda. In particular, the Commission will advise government on funding proposals put forward under the Water Fund framework.

Controversially, the Water Fund will be established using funds previously earmarked for further 'competition payments' to the states under the National Competition Principles Agreement. These funds had previously been set aside in the contingency reserve in case the Commonwealth decided to make competition payments past June 2006, the date on which Commonwealth obligations under the National Competition Principles Agreement cease.

In a separate, but related, announcement, Deputy Prime Minister John Anderson has offered to contribute up to $167 million to the cost of constructing the proposed Wimmera-Mallee pipeline in northwestern Victoria. The pipeline is to replace the wasteful, open-channel domestic and stock supply system that is currently in operation.

Implications for the National Water Initiative

The states have, perhaps predictably, rejected the Howard Government's policy on the basis that it diverts funds from other areas, such as education and health. In particular, Victorian Water Minister John Thwaites immediately rejected the proposed Wimmera-Mallee pipeline funding as a 'hoax', referring to the fact that funding was to be drawn from the Water Fund and therefore from withdrawn competition payments that were to be spent on other state responsibilities.

The states have also cast serious doubt on the future of the NWI itself.

On 16 September 2004, a letter to the Howard Government, signed by each of the state premiers, declared that the Securing Australia's Water Future policy was not a reasonable basis on which the NWI could operate. The letter went on to allege that the Howard Government had effectively repudiated its commitments under the NWI agreement, and therefore the states took the Howard Government's actions to be a termination of the NWI.

The Australian Labor Party's Saving the Murray River

Also on 16 September 2004, the ALP released its water reform agenda in the form of its Saving the Murray River policy, focusing on the health of the Murray-Darling Basin. The Saving the Murray River policy is comprised of two parts:

  • the establishment of a new Commonwealth authority – RiverBank – responsible for funding a range of water-related projects with an initial capital injection of $500 million; and
  • a specific $500 million plan to secure increased environmental water flows for the Murray River.

RiverBank is to invest in water infrastructure, water-efficiency projects (in partnership with the states and the private sector), water-supply improvement projects (such as revegetation projects), and measures to help farmers achieve greater on-farm water efficiency and encourage more water reuse and recycling.

The Saving the Murray River policy notes that the Wentworth Group of scientists has calculated that an additional 450 gigalitres per year of environmental flows is needed to keep the mouth of the Murray River open. The ALP policy describes the $500 million earmarked to secure these flows as a 'down payment' on its long-term goal of delivering an extra 1500 gigalitres in annual environmental flows over 10 years. However, it is unclear whether the $500 million for environmental flows is new funding or merely a re-statement of funds previously committed by the Commonwealth and State governments as part of the NWI.

If you would like any further information in relation to the policies outlined above or their implications for the water industry and consumers, please contact any of the people listed below.

For further information, please contact:

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