INTERGOVERNMENTAL AGREEMENT
ON A NATIONAL WATER INITIATIVE

Between the Commonwealth of Australia and the Governments of New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory

and the Northern Territory

PREAMBLE

  1. Water may be viewed as part of Australia’s natural capital, serving a number of important productive, environmental and social objectives. Australia’s water resources are highly variable, reflecting the range of climatic conditions and terrain nationally. In addition, the level of development in Australia’s water resources ranges from heavily regulated working rivers and groundwater resources, through to rivers and aquifers in almost pristine condition.
  2. In Australia, water is vested in governments that allow other parties to access and use water for a variety of purposes – whether irrigation, industrial use, mining, servicing rural and urban communities, or for amenity values. Decisions about water management involve balancing sets of economic, environmental and other interests. The framework within which water is allocated attaches both rights and responsibilities to water users – a right to a share of the water made available for extraction at any particular time, and a responsibility to use this water in accordance with usage conditions set by government. Likewise, governments have a responsibility to ensure that water is allocated and used to achieve socially and economically beneficial outcomes in a manner that is environmentally sustainable.
  3. The 1994 Council of Australian Governments’ (COAG) water reform framework and subsequent initiatives recognised that better management of Australia’s water resources is a national issue. As a result of these initiatives, States and Territories have made considerable progress towards more efficient and sustainable water management over the past 10 years. For example, most jurisdictions have embarked on a significant program of reforms to their water management regimes, separating water access entitlements from land titles, separating the functions of water delivery from that of regulation, and making explicit provision for environmental water.
  4. At the same time, there has been an increase in demand for water, and an increased understanding of the management needs of surface and groundwater systems, including their interconnection. There has also been an enhanced understanding of the requirements for effective and efficient water markets. The current variation in progress with water reforms between regions and jurisdictions, and the expanded knowledge base, creates an opportunity to complement and extend the reform agenda to more fully realise the benefits intended by COAG in 1994.
  5. The Parties agree to implement this National Water Initiative (NWI) in recognition of the continuing national imperative to increase the productivity and efficiency of Australia’s water use, the need to service rural and urban communities, and to ensure the health of river and groundwater systems by establishing clear pathways to return all systems to environmentally sustainable levels of extraction. The objective of the Parties in implementing this Agreement is to provide greater certainty for investment and the environment, and underpin the capacity of Australia’s water management regimes to deal with change responsively and fairly (refer paragraph 23).
  6. The Parties acknowledge that the NWI builds on the 1994 strategic framework for the efficient and sustainable reform of the Australian water industry (the 1994 COAG framework), as amended in 1996 to include groundwater and stormwater management revisions and by the Tripartite agreement in January 1999. The Parties are committed to meeting their commitments under the 1994 COAG framework and continuing to meet the objectives and policy directions of the 1994 COAG framework in a way that is consistent with the objectives and actions set out in this Agreement.
  7. Other natural resource management initiatives having a significant water focus and subject of separate agreements by the Parties, particularly the National Action Plan for Salinity and Water Quality and the Natural Heritage Trust, play an important and complementary role in improving the sustainable management of water in Australia. Continued implementation of the National Water Quality Management Strategy will also complement the outcomes of this Agreement. To the extent that there is any inconsistency between the agreements, the National Water Initiative should take precedence.

IMPLEMENTATION

  1. The Parties agree that actions under this Agreement will be implemented in accordance with the timetable at Schedule Aand in accordance with implementation plans to be developed by each jurisdiction within 12 months of signing this Agreement, to reflect their particular circumstances. The Parties will make substantial progress towards implementation of this Agreement by 2010.
  2. The implementation plans will:

(i) describe how the actions and timelines agreed in the IGA are to be achieved, including milestones for each key element of the Agreement (paragraph 24 refers);

(ii) describe the timing and process for making any consequential changes to water plans and the water access entitlements framework (paragraph 26 refers);

(iii) be developed cooperatively between States and Territories which share water resources to ensure appropriate codevelopment of those actions which are of a cross-jurisdictional nature, including registries, trading rules, water products, and environmental outcomes; and

(iv)be made publicly available.

  1. The Parties agree to the establishment of a National Water Commission (NWC) to assist with the effective implementation of this Agreement. The NWC will accredit implementation plans to ensure consistency with the timetable at Schedule A.
  2. The Parties agree that the scheduled 2005 assessment of States’ and Territories’ National Competition Policy water-related reform commitments will be undertaken by the NWC.
  3. This Agreement contains a number of interrelated actions. It is recognised that some actions have already commenced in some jurisdictions. The Parties intend that where necessary to achieve the objectives of the Agreement, actions required may be modified on the basis of further information or analysis.
  1. Relevant Parties will review existing cross-jurisdictional water sharing agreements to ensure their consistency with this Agreement, and identify those instances where any new cross-jurisdictional agreements may be required to give effect to this Agreement.
  2. In relation to the Murray-Darling Basin (MDB):

i)relevant Parties agree to review the 1992 Murray-Darling Basin Agreement, where necessary, to ensure that it is consistent with this Agreement; and

ii)a separate agreement to address the overallocation of water and achievement of environmental objectives in the MDB (‘the MDB Intergovernmental Agreement’) will operate between the Commonwealth Government and the Governments of NewSouth Wales, Victoria, South Australia and the Australian Capital Territory. The MDB Intergovernmental Agreement will be consistent with the objectives, principles and actions identified in this Agreement.

