The Productivity Commission is currently undertaking an inquiry into the reform of Australia’s water resources sector. It is required to:
- assess the outcomes of the National Water Initiative (‘NWI’) and related water reform efforts.
- consider the potential and realised benefits of NWI implementation.
- consider the scope for improving the NWI.
- make recommendations on future reform priorities.
The Productivity Commission released its draft report on 15 September 2017. Its key findings and recommendations are listed below.
The report found that generally good progress has been made in implementing the National Water Initiative. All jurisdictions except WA and the NT have created statutory-based, clear and secure long-term water rights for consumptive uses. Further, the expansion of water trading has provided irrigators with greater flexibility to manage change, water metering, accounting and compliance systems across all jurisdictions. Reforms have contributed to improved water efficiency and economic growth. For example, over the 10 years to the late 2000s, on-farm irrigation efficiency in the cotton industry increased from 57 to 70%. Additionally, there is some evidence of improved ecological outcomes from increased environmental flows.
The report highlights several areas in which further reform is required. This includes the need for:
- WA and the NT to modernise their entitlement regimes to create statutory-based long-term water rights.
- Economic regulation for the urban water sector to be improved. The Commission particularly recommended that the ‘Western Australian Government should amend the role of the Economic Regulation Authority (ERA) so that irrigation bulk water customers can request the ERA to review the infrastructure prices and / or services proposed by Water Corporation (WA) as part of bulk water supply contract negotiations’.
- The performance of regional urban water utilities to be improved.
- Governments to better engage Indigenous people in water planning. This includes addressing temporal delays in introducing cultural objectives set out in the reforms that are now thirteen years old. Water plans should integrate cultural flows sourced through environmental water holders. Within existing water entitlement frameworks, governments should provide allocations for indigenous economic development through capacity building within communities. This is already occurring in the Northern Territory but should be expanded into other states.
- Significant challenges (like population growth and climate change) need to be addressed.
The report therefore identified the key priorities for future national water reform:
- Improving national policy settings in areas such as entitlement and planning arrangements for extractive industries, and the water requirements of Indigenous people
- Enhancing national policy settings in urban water management (including clearer roles and responsibilities for supply augmentation planning, enabling decentralised solutions and more outcomes‑focused environmental regulation), environmental water management (including better integration with waterway management, strengthening institutional and governance arrangements, and improved monitoring and evaluation for adaptive management), and new irrigation infrastructure (where the focus needs to be on ensuring environmental sustainability and financial viability before any government resources are committed for construction).
The Productivity Commission invites further submissions to be made by 19 October 2017. The final report of the inquiry will be forwarded to the Australian Government by 31 December 2017. Next year, the Productivity Commission will review the effectiveness of the Murray-Darling Basin Plan.
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