Securing Western Australia's water future

Position paper - reforming water resource management

September 2013 Looking after all our water needs

SCT_Online Print_Final_A4.indd 1 31/05/10 11:08 AM

Securing Western Australia's water future

Position paper - Reforming Water Resource Management

Looking after all our water needs

Department of Water September 2013

Department of Water 168 St Georges Terrace Perth Western Australia 6000 Telephone +61 8 6364 7600 Facsimile +61 8 6364 7601 National Relay Service 13 36 77 www.water.wa.gov.au

© Government of Western Australia

September 2013

This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. Requests and inquiries concerning reproduction and rights should be addressed to the Department of Water.

ISBN 978-1-922248-11-4 (online)

Acknowledgements

The assistance of stakeholders in refining the policies in this paper is acknowledged. These include the Western Australian Farmers Federation, Pastoralists and Graziers Association of Western Australia, Water Cooperatives (represented by Harvey Water), vegetablesWA, Potato Growers Association of WA (Inc), Carnarvon Growers Association, Fruit West, Wines of Western Australia, Chamber of Minerals and Energy, Chamber of Commerce and Industry, Irrigation Australia, Australian Drilling Industry Association, Conservation Council of Western Australia, the Urban Development Institute of Australia (Western Australia Division Inc), Water Corporation and the WA Local Government Association.

For more information see the Opportunity to comment section of this report.

Disclaimer

This document has been published by the Department of Water. Any representation, statement, opinion or advice expressed or implied in this publication is made in good faith and on the basis that the Department of Water and its employees are not liable for any damage or loss whatsoever which may occur as a result of action taken or not taken, as the case may be in respect of any representation, statement, opinion or advice referred to herein. Professional advice should be obtained before applying the information contained in this document to particular circumstances.

This publication is available at our website or for those with special needs it can be made available in alternative formats such as audio, large print, or Braille.

Securing Western Australia’s water future

Minister’s foreword Few resources have been so extensively discussed in Western Australia over the past decades as water. Our water resources underpin our lifestyles and the productivity of industrial, mining, agricultural and urban development. As a result of Western Australia’s enviable growth, competition for groundwater and surface water resources is increasing and more of these resources are becoming fully-allocated. Changed climate patterns and reduced rainfall and the resultant water resource pressures affect our economy and lifestyles and, just as importantly, puts pressure on the environment and its water-dependent ecosystems. The Western Australian government has undertaken several initiatives to ensure effective water management and supply, including removing unnecessary regulation, encouraging efficiency, increasing investment in investigation, and desalination – all of which is greatly assisted by the community’s response to using water more wisely. The government also recognises that new legislative tools must be at hand to increase options to adequately respond to existing and future challenges and the changing needs of water users and the environment. As the attached position paper details, we are proposing changes to water resource management legislation and policy to meet 21st century challenges in Western Australia. This reform framework covers the way water resources are planned, allocated, managed and regulated. It will provide the government and water users with more flexible options from which to choose when making decisions about the best and most productive use of this essential resource. Importantly, the framework is based on a foundation of greater transparency and engagement with water users and other stakeholders. In developing the framework, we have continued to build on the consultation already done on water resource management reform in Western Australia over recent years. Government has indicated that it will not introduce cost recovery for water licences and maintain the existing licencing arrangements for farm dams. Water management is important to our community, and public consultation – giving everyone a chance to have a say – is an important part of our process. I encourage you to provide your views, which will inform the Liberal-National government in finalising positions on improvements to water resource management in Western Australia.

Hon Terry Redman MLA Minister for Water

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iv Department of Water Securing Western Australia’s water future

Contents Minister’s foreword ...... iii Opportunity to comment ...... vi 1 Paper at a glance ...... 1 2 Executive summary ...... 3 2.1 Policy drivers ...... 3 2.2 Legislative confusion ...... 4 2.3 The current situation: building on previous stakeholder input ...... 4 2.4 What are we proposing in this position paper? ...... 5 2.5 Who will these changes impact and what will they mean for you? ...... 9 3 Changes in detail ...... 10 3.1 Improved licensing ...... 11 3.2 Water access entitlement framework ...... 14 3.3 Improved planning framework ...... 16 3.4 Linked policy considerations ...... 25 Glossary ...... 30

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Opportunity to comment This paper encourages ongoing public involvement in guiding the future of water resource management in Western Australia. Written comments on this paper are sought from all stakeholders. You are encouraged to respond with your views on any aspect of these important reforms and supporting legislation. To ensure that your submission is as effective as possible, please: • clearly state your views and the sections you are referring to • support your response with evidence and your reasons • suggest alternatives to address any issues that you believe will result in a better outcome. Please be sure to attach a covering letter with the names and contact details of the person or organisation making the submission. Please note that, unless marked ‘confidential’, selected extracts from submissions may be published on the Department of Water website or cited in other public documents. The closing date for submissions is 31 December 2013. Please send your submissions in hard or electronic copy to: Policy submissions – Water Reform Policy and Innovation Directorate Department of Water PO Box K822 Perth WA 6842 email: [email protected] web: < www.water.wa.gov.au > have your say > open for public comment

