SUMMARY
This briefing paper summarises the legislative and administrative
arrangements for water management in rural NSW.
History of water management in NSW
Water regulation commenced in NSW with the Water Act 1912.
Substantial water reforms have taken place within the past 20 years, with the
Commonwealth Government playing a major role. [2.0]
Two themes have predominated in these reforms: (1) governance of the
Murray-Darling Basin; and (2) a reform agenda for water in Australia set by
COAG that has focused on maximising water use efficiency in order to optimise
economic, social and environmental outcomes. The first theme commenced with a
Murray-Darling Basin Agreement in 1992 that set out to co-ordinate management
of the Murray-Darling Basin by Queensland, NSW, Victoria, South Australia, the
ACT and the Commonwealth Governments. This Agreement was superseded in 2008 by
the Agreement on Murray-Darling Basin Reform. State powers were referred to the
Commonwealth to enable it to assume primary responsibility for the
Murray-Darling Basin. [2.0]
The second theme was set by the COAG 1994 meeting, at which a strategic
framework for the efficient and sustainable reform of the Australian water
industry was agreed to. This framework was instrumental in the creation of the
Water Management Act 2000 (NSW), and was renewed in the form of the
National Water Initiative in 2004. More recently, this theme was manifest in
the National Plan for Water Security in 2007, and found legislative expression
in the Water Act 2007 (Cth) and its 2008 amendment. [2.0]
Water Management Act 2000 (NSW)
The Water Management Act 2000 (NSW) repealed the Water Act
1912 (NSW); however, the Water Act 1912 (NSW) still applies in those
areas of NSW not yet covered by a Water Sharing Plan. The Water Management
Act 2000 (NSW) abolished common law riparian rights and vested all water
rights in the Crown. Water rights can now only be acquired through possession
of an access licence, with the exception of some domestic and stock rights,
harvestable rights and native title rights. [4.1.1]
The objects and principles of the Act reflect the COAG goals for water
reform and the principles of ecologically sustainable development. An important
means of achieving these objects is the creation of two classes of
environmental water: planned environmental water; and adaptive environmental
water. Water management plans provide for the allocation and distribution of
both types of environmental water. [4.1.4]
Water planning in NSW
Provision is made in the Water Management Act 2000 (NSW) for a State
Wide Management Outcomes Plan. This was intended to provide an over-arching
policy context, targets and strategic outcomes for the management of the
State’s water sources. However, the first version ceased to be in force
in December 2007 and a new plan has not been released as yet. [4.1.3]
The Water Management Act 2000 (NSW) provides for the creation of
several types of water management plan. The only type that has so far been made
is the Water Sharing Plan. Water Sharing Plans apply to a specific water
management area. They establish environmental water rules, identify water
requirements for all stakeholders in the management area, establish access
licence dealing rules and establish a bulk access regime for the extraction of
water under access licences. [4.1.5]
Water management plans have a lifespan of 10 years and must be audited at
least every 5 years. Implementation programs set the framework through which
the water management plan will be implemented. The Minister may suspend a
management plan during severe water shortage. Three Water Sharing Plans are
currently suspended: the Murrumbidgee Regulated River, Lachlan Regulated River
and NSW Murray – Lower Darling Regulated Water Sharing Plans.
[4.1.5]
Water access licences and approvals in NSW
Water access licences have two components: a share component and an
extraction component. These components are separate. A share component entitles
its holder to a specified share in the available water within a specified water
management area. An extraction component entitles its holder to take water at
specific times, rates and/or circumstances from specified areas or locations.
[4.1.6]
An access licence does not provide permission for the physical acquisition
or actual use of water. Three types of approvals are available for the physical
acquisition and use of water. A water use approval confers a right on
its holder to use water for a particular purpose at a particular location. A
water management work approval confers a right on its holder to
construct and use a specified work at a specified location. An activity
approval confers on its holder the right to carry out activities that will
impact a groundwater source or that are located adjacent to a water source.
[4.1.10]
The Water Management Act 2000 (NSW) and Water Management (General)
Regulation 2004 (NSW) provide for a number of categories and subcategories
of water access licence. These are normally prioritised in the following order:
(1) domestic and stock, local water utility and major utility access licences;
(2) regulated river (high security) access licences; (3) all access licences
other than those referred to in parts (1), (2) and (4); and (4) supplementary
water access licences. However, the order of priority changes during times of
severe water shortage to the following: (1) basic domestic water rights and
essential town services; (2) the environment; (3) stock purposes under basic
landholder rights, regulated river (high security) access licences, commercial
and industrial activities, domestic and stock access licences and conveyance
access licences that are connected to any of the other licences in section (3);
and (4) all other access licences. Water allocations are made according to the
priority awarded to access licences, any applicable rules in a Water Sharing
Plan, and available water determinations made by the Minister. An available
water determination is a determination as to the availability of water for one
or more access licence categories for a specific water management area.