COMMENCEMENT

  1. The provisions of this Agreement will commence for each jurisdiction as it becomes a signatory to the Agreement.

INTERPRETATION

  1. In this Agreement words and phrases that are italicised are to be interpreted by reference to the glossary at Schedule B(i).
  2. Recognising the importance of a common lexicon for water use and management, the Parties acknowledge the desirability of adopting within their respective water management frameworks, the words and phrases, and their interpretations, contained in ScheduleB(ii).

ROLES AND RESPONSIBILITIES

  1. The Natural Resource Management Ministerial Council (NRMMC) will be responsible for:

i)overseeing implementation of this Agreement, in consultation with other Ministerial Councils as necessary and with reference to advice from COAG; and

ii)addressing ongoing implementation issues as they arise.

  1. The National Water Commission (NWC) will be responsible for providing advice to COAG on national water issues and to assist in the implementation of this Agreement. The NWC’s institutional structure and role are set out in Schedule C.
  2. The States and Territories are responsible for implementing this Agreement within their respective jurisdictions, consistent with their implementation plans (paragraph 9 refers).
  1. The Parties are responsible for ensuring there is adequate engagement of relevant stakeholders in the implementation of this Agreement (paragraphs 95 - 97 refer).
  2. The Commonwealth Government will assist in implementation of this Agreement by working with the States and Territories.

OBJECTIVES

  1. Full implementation of this Agreement will result in 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 by achieving the following:

i)clear and nationally-compatible characteristics for secure water access entitlements;

ii)transparent, statutory-based water planning;

iii)statutory provision for environmental and other public benefit outcomes, and improved environmental management practices;

iv)complete the return of all currently overallocated or overused systems to environmentally-sustainable levels of extraction;

v)progressive removal of barriers to trade in water and meeting other requirements to facilitate the broadening and deepening of the water market, with an open trading market to be in place;

vi)clarity around the assignment of risk arising from future changes in the availability of water for the consumptive pool;

vii)water accounting which is able to meet the information needs of different water systems in respect to planning, monitoring, trading, environmental management and on-farm management;

viii)policy settings which facilitate water use efficiency and innovation in urban and rural areas;

ix)addressing future adjustment issues that may impact on water users and communities; and

x)recognition of the connectivity between surface and groundwater resources and connected systems managed as a single resource.

KEY ELEMENTS

  1. Agreed outcomes and commitments to specific actions are set out on the basis of the following key elements:

i)Water Access Entitlements and Planning Framework;

ii)Water Markets and Trading;

iii)Best Practice Water Pricing;

iv)Integrated Management of Water for Environmental and Other Public Benefit Outcomes;

v)Water Resource Accounting;

vi)Urban Water Reform;

vii)Knowledge and Capacity Building; and

viii)Community Partnerships and Adjustment.

Water Access Entitlements and Planning Framework

Outcomes

  1. The Parties agree that, once initiated, their water access entitlements and planning frameworks will:

i)enhance the security and commercial certainty of water access entitlements by clearly specifying the statutory nature of those entitlements;

ii)provide a statutory basis for environmental and other public benefit outcomes in surface and groundwater systems to protect water sources and their dependent ecosystems;

iii)be characterised by planning processes in which there is adequate opportunity for productive, environmental and other public benefit considerations to be identified and considered in an open and transparent way;

iv)provide for adaptive management of surface and groundwater systems in order to meet productive, environmental and other public benefit outcomes;

v)implement firm pathways and open processes for returning previously overallocated and/or overdrawn surface and groundwater systems to environmentally-sustainable levels of extraction;

vi)clearly assign the risks arising from future changes to the consumptive pool;

vii)in the case of water access entitlements, be compatible across jurisdictions to improve investment certainty, be competitively neutral and to minimise transaction costs on water trades (where relevant);

viii)reflect regional differences in the variability of water supply and the state of knowledge underpinning regional allocation decisions;

ix)recognise indigenous needs in relation to water access and management;

x)identify and acknowledge surface and groundwater systems of high conservation value, and manage these systems to protect and enhance those values; and

xi)protect the integrity of water access entitlements from unregulated growth in interception through land-use change.

Actions

  1. The Parties agree that the general approach to implementing the entitlements and allocation framework will be to:

i)substantially complete plans to address any existing overallocation for all river systems and groundwater resources in accordance with commitments under the 1994 COAG water reform framework by 2005;

ii)incorporate the elements of the entitlements and allocation framework in this Agreement that are missing or deficient in existing water entitlement frameworks, into their legislative and administrative regimes by 2006;

iii)review any plans developed for the 1994 COAG framework to ensure that they now meet the requirements of this Agreement in terms of transparency of process, reporting arrangements and risk assignment;

iv)immediately proceed on a priority basis to develop any new plans, consistent with paragraph 38; and

v)apply the risk assignment framework (paragraphs 46-51 refer) once plans are initialised under this Agreement.