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1 Paper at a glance This paper sets out a proposed legislative and policy framework to help deliver new water management solutions in Western Australia. It has been prepared to give water users and the community a clear understanding of the proposed reforms, their implementation, and benefits that can be expected. The framework provides Western Australia’s government and water users with more options for managing water, which include new mechanisms as well as improvements to those that are currently in existence. In essence, it provides ‘more tools in the toolbox’ to enable better water management for the 21st century. This is important for our state as we move increasingly to an environment of fully-allocated resources, greater demand and competition for water, and the effects of a drying climate. Our vision is for the people of Western Australia to benefit from secure access to water resources in the decades ahead; for our water management framework to maximise the productive value of water, minimise long term costs to water users, industry and government; and protect the water-dependent environment. We propose a flexible and adaptive framework that can effectively deal with increasingly dynamic conditions and deliver a broad range of benefits to the community. Consistent with this vision, our primary objectives are to enhance confidence in investment decisions by water users through increased security of access, improved clarity of rules and greater transparency of process; reduce the level of intervention by government in water allocation by enabling the involvement of market-based mechanisms where appropriate; and use appropriate policy and regulation to balance the needs of water users with the protection of water-dependent ecosystems. Achievement of our vision and these objectives will provide the required flexibility for water users and the government to adapt and respond to changes in climate and demand, and secure sufficient water supply to allow our state to continue to prosper into the future. The reforms proposed in this paper cover the areas of water allocation planning, licensing, administrative processes, trading, risk assignment and environmental water. The package of reforms has been developed to reflect Western Australia’s aspirations and unique conditions, particularly in relation to its groundwater resources. They build on the approach to water management articulated in the Intergovernmental Agreement on a National Water Initiative and the experiences of other states, and are guided by principles and feedback received through earlier rounds of consultation. The approach to implementation outlined here reflects our recognition of the importance of community wellbeing and livelihoods; our commitment to work with local communities; an emphasis on having the right balance between markets, planning and regulation; and our strong desire to ensure the water management framework in Western Australia is robust and resilient.

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The following diagram (Figure 1) illustrates how our vision, principles, objectives, and approach will lead to the beneficial outcomes government, water users and the community should expect from our improved approach to water resource management.

The people of Western Australia will benefit from secure access to water resources in the decades ahead; our water management framework will maximise the productive value of resources, minimise long term costs to water users, industry and government; and protect the water dependent environment. We envisage a flexible

VISION and adaptive framework which operates effectively in our increasingly dynamic conditions and delivers the community a broad range of benefits Enhance confidence Reduce gover nment Enable flexibility to Se cur e w a t e r suppl y Secure water for the • Increase security of intervention adapt and respond for the future environment access • Minimiseand • Mechanisms to • Pl an n i n g t o ad d r ess • Pr o t ect i o n o f • Improve clarity of simplif y regulat ion vary licence risk of over- water-dependent rules • Balancing of risks volumes in line allocation ecosystems • Gr eat er • Adopt ion of with seasonal • Protection of water transparency of market-based condit ions resources and long

OBJECTIVES process mechanismswhere • Est ab l i sh term water quality • Co m m u n i t y appropriate consumptive pools participation in where appropriate decision-making

Effective water Water resource Water resources The same rul es The l egi sl at i ve Co m m u n i t i es an d resources allocation will will be managed will apply framework must water users will management will reflect the range sust ainably and throughout the be enduring and be involved and support st at e of economic, flexibly to cater state but with capable of their aspirations development, environmental, for future climate application at a responding to a will be central to community social, and change. local level to suit range of changing the management wellbeing and cult ural values the nature of the circumst ances framework livelihood, our relevant to local resource, AND GUIDING STRATEGY GUIDING AND quality of life, and Western Australia water use needs, the water and water dependent management environment priorities PRINCIPLES

Increased En h an ced ad ap t i ve Increased Increased Increased Pr o t ect i o n o f confidence and and sustainable efficiency in the efficiency in transparencyand water-dependent security for water water use management and water use accountability ecosystems users and administration of through through communities the state’s water innovation, community resources productivity and involvement in OUTCOMES allocation decision making

Figure 1: Vision, objectives, principles and outcomes – water reform strategy at a glance

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2 Executive summary 2.1 Policy drivers

2.1.1 A drying climate

Rainfall in the state’s south-west has reduced by around 15 per cent since the mid- 1970s. From 1911 to 1974 the average annual stream flow into Perth dams was 338 gigalitres (GL). From 1975 to 2000 average annual stream flow was almost half this value at 177 GL. From 2001 to 2010 inflows again halved again to approximately 75 GL a year. The future projection for the south-west region is for a further decline in the winter and spring rainfalls vital for stream flows and groundwater recharge to public and self-supply water supplies as well as the natural environment. The most severe projections by CSIRO are for average annual rainfalls to decline in the south-west by up to 20 per cent by 2030 relative to the average rainfall experienced in the period from 1980 to 1999. At the same time, climate change modelling suggests that some rainfall activity will be more intense (less rain but concentrated in short storm events) and this may increase flood risk.1

2.1.2 Population growth and an expanding economy

Population and economic projections indicate substantial growth of the state during the next few decades. The state’s population could reach over 3.2 million people by 2026, representing an annual growth rate of 2.2 per cent.2 As a result of this growth, water use is anticipated to increase by approximately 2.4 per cent a year. The increasing demand for water will exert additional pressure on the state’s water resources, some of which are already fully-allocated. At present, 24 per cent of Western Australia’s groundwater resources are either fully-allocated or over-allocated and 39 per cent of the state’s groundwater resources are over 80 per cent allocated. 3

2.1.3 New and emerging management challenges Managing competing demands for access to water is not the only challenge. The operations of the mining sector in the Pilbara, for example, have given rise to the need to manage large volumes of groundwater from mine dewatering. Legislative and policy reform is needed to meet these challenges, some of which were not envisaged when the current legislation was developed. The current

1 Indian Ocean Climate Initiative (IOCI) 2012, Western Australia’s Weather and Climate: A Synthesis of Indian Ocean Climate Initiative Stage 3 Research. CSIRO and BoM, Australia. 2 Western Australian Planning Commission (Current Projections - Western Australia Tomorrow, Population Report No.7, 2006 to 2026, February 2012). 3 Total number with fractured rocks, palaeochannels, saline resources and resources without allocation limits removed (public drinking water supply reserves are not included).