[4.1.6]
There are three types of water access licence tenure: continuing, specific
purpose and supplementary. Access licences with continuing tenure are issued in
perpetuity, and are generally used for commercial purposes. Access licences
with specific purpose tenure have higher priority than continuing tenure
licences, eg. town water or domestic and stock purposes. Access licences with
supplementary tenure have the lowest priority and are only created when a Water
Sharing Plan makes provision for them. The NSW Government Land and Property
Management Authority maintains a Register of all access licences and relevant
transactions. [4.1.6 and 4.1.8]
Water trading in NSW
The Water Management Act 2000 (NSW) provides for two generic types of
water dealings: (1) general water dealings and (2) water allocation assignment
dealings. General water dealings involve the transfer (permanent or temporary)
or alteration of a share of water. A water allocation assignment dealing
involves the sale of a volume of water. Water dealings may only occur if
they comply with the water management principles of the Act, the access licence
dealings principles laid out in the Access Licence Dealing Principles Order
2004 (NSW), and the access licence dealing rules established by the
relevant Water Sharing Plan. The Act also makes provision for interstate
transfers. These transfers require the consent of the responsible NSW Minister
and the responsible Minister from the other State or Territory. [4.1.8]
Ministerial influence in access licences and compensation
There are five ways in which the NSW Minister can impact upon access
licences, some of which may result in the payment of compensation: (1)
temporary water restrictions; (2) embargoes on applying for licences; (3)
cancellation and suspension of licences; (4) acquisition of licences; and (5)
variation of the bulk access regime. No compensation is payable under the first
three categories. Compensation, as determined with reference to the current
market value, is payable in the case of the fourth category. Payment of
compensation in cases arising under the fifth category involves a complex set
of roles. [4.1.9]
NSW water management administration and policies
Several NSW administrative bodies are involved in water management in rural
NSW. State Water is NSW’s rural bulk water delivery corporation,
delivering water in accordance with Water Sharing Plans to all users including
the environment. The NSW Office of Water carries out the majority of water
planning and management in NSW, and implements a number of policies including
the Draft Floodplain Harvesting Policy 2010, Water Compliance Policy and Water
Extraction Monitoring Policy. The prices charged by both of these bodies for
their services are regulated by the Independent Pricing And Regulatory
Tribunal. Other bodies involved in water management include: the Department of
the Environment, Climate Change and Water; NSW Government Land and Property
Management Authority; Natural Resources Commission; Catchment Management
Authorities; and the Dumaresq-Barwon Border Rivers Commission. [4.2]
Water (Commonwealth Powers) Act 2008 (NSW)
The Water (Commonwealth Powers) Act 2008 (NSW) refers State powers to
the Commonwealth in order that it might implement the Water Act 2007
(Cth). This Act also amended the Water Management Act 2000 (NSW) and
repealed the Murray-Darling Basin Act 1992 (NSW). Equivalent legislation
was passed by the other Basin States. The Water Act 2007 (Cth) is not
intended to exclude or limit the concurrent operation of any State law.
[4.1.12 and 5.1.9]
Water Act 2007 (Cth)
The Water Act 2007 (Cth) was designed to address the deteriorating
environmental condition of the Murray-Darling Basin by enabling the
Commonwealth, in conjunction with the Basin States, to manage the Basin water
resources in the national interest in a way that will optimise economic, social
and environmental outcomes. The Act also establishes two national level
institutions for water management: the Commonwealth Environmental Water Holder
manages all Commonwealth environmental water holdings; and the Bureau of
Meteorology will create and manage a National Water Account. [5.1.1, 5.1.7
and 5.1.8]
The planning regime implemented by the Water Act 2007 (Cth)
The Murray-Darling Basin Authority is established by the Act to prepare and
implement the Basin Plan, advise the Commonwealth Minister for Climate Change,
Energy Efficiency and Water on the accreditation of State water resource plans
(NSW Water Sharing Plans), develop a water rights information service to
facilitate water trade in the Basin and several other water management
activities. The Basin Plan will set sustainable diversion limits for the Basin
as a whole and for each individual water management area, set water trading
rules, and contain an Environmental Watering Plan and a Water Quality and
Salinity Management Plan for the Basin. Water Sharing Plans in the Basin will
need to become consistent with the Basin Plan once their current version
expires. Both the Water Sharing Plans and Basin Plan will be audited by the
National Water Commission. [5.1.3 and 5.2]
The operation of the water market in the Murray-Darling Basin is also
altered by the Water Act 2007 (Cth). Risk allocation in relation to
changes in water access entitlements corresponds with the Water Management
Act 2000 (NSW). However, water market and water charge rules may be made by
the Commonwealth Minister for Climate Change, Energy Efficiency and Water. The
rules are based on advice received from the Australian Competition &
Consumer Commission. The Commission will also regulate compliance with these
rules. [5.1.3, 5.1.4, 5.1.5 and 5.2]