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Focus: Western Australia's new water future

2 October 2013

In brief: Significant reforms to Western Australia's water resource management will have implications for existing and future water users across all industries. These reforms have been foreshadowed in the WA Department of Water's position paper on water resource reform, released last week. Partner Jodi Reinmuth (view CV) and Senior Associate Eve Lynch report on the State's proposed new legislative and policy framework for managing and allocating water.

How does it affect you?

  • Water users will need to consider the new framework in managing their existing water entitlements and in planning for water security.
  • As new statute-based water allocation plans are developed under the new framework, water users will need to engage in the process to ensure their entitlements are protected.

Background

The Department of Water's proposed reforms are intended to streamline the existing 'fragmented' framework and to consolidate and modernise water allocation planning, licensing and trading across the State. The focus is on providing water users with more options for managing water through a flexible and adaptive framework, while also making adequate provision for the protection of environmental water. The drivers underpinning the reforms include the impacts of climate change on rainfall patterns, the pressures of population growth, the competing demands for water access and the emerging challenge of mine dewatering. Extensive stakeholder consultation on the water framework in Western Australia over a considerable number of years has 'provided an important basis for the positions that appear' in the position paper.1

The proposed changes aim to create a new, streamlined system for allocating and managing water resources and will involve the consolidation and repeal of the various, and, in some cases, outdated enactments that deal with water resource management.

Changes to existing licensing regime

The position paper sets out a number of significant changes to the existing regime for water licensing:

  • Simplified licensing regime – criteria will be developed to ensure that the level of assessment for licence applications is commensurate with risk, with different criteria for licence renewals, amendments and certain bore licences, which, in many cases, will see the existing regime simplified.
  • Efficient and effective trade and transfers – statute-based trading rules will be introduced and provision will be made for 'low risk' trades and transfers to proceed without the rigour of a full assessment that is currently required and can impose additional cost and delay on licence holders.
  • Changes to licence terms to improve security of access – the current policy practice of automatic 10-year licence terms will no longer apply (although flexibility will be retained), with the regulator to have power to extend licence terms by up to 40 years with a view to boosting investor confidence, as it will allow water resources, where the knowledge of those resources is robust, to be allocated to the relevant investment lifecycle.
  • Increased flexibility to vary volumetric entitlements – a new mechanism for varying licence volumes on a seasonal basis will be introduced to ensure water usage reflects water availability (seasonal variations to volumetric entitlements under a water licence will not attract compensation rights). This will replace the current fixed annual volume regime.

New framework for water access entitlements

In addition to changes to the existing licensing framework, the introduction of a separate regime for 'water access entitlements' is proposed. This regime, modelled on other Australian jurisdictions, will be implemented through the development of statutory water allocation plans for different water resources across the State, which will replace existing administrative plans/policies.

These statutory water allocation plans will establish water sharing rules and statutory allocation limits within plan boundaries – limits are currently set through policy and therefore do not have statutory effect. It is envisaged that each plan will define the aggregate amount of water available for use from a particular water resource (the 'consumptive pool'), which will be an adaptive figure based on modelling. Plans will also make provision for the protection of environmental water.

Water will be allocated from the consumptive pool through the grant of water access entitlements to water users. These entitlements will be easier to trade than water licences and will constitute an interest in property that can be subdivided, mortgaged, bequeathed and traded.

Unallocated water will be granted through a variety of mechanisms (including a combination of the traditional 'first in first served' approach and, particularly where there is competition for scarce resources, other competitive or market-based mechanisms). According to the position paper, the mechanism for allocation will vary across the State, subject to factors such as the characteristics of the particular resource and level of demand.

It is expected that the existing licensing regime and administrative plans will continue to apply to water resources until a statutory allocation plan for the resource is introduced. Where a statutory allocation plan is introduced, existing licences may be converted to water access entitlements (or still used in some circumstances).

Statutory water allocation plans will be developed over time and planning for water resources under pressure (such as the Gnangara groundwater area) will be prioritised. The paper does not identify whether a moratorium on new water licences or changes to existing licences would operate for particular resources while the plan process is underway.

An independent advisory body and local water resource management committees will play a role in the development of water allocation plans. In addition, the position paper identifies role for 'voluntary local advisory groups' outside of the statutory framework to enhance community consultation and input on an ongoing basis.

Over-allocated water

A mechanism for the recovery of 'over-allocated' water (for example, when the allocation limit decreases due to climactic factors) will be included in the new legislation, and, although no detail is provided, it is proposed that specific methodologies for the return of over-allocated water will be developed concurrently with statutory water allocation plans. Reforms to the compensation regime are proposed in line with new risk-assignment provisions apparently designed to shift the risk of volumetric cuts due to climate conditions onto the water user (rather than the taxpayer).

Metering requirements

More rigorous metering obligations will be introduced through the imposition of conditions on existing licences and future licences and water access entitlements. These metering requirements will generally apply to all users of groundwater and multi-user surface water resources such as rivers and dams (regardless of the authorised volumetric take). The position paper proposes a phase-in of metering requirements for existing licensees.

Other notable changes

The position paper also identifies a number of other discrete changes to the water framework, including:

  • Environmental water – provisions for the protection of environmental water will be developed and implemented through regulations and statutory water plans.
  • Water quality – existing legislation regulating water quality will be consolidated and factored into all decision-making processes.
  • Domestic/basic water – changes will be made to remove inconsistencies in the existing framework regulating domestic entitlements from surface water and groundwater sources.
  • Injections – regulations will be introduced to manage the injection of water into aquifers and underground water resources (excluding hydraulic fracturing stimulation for unconventional gas as this is regulated elsewhere).

Consultation

The closing date for submissions in relation to the position paper is 31 December 2013.

Footnotes
  1. Securing Western Australia's water future – a position paper, page 5.

For further information, please contact:

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