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management framework has served Western Australia well, but water users and government decision-makers increasingly need access to more options, information and certainty than is available, for supporting complex management and business decisions. 2.2 Legislative confusion

Western Australia’s water legislation is some of the oldest in Australia and was originally developed at a time when demand was low and water was relatively abundant. The situation in the 21st century is very different. For a state that is experiencing rapid population and industry growth, an improved approach is required to manage water resources to provide greater confidence and security, and support livelihoods and community wellbeing. At present, water resources legislation is spread across six different Acts, one of which has been in place since 1914. These Acts were developed at various times to deal with specific water issues but do not adequately integrate with one another and create inefficiencies in management. The fragmentation of existing laws means that holistic reforms, which are necessary to meet contemporary challenges, are hard to achieve simply through amendments to pieces of the existing legislation. It is time to stop patching the existing Acts and rebuild the legislative framework for water management. 2.3 The current situation: building on previous stakeholder input

This position paper is the culmination of more than a decade of debate on water reform in Western Australia. Reforms to improve water supply and water management gained impetus nationally from the 1994 Council of Australian Governments (COAG) Water Reform Framework, resulting in amendments to the Rights in Water and Irrigation Act 1914 (WA) that were implemented in 2001.

Further reforms were considered from 2000 onwards at both the state level and through the development of the Intergovernmental Agreement on the National Water Initiative (NWI) at the COAG in 2004. The NWI promotes the COAG water agenda of economic efficiency and environmental protection. Western Australia became a signatory to the NWI on 6 April 2006.

Implementing water resources reform consistent with the NWI has presented challenges in all states. In Western Australia the NWI reform journey began in 2007 with the publication of a Government response to a blueprint for water reform in Western Australia, and a subsequent release of a Discussion paper – water resources management options in 2009.

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Several investigations and publications followed: • In 2001 the Rights in Water and Irrigation Act 1914 amendments introduced water planning into law and allowed water entitlements to be traded separately to land title. • In 2005 the Irrigation review final report was tabled in Parliament. • In 2006 Western Australia became a signatory to the NWI and in the same year the Water Reform Implementation Committee released A blueprint for water reform in Western Australia 2006. This report made 72 recommendations. • In 2007, government published its response to the blueprint and, in the same year, released Western Australia’s implementation plan for the National Water Initiative. • In 2009, the government published a discussion paper on water resource management options. This paper proposed positions on areas of legislative and policy reform updating the government’s response to the blueprint. Stakeholder consultation and feedback that followed the 2009 discussion paper has provided an important basis for the positions that appear in this paper. We acknowledge that it has been a long journey to reach this point and appreciate stakeholder input to date. A key aspect of Western Australia’s water reform process was to separate out legislation dealing with the delivery of water services to consumers by water service providers, from legislation dealing with the management of water resource itself. The Water Services Bill 2011 and the Water Services Legislation Amendment and Repeal Bill 2011 passed through Parliament late in 2012. This new framework for delivery of water was a major step forward in modernising the way water services are delivered. This position paper on water resource management reform is the next step in the reform process. 2.4 What are we proposing in this position paper?

2.4.1 Overview

This position paper outlines the State Government’s plan to streamline and better manage Western Australia’s water resources. We have outlined proposals for an improved licensing and management regime, the ability to introduce water access entitlements and statutory water allocation plans and limits, with a view to reducing red tape and regulation and ensuring that we are able to sustainably manage our water into the future. The key features of the new framework, and how these differ from existing arrangements, are summarised in Figure 2.

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Exi st i ng f r a me w or k New water resource management framework

Improved licensing and Water access entitlements management

Instruments A licence to takeand a A licence to take and a Water access entitlement and works permit works permit abstraction arrangements

Duration of Usually 10 years Up to 40 years Per pet ual tenure

Nature of access Volumetric, with limited Volumet ric with a Share of a consumptive pool right flexibility to vary take to mechanism to vary the with periodic allocations match water availability take depending on how determined in accordance much water is available with available water in the pool Planning Non-st at ut ory wat er Transitioning St a t u t o r y allocation limits St a t u t o r y water allocation allocation plans to and statutory water plans are mandatory allocation plans

Li ce n si n g o f t a ke Authorisation required No change to existing Farm dams that currently from farm dams to construct a farm dam require a licence to take water and volumes may be can be given a wat er access licensed entitlement Trades and Li censed entitlements Simplified mechanism for Tr adeabl e water access transfers are tradeable and trading and transfer of entitlements licenses are transferable licensed entitlements following assessment Administration Full assessment for all Si m p l i f i e d , r i sk -based Implementation through licence and permitting permitting and assessment statutory water allocation plan applications Policies and regulations Supporting policies and regulations implemented through a adopted through single new Act multiple Acts

Figure 2: Key features of the new framework and how these relate to existing arrangements

2.4.2 Improved legislative framework

Water users will benefit from having legislation and supporting practices that clearly: • clarify and update heavily amended and out-dated legislation • introduce water allocation plans that have the force of law and have been developed through transparent, effective and ongoing engagement of local advisory groups and stakeholders so that water resources are managed at a local and resource level • introduce transparent and strengthened management and compliance measures • put in place a simplified risk-based assessment process for some categories of licence applications • enable the adoption of tradeable water access entitlements, where appropriate, which can be bought, sold and leased, among other things • introduce trading opportunities for licensed entitlements, where appropriate

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• enable the use of appropriate mechanisms, including competitive or market-based approaches in certain circumstances, for the release of unallocated water.

2.4.3 Greater confidence and security regarding access to water

The reforms will improve confidence and security in water access through: • long term renewable licences • statutory water allocation plans that give assurance on how the water will be allocated and managed, and are subject to Parliamentary scrutiny • clearly specified rights through water access entitlements, where they are introduced • the ability to set statutory allocation limits for water resources • risk assignment provisions that provide clear parameters about when compensation may be triggered • more information being available on the water resource and water allocations that will allow users to better plan for the future.