  1. Recognising that States and Territories retain the vested rights to the use, flow and control of water, they agree to modify their existing legislation and administrative regimes where necessary to ensure that their water access entitlement and planning frameworks incorporate the features identified in paragraphs 28-57 below.

Water Access Entitlements

  1. The consumptive use of water will require a water access entitlement, separate from land, to be described as a perpetual or open-ended share of the consumptive pool of a specified water resource, as determined by the relevant water plan (paragraphs 36 to 40 refer), subject to the provisions at paragraph 33.
  2. The allocation of water to a water access entitlement will be made consistent with a water plan (paragraph 36 refers).
  3. Regulatory approvals enabling water use at a particular site for a particular purpose will be specified separately to the water access entitlement, consistent with the principles set out in Schedule D.
  4. Water access entitlements will:

i)specify the essential characteristics of the water product;

ii)be exclusive;

iii)be able to be traded, given, bequeathed or leased;

iv)be able to be subdivided or amalgamated;

v)be mortgageable (and in this respect have similar status as freehold land when used as collateral for accessing finance);

vi)be enforceable and enforced; and

vii)be recorded in publicly-accessible reliable water registers that foster public confidence and state unambiguously who owns the entitlement, and the nature of any encumbrances on it (paragraph 59 refers).

  1. Water access entitlements will also:

i)clearly indicate the responsibilities and obligations of the entitlement holder consistent with the water plan relevant to the source of the water;

ii)only be able to be cancelled at Ministerial and agency discretion where the responsibilities and obligations of the entitlement holder have clearly been breached;

iii)be able to be varied, for example to change extraction conditions, where mutually agreed between the government and the entitlement holder; and

iv)be subject to any provisions relating to access of water during emergencies, as specified by legislation in each jurisdiction.

  1. The provisions in paragraphs 28-32 are subject to the following provisions:

i)fixed term or other types of entitlements such as annual licences will only be issued for consumptive use where this is demonstrably necessary, such as in Western Australia with poorly understood and/or less developed water resources, and/or where the access is contingent upon opportunistic allocations, and/or where the access is provided temporarily as part of an adjustment strategy, or where trading may otherwise not be appropriate. In some cases, a statutory right to extract water may be appropriate; and

ii)an ongoing process will be in place to assess the risks of expected development and demand on resources in poorly understood or undeveloped areas, with a view to moving these areas to a full entitlement framework when this becomes appropriate for their efficient management (paragraph 38 refers).

  1. The Parties agree that there may be special circumstances facing the minerals and petroleum sectors that will need to be addressed by policies and measures beyond the scope of this Agreement. In this context, the Parties note that specific project proposals will be assessed according to environmental, economic and social considerations, and that factors specific to resource development projects, such as isolation, relatively short project duration, water quality issues, and obligations to remediate and offset impacts, may require specific management arrangements outside the scope of this Agreement.

Environmental and Other Public Benefit Outcomes

  1. Water that is provided by the States and Territories to meet agreed environmental and other public benefit outcomes as defined within relevant water plans (paragraphs 36 to 40 refer) is to:

i)be given statutory recognition and have at least the same degree of security as water access entitlements for consumptive use and be fully accounted for;

ii)be defined as the water management arrangementsrequired to meet the outcomes sought, including water provided on a rules basis or held as a water access entitlement; and

iii)if held as a water access entitlement, may be made available to be traded (where physically possible) on the temporary market, when not required to meet the environmental and other public benefit outcomes sought and provided such trading is not in conflict with those outcomes.

Water Planning

  1. Recognising that settling the trade-offs between competing outcomes for water systems will involve judgements informed by best available science, socio-economic analysis and community input, statutory water plans will be prepared for surface water and groundwater management units in which entitlements are issued (subject to paragraph 38). Water planning is an important mechanism to assist governments and the community to determine water management and allocation decisions to meet productive, environmental and social objectives.
  2. Broadly, water planning by States and Territories will provide for:

i)secure ecological outcomes by describing the environmental and other public benefit outcomes for water systems and defining the appropriate water management arrangements to achieve those outcomes; and

ii)resource security outcomes by determining the shares in the consumptive pool and the rules to allocate water during the life of the plan.

  1. The relevant State or Territory will determine whether a plan is prepared, what area it should cover, the level of detail required, its duration or frequency of review, and the amount of resources devoted to its preparation based on an assessment of the level of development of water systems, projected future consumptive demand and the risks of not having a detailed plan.
  2. States and Territories will prepare water plans along the lines of the characteristics and components at Schedule E.
  3. In the implementation of water plans, the Parties will, consistent with the nature and intensity of resource use:

i)monitor the performance of water plan objectives, outcomes and water management arrangements;