2.4.4 Improved planning framework

2.4.4.1 Introduction of statutory allocation limits and plans Current legislation does not readily facilitate the establishment of statutory water allocation plans without the establishment and consideration of a Water Resources Council, and allocation limits are not currently defined in law. The reforms will make the new statutory water allocation plans more robust than a guidance document and remove the legislative necessity for consideration by an advisory body. We need to make sure the amount of water we are drawing on is sustainable, and done in a way that provides certainty for users.

2.4.4.2 Measurement and metering There is a need to enhance the take up of measurement, including metering as good business practice as water resource management requires good information to support it. Measurement is required by licensees and abstraction instrument holders to ensure that they are conforming with their conditions. It also improves water efficiency for business as there is more knowledge of how much, and when, water is being used. Metering is also essential to facilitate trading and for the operation of water access entitlements, including their trading. We have set out a staged proposal to roll out meters in groundwater systems and multi-user surface water systems such as rivers and multi-user dams, except where there is no benefit to water management in doing so. We believe the proposal we have set out is fair and prioritises areas where there is considerable pressure on water resource. It is in nobody’s best interests for Western Australia to run out of water. We believe the proposal we have set out, establishes a framework to ensure this does not occur.

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2.4.4.3 Local water advisory groups All the changes we have set out in this position paper are underpinned by one fundamental principle: local community engagement. We have proposed changes that will enable the establishment of local water advisory groups who would work with government to inform and advise on water management and allocation issues within their community. Community views are essential to assisting government develop water policy and we want to make sure there is a process to ensure a local voice in this important policy area.

2.4.5 Recovery of over-allocated water, risk management and compensation

2.4.5.1 Ensure water supply for the future The reforms will provide a more flexible and adaptive means of securing water resources for the future by: • ensuring that the quantity and quality of a water resource is managed sustainably • recovering over-allocated resources in a transparent and fair manner • encouraging innovation that reduces demand on existing water resources, such as the use of managed aquifer recharge • providing improved information about the availability and allocation of water and specifying transparent processes for any changes.

2.4.5.2 Greater flexibility to react to climatic variations and increasing demand The reforms will allow Western Australia to manage increasing climatic variation and demand for water by: • introducing a simpler, more transparent and responsive way of providing water users with access to water in wetter periods and reducing the take of water in dryer times where needed • providing mechanisms for the creation of allocation limits and sharing of the available water resources where water access entitlements are introduced.

2.4.5.3 Security of water for the environment The reforms will underpin a better way of managing water to support the water- dependent environment under changing climatic and seasonal conditions, while continuing to meet the needs of water users. This will be achieved through: • more transparent provision of water for dependent ecosystems such as estuaries and waterways • environmental water rules, requirements and objectives being more clearly articulated • environmental water being transparently accounted for.

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These reforms: • provide the Western Australian Government with a more flexible suite of legislative and policy tools, and a stronger framework to manage complex and contestable water management decisions as the state increasingly moves to fully-allocated resources, more competition for water, and the effects of a variable climate • provide for greater clarity and transparency in the rules for water allocation at the state level as well as for individual resources. This gives water users more confidence in making business decisions and gives the community more confidence in how we are managing water resources and their dependent environments. 2.5 Who will these changes impact and what will they mean for you?

The current framework that governs management of Western Australia’s water resources is fragmented, confusing and hard for water users to navigate. This position paper outlines our proposals on how to consolidate and streamline law and policy relating to the use and management of our precious water resources. We want to put in place a streamlined system that means users can get on with running their businesses and homes with less risk, cost and red tape around how they access water. Users, including agriculture, horticulture, mining, industry, local government, developers, irrigators and water service providers will have greater knowledge and certainty around how much water there is and how much they have access to. We know businesses depend on the ability to access basic resources and services such as water. We believe these changes deliver the certainty needed to do that.

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3 Changes in detail This section of the paper contains details of the government’s proposed reforms, policy positions on a range of issues and the basis for each position. Examples are provided of how the reforms will be implemented and how the changes may impact on different water users. Currently water resources management legislation is across six Acts.

Rights in Water and Irrigation Act The principal legislation for the allocation 1914 (WA) and management of water resources.

Country Areas Water Supply Act Provides for the protection of public drinking 1947 (WA) water source areas in rural areas and the regulation of clearing control areas.

Metropolitan Water Authority Act Authorises the provision of certain drainage 1982 (WA) works and coordinates drainage services.

Metropolitan Water Supply, Provides for the protection of public drinking Sewerage and Drainage Act 1909 water source areas in the metropolitan area. (WA)

Water Agencies (Powers) Act 1984 Provides many of the works and other (WA) powers of the Minister for Water and the Department of Water.

Waterways Conservation Act 1976 Provides for the conservation and (WA) management of certain waters and associated land and environment.

Change is needed because the six pieces of outdated legislation are heavily amended, cumbersome and complex. Change is also needed to provide clarity of rules, security of access to water and reduction of red tape. Furthermore, the new Water Services Act 2012 (WA) has removed large sections of some of these Acts, making consolidation more necessary. New legislation will consolidate, clarify and modernise the existing legislation with regards to management of water resources. The new legislation will be enabling, that is the legislation will provide for a range of tools for managing water resources across the state, giving the community and government the ability to adapt management according to the conditions of specific resources and localities over time. It will not be prescriptive on every management issue. The focus of the reforms is water allocation and the provision of a flexible and robust management framework.

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3.1 Improved licensing

The key elements of this proposed regime are: • a simplified licensing and permitting assessment process • improvements to provisions for trading and transfers of licensed entitlements through inclusion of generic trading rules in the legislation and a simplified risk-based assessment process for trades • increased duration of licence tenure • introduction of mechanisms that will allow volumes of water taken under licence to be varied according to seasonal conditions.

3.1.1 Simplified licensing

Under current legislation, full assessment is required of all licence and permit applications, renewals and trades regardless of the circumstances. This can unnecessarily delay and add cost to an application’s assessment. Legislative change is needed to enable the level of assessment to be varied according to circumstances and the risks posed by an application to the water resource, other water users and the environment. It is proposed that criteria be developed in formulating the new legislation to determine a level of assessment commensurate to the risk. It is expected that assessment criteria will be able to be simplified for licence renewals, amendments to existing licences, some licensed entitlement trades, applications for a licence to construct or alter a bore, or for a permit to interfere with the bed and banks of a watercourse. Other states and territories have already adopted similar simplifications and risk- based assessment measures.

3.1.2 Licence trading and transfer

The implementation in 2001 of amendments to the Rights in Water and Irrigation Act 1914 enabled water to be traded separately to land (that is, after the amendments, an entity could hold water without owning land). From July 2010 to September 2012 there were a total of 147 permanent trades and 78 temporary trades. The physical nature of Western Australia’s water resources (mostly groundwater and non- connected surface water systems) means that water trading is unlikely to ever reach the level of activity experienced in the Murray-Darling Basin, which is a large, connected river system. However, the demand for trading in Western Australia is expected to increase over time as water resources become fully-allocated and demand for water increases. Current arrangements do not foster efficient and effective trade. There are two main limitations - many trading rules are not backed by law (non-statutory) and under the current legislation all trades must be assessed under a rigorous process irrespective of the level of risk posed by the trade.

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To rectify this, it is proposed to: • simplify the assessment process for trades and transfers.4 Applications for trades that represent a low risk to the water resource, other water users or the environment will not be required to undergo the full assessment process • include generic, state-wide trading rules in the new legislation, which will offer consistency and certainty to water traders. Rules may include, for example, a requirement for trade to only occur within a specified water resource boundary in some areas; and/or a rule that requires metering to be in place before trading can occur. The generic rules could be supplemented by local rules contained in a statutory water allocation plan, for example, conditions on trades that are close to endangered wetlands or existing locations of abstraction • it is also proposed that traded volumes and prices be made publicly available for permanent and temporary trades. This will ensure that prospective buyers and sellers have sufficient information to make informed decisions. Prospective buyers will also be able to obtain limited contact details of licensees to facilitate contact between buyers and sellers.

3.1.3 Licence tenure The tenure of licence is broad in the Rights in Water and Irrigation Act 1914. Current practice is for the Department of Water to issue renewable licences for a term of up to 10 years. This practice has been adopted to accommodate uncertainties about the water resource, thus allowing the department to have sufficient flexibility to adapt to changing circumstances, such as a drying climate and increased resource information. However, it is recognised that longer licence tenure would be desirable in order to give greater security of access to water, which is important for business certainty (e.g. securing finance for water-using enterprises). It is proposed to retain the current legislative provision that leaves the tenure undefined but include in the regulations an extension of the term of a licence up to 40 years. This matches the average working life and financial arrangements of an individual water user. The term of tenure assigned to a particular licence will reflect specific or individual circumstances such as business activity undertaken, eligibility to hold a licence, and capacity of the water resource. Examples may include: • allowing for long term tenures where knowledge of water resources management is robust • allowing for long term tenures according to the business activity undertaken, for example to match (to a maximum of 40 years) the life of the mining project or a pastoral lease

4 Licence transfers are defined as changes in ownership, but no change in the location of the draw point. Trades are defined as changes in ownership accompanied by a change in location.

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• allowing licence tenure for dewatering for mining, construction or mine safety, or for managed aquifer recharge operations to align with the life of the project • issuing licences for a fixed term of shorter duration (e.g. five to 10 years) where there is limited knowledge of the resource, and limited management and compliance in place, or where a water resource is subject to a recovery mechanism to address over-allocation. It is not proposed to extend licence tenure beyond 40 years because this may be interpreted as a property right in the licence. A licence is merely a contractual arrangement between the State of Western Australia and the licensee with a set of conditions attached. A legal interpretation that a ‘perpetual’ licence infers a property right may compromise the ability to ensure compliance with the licence conditions. (The proposed new regime of water access entitlements will provide users with a perpetual property right. However, under this system the access entitlement must be accompanied with abstraction arrangements that place conditions on the take of water. These conditions are required to effectively manage the resource within sustainable levels, for example only take water in the wet season.) In Victoria, surface water and groundwater licences for ‘unregulated’ sources5 are for a fixed term of up to 15 years although they can vary with shorter tenure in specific circumstances. Victoria is considering extending the licence tenure to 20 years as a compromise for the call for perpetual licences. In Queensland, licences are generally of 10-year tenure. Tenure can vary according to specific requirements. For developments of state significance, licences are issued for the life of the development. Queensland is proposing to move to long term licences in the near future.

3.1.4 Variation of existing water entitlements

Under current legislation, water licences are issued with a fixed annual volume of take specified on the licence. Ministerial directions can temporarily reduce allocations but this is subject to a cumbersome process. There is no power to increase allocations. Change is needed to include a new provision in the legislation to increase or decrease water entitlements, with clear transparent rules, in order to match water use with water availability. This will allow government and users to respond more quickly to short term variability in the water resource, which will become even more important in the context of our changing climate. A defined process for varying licence volumes on a seasonal basis will give users more confidence to plan their water use over a water year. Possible mechanisms may include variable take (having licences with differing reliabilities, such as those being trialled in the Warren-Donnelly area) or periodic allocation announcements (with a percentage change to volume available under the

5 Defined as water sources that are not flow-regulated through a public dam, weir or similar structure.

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allocation issued periodically). The mechanism will be tailored to local circumstances and developed in consultation with local advisory groups, with reference to statutory water allocation plans and/or statutory allocation limits. This mechanism provides water users with greater certainty and transparency in how water will vary to match availability. As these variations will be seasonal/periodic and temporary, they will not be compensable because there is no long term impact on the allocation limit and the water dependent environment. Variation mechanisms are part of the improved licensing/management regime. The mechanisms for water access entitlements are different, as these are subject to a consumptive pool that is variable in nature but achieve a similar outcome. Variation mechanisms exist in most states but differ in their approach. In Victoria, annual allocation announcements are made to vary the user’s entitlement to prevent groundwater levels from falling below acceptable levels. This is based on equity, accessibility and cost. In Queensland, an allocation announcement is made to alter a percentage of the licence holder’s nominal allocation that can be taken in a water year. In New South Wales, an available water determination can, by proclamation, apply to specific water resources or the whole state. In South Australia, legislation allows that the Minister may vary a water allocation if it is necessary or desirable to more effectively regulate the use of water from the resource. 3.2 Water access entitlement framework

The key elements of this proposed regime undertaken through a statutory water allocation plan are: • a water access entitlement instrument • water allocation • consumptive pools • abstraction arrangements.

3.2.1 Introduction of water access entitlements

The ability to have a water access entitlement regime is being introduced as a means to provide additional security for water users through a property right, with reduced government intervention and enhanced market mechanisms. Water access entitlements have the added benefit of being easier to trade than water licences and more flexible in responding to changing climatic conditions. With the exception of Tasmania and the Northern Territory, all other Australian jurisdictions have implemented a system of water access entitlements. Experience in these other jurisdictions has shown that the existence and use of tradeable water access entitlements, together with a well-informed water market, has greatly assisted water users, industry, communities and governments to increase productive uses of available water resources and to manage businesses through dry times.

14 Department of Water Securing Western Australia’s water future

Water access entitlements are perpetual, tradeable, and can be mortgaged and bequeathed. This regime will only be introduced through a statutory water allocation plan. Following the commencement of legislation, it will be some time before statutory water allocation plans will be finalised. Statutory water allocation plans are a prerequisite for the water access entitlement regime so it will be some time before the entitlement regime can be considered for specific resources.

3.2.2 Consumptive pools

The proposed approach is to have water access entitlements that constitute a property right in a share of a defined ‘consumptive pool’. A consumptive pool is the aggregate amount of water that can be made available for consumptive use in a particular water resource under the rules of a statutory water allocation plan. The consumptive pool for a particular water resource is determined through modelling and assessment processes, and is set to achieve the plan’s environmental and supply security objectives. Management of a consumptive pool will be based on an adaptive management approach. As the size of the pool changes due to climate or other factors, the volume of water that relates to each share or unit of the pool will also change. The water sharing rules for a consumptive pool will be developed as a part of a statutory water allocation plan. Legislation will allow designation of purpose, priority and performance for allocated water as part of the tool box for water sharing rules. For example, this could be used to protect public drinking water supplies (refer to 3.4.5).

3.2.3 Water allocations

Allocation announcements will be made periodically that may change the specific volume of water available in the consumptive pool. This would not change the number of shares for each water user, but would change the volume of water able to be taken under each share.

3.2.4 Accessing the water

To access water, ‘abstraction arrangements’ will also be required. These arrangements may constitute: • a water resource works approval – which provides the permission to construct, operate and maintain works for the purpose of taking prescribed water at a particular location, in a particular manner (similar to current provisions) • a site use approval – which provides the permission to take the water from a particular site in a particular manner. The abstraction arrangements require legal access to the land to which the relevant approval relates.

Department of Water 15 Securing Western Australia’s water future

In areas where a water access entitlement regime is to be introduced, existing licences could be converted to water access entitlements and abstraction arrangements. In a water resource that is less than fully-allocated, new applications for water would be accepted and assessed according to the chosen allocation mechanism, which may be market-based or through a competitive mechanism. Trading may also occur. In a fully-allocated system, water access entitlements could be purchased on the market. In some circumstances, licences under the improved licensing and management regime may still be used in areas where a water access entitlement regime operates. For example, licences may be retained for temporary dewatering purposes, removal of contaminated groundwater, or for health and safety issues. 3.3 Improved planning framework

3.3.1 Introduction of statutory allocation limits

Allocation limits establish the sustainable level of water that can be allocated. At present, allocation limits are not mentioned in the Rights in Water and Irrigation Act 1914. Limits are currently defined through policy, meaning that they may change without following a legal decision-making process. These administrative allocation limits are based on administrative boundaries that in some cases may not reflect hydrogeological or hydrological boundaries and may change without due process. The introduction of statutory allocation limits is designed to give greater security to water users, particularly those operating outside a statutory water allocation plan. It will ensure that water entitlements are not amended without going through due process. This mechanism will be developed through a consultative process and will be prescribed through regulations. It will also give the government a more defined and transparent mechanism to support decisions such as licensing, allocation, risk assignment and compensation, which will be increasingly important in contested decisions in nearly fully-allocated areas. Having a statutory basis for the limits is also important for implementing several other reforms where limits are set outside a statutory water allocation plan (e.g. the variability of licensed entitlements and recovery mechanisms for over-allocated resources). Statutory allocation limits will only be set where risk to the water resource, other water users or the environment is identified. The setting of a sustainable allocation limit will involve balancing competing demands over time through a transparent process that is built around stakeholder consultation, including local advisory groups where they have been established. The Minister will have the power to statutorily define and amend boundaries for a water resource (sub-area boundary and depth for a groundwater resource, and sub- area boundaries for a surface water resource). The Minister will also be able to statutorily define the allocation limit for that water resource. These limits will take into account factors such as: • hydrogeological and hydrological information

16 Department of Water Securing Western Australia’s water future

• environmental water provisions • characteristics of the water resource • climate change • land use planning • public interest • existing uses. The Minister may also specify the circumstances under which water entitlements may temporarily exceed the statutory allocation limit. This could include purposes such as: • for public health reasons • the removal of contaminated groundwater • the provision of small volumes of water for short term projects (for example short term dewatering for construction purposes) • being in the public interest. The setting of allocation limits is an integral part of the improved licensing and management regime and can be used in the transition to statutory water allocation plans, or where statutory water allocation plans will never be used. Allocation limits and boundaries in current administrative water allocation plans may be reviewed and transitioned to the statutory limits and boundaries for those water resources. In the short term, statutory allocation limits are expected to predominate. Once statutory water allocation plans are developed, statutory allocation limits will be included in the statutory water allocation plan. All jurisdictions have limits on water abstraction that are set through a planning process. For example Victoria sets sustainable diversion limits through its surface water and groundwater management plans and New South Wales sets extraction limits through water sharing plans. In the Northern Territory, sustainable extraction limits are set through water allocation plans. In the absence of a plan, contingent limits are established in the state's water allocation planning framework. These contingent limits are not legal limits like those proposed for Western Australia.

3.3.2 Introduction of statutory allocation plans

A water allocation plan is a principal tool for water resource management at the localised level. It takes into account local issues relevant to the specific water resources and contains a consultative mechanism to include the views of a local advisory group and the community in decision-making processes. The heart of the plan is the allocation limit, the boundaries and specified water sharing arrangements. Currently, water allocation plans are administrative instruments and are not set through law. Twenty two allocation plans have been, or are being, developed. Administrative allocation plans provide less security to licence holders as the plans may be changed with administrative, rather than legislative due process. Decisions made based on an administrative plan are not as certain as those based on a

Department of Water 17 Securing Western Australia’s water future

statutory plan, and there may be additional costs to water users and the government if those administratively based decisions are appealed. While amendment was made to the Rights in Water and Irrigation Act 1914 that made provision for the creation of statutory water allocation plans, the legislation refers to these as ‘guidance’ documents only and compels consideration by a ministerially appointed state wide advisory body. The reforms would make the new statutory water allocation plans more robust than a guidance document, facilitate local advisory groups and stakeholder inputs and remove the connection to the state- wide advisory body. It is proposed that statutory water allocation plans will be developed over a period of time. Existing administrative plans6 may be transitioned to statutory plans where specific conditions are met as defined below. Plan development for water resources will be prioritised according to the level of development of the resource, the scale of risks and management complexities being experienced. The plans will establish clear water sharing rules, statutory allocation limits and boundaries. However, operational flexibility will also be provided within those rules. A review period (generally no more than 10 years) will be included in the plans. A number of prerequisites have been proposed before a statutory water allocation plan will be prepared, including: • water resources are approaching or have approached full allocation • the water resource is extensive, both in area and in the volume of water available for consumption • the science of the resource is sufficiently understood, including historical recharge and usage data • there are a relatively large number of users competing for access to the resource • where the benefits of establishing a consumptive pool and the supporting systems (including statutory water allocation plans) clearly outweigh the costs. The Gnangara groundwater area is likely to be one of the first areas to have a statutory allocation plan developed. The content of a statutory water allocation plan will be aligned with the elements set out in Schedule E of the NWI. These elements require a plan to: • describe the area to which the plan applies including the geographic location and extent of the water resource(s) in the plan area • describe the health and condition of the water resources in the area at the commencement of the plan

6 See Water allocation planning in Western Australia - A guide to our process, November 2011, available on the Department of Water website.

18 Department of Water Securing Western Australia’s water future

• describe the effects or potential effects of climate variability or change on the water resources and identify the policies and programmes that are included in the plan for managing these effects • state the objectives and reasons for which the plan is made and how these objectives will be achieved • specify performance indicators that are to be used to assess the effectiveness of the strategies provided for in the plan • determine the ‘environmental water provision’ that is to be made in the area • specify an allocation limit on the total volume of water that may be ‘taken’ from that water resource during any specified period • prescribe the grounds on which an allocation limit may be varied • state the rights to ‘take’ water and any associated authorisations that are required • set out the rules for managing the water resources including but not limited to how much and when water may be taken, when restrictions may apply, how entitlements may be varied, how trading may occur and how allocation announcements may be made (where appropriate) • provide for strategies and policies to return water resources that are over- allocated or overused to environmentally sustainable levels of take • set out a program for monitoring the operation and effectiveness of the plan • set out time or times when the Minister will report on the operation of the plan, the periods to be covered by reports and the matters to be reported on. The development of a plan will be triggered by publication by the Minister of a notice of intent to prepare a plan. The notice will cover (among other items) the management area that is subject to planning, the purpose and reasons for preparing the plan and the consultation process. Local advisory groups will assist in the development of plans. Allocation limits and boundaries in current administrative water allocation plans may be reviewed and converted to statutory limits and boundaries. Statutory water allocation plans may be developed for water resources that are to be managed under the improved licensing and management regime. Resources to be managed under a water access entitlement regime will be through the establishment of statutory water allocation plans. Statutory water allocation plans will have the force of law and will be subject to Parliamentary scrutiny. Plans may be able to adapt rules in regulations according to local circumstances. In Queensland water management arrangements for both surface water and groundwater have transitioned to 10 year statutory water resource plans under the Water Act 2000 (Qld). An extension to 15 years is being considered. In New South Wales the Water Management Act 2000 (NSW) provides for a State water

Department of Water 19 Securing Western Australia’s water future

management outcomes plan that guides the preparation of statutory water sharing plans. Victoria and South Australia have also adopted a statutory approach, and develop plans in perpetuity with review periods. Tasmania, the Northern Territory and the ACT have adopted ten-year statutory plans.

3.3.3 Measurement including metering

Current policy requires licensees to meter their water extraction if their annual water allocation is above 500 megalitres (ML). Metering obligations may also be imposed in some situations on licensees whose annual water allocation is below 500 ML. In the context of the improved licensing/management regime, it is proposed that policy be changed to provide for metering for all groundwater systems and for multi user surface water systems such as rivers and multi-user dams, except where there is no benefit to water management in doing so. Meters are a prerequisite for trading. Where used, meters should be installed by licensees as a condition of licence and could be ‘self-read’ or automated. The requirement and installation of meters should be staged over a period of time – i.e. not all resources or licensees would require a meter from day one. These would be prioritised by volume and/or by risk to the resource. Measurement or metering would not be a requirement where the risk to the water resource is minimal. Measurement including metering will not be a requirement for farm dams that are currently not licensed. Single-user surface water systems such as farm dams may not require meters as a licence condition, but could use alternative methods of measurement, for example, dam capacity, pump volume/capacity multiplied by usage hours or dam structure volumes with the use of a staff gauge. Currently the dam capacity is the method of measure that is reflected in the licence. Local advisory groups may help to develop alternative measurement options. This system would be implemented as follows: • in the first two years from mid-2014 licences with allocations of 500 ML or more will have conditions to ensure compliance with current policy to have metering or measurement: − all groundwater/multi-user surface water licences with allocations of 500 ML or more to include a licence condition for metering − 60 per cent of single-user surface water licences with allocations of 500 ML or more to include a licence condition for measurement • within five years 100 per cent of single-user surface water licences with allocations of 500 ML or more to include a licence condition for measurement • within five years, groundwater/multi-user surface water licences with allocations of less than 500 ML to include a licence condition for measurement. Single-user surface water licences with allocations of less than 500 ML to include a condition for measurement. There will be exceptions as outlined above.

20 Department of Water Securing Western Australia’s water future

It is proposed to make a legislative change that requires metering for all water access entitlements. This would only be implemented in the context of a statutory water allocation plan. The statutory water allocation plan may include specific transitional arrangements for the installation of meters over time. Metering will be a condition of the abstraction instrument and could be self-read or automated. The need for accurate measurement has been recognised throughout Australia. For example, Queensland has developed and introduced the State implementation plan for non-urban water metering. The meters installed under the Queensland plan are user owned, installed, maintained and read. Stock and domestic pumps are not metered whereas irrigation pumps are metered. Queensland is aiming at achieving 100 per cent metering. New South Wales has a variety of metering regimes ranging from user-owned meters to state-owned meters. In all cases meters are read by the government. In the future it is proposed there will be an expansion of government-owned meters to replace existing user-owned meters, and to expand metering into previously unmetered areas aiming to achieve at least 95 per cent coverage within an area.

3.3.4 Local water advisory groups

There are currently legislative provisions to establish an independent advisory body that must be consulted to implement statutory water allocation plans and local by- laws. Provision of local water resources management committees also exist in law. The new legislation will retain the capacity to introduce an independent advisory body to provide general advice to the Minister on any water-related issue. There is a need to refine some statutory responsibilities provided in current legislation of the independent advisory body to allow it to focus on providing balanced and independent advice to the Minister. This will remove an unnecessary level of bureaucracy and legislative responsibility. The new legislation will retain the capacity to introduce local water resources management committees. Outside of the legislative framework, there will also be an ability to establish voluntary local advisory groups that would work with the Department of Water to inform and advise on water management and allocation issues within a specific locality. A benefit of this approach will be increased clarity and confidence in the rules on water across communities. These groups would be particularly valuable during the development of statutory water allocation plans but they could also assist in a broader range of circumstances such as to promote better communication and coordination of water resource management activities. In this regard, the core role of the group will be: • to contribute to the development, implementation and review of local water allocation plan(s) • to provide advice on local area management and allocation planning • to provide a conduit for the community to ensure that the Department of Water is aware of the range of community views on water resource issues

Department of Water 21 Securing Western Australia’s water future

• to support community consultation processes on water resource issues including regional, sub-regional and local area management plans where relevant • to provide assistance and advice on matters relating to the functions of the Department of Water to the extent that the department asks the group to do so. There is scope for additional functions reflecting specific local needs to be included where appropriate, but these would be determined on a case-by-case basis and should complement existing management or administrative functions and processes. Membership should include a majority of representatives from water users, as well as representatives of other interest groups e.g. local government and environmental groups.

3.3.5 Allocation mechanism for the release of unallocated water

At present, licensed water entitlements are allocated up to the allocation limit. The allocation mechanism is by first-in-first-served (FIFS), which means that applications to take water from a particular water resource are assessed in the order in which they are received. It is proposed that the new legislation allow for unallocated water to be granted by various mechanisms, including FIFS, competitive submission according to certain criteria which may not involve payment for the water, market mechanisms or other suitable means. The method of releasing unallocated water will vary across the state taking into account the resource characteristics, the level of demand, and community and industry requirements. Local advisory groups would play a role in determining suitable mechanisms. If a water resource is undeveloped, demand for water may not be sufficient to warrant the use of a competitive mechanism and water may continue to be allocated by FIFS to encourage growth and development in the area. However when the level of allocation reaches a stage where there is, or potentially could be, competition for the remaining water, this water could be allocated through a competitive or market based mechanism that is decided consultatively. This can work under the improved licensing/management regime and the water access entitlement regime. Most of the water resources in other jurisdictions are fully-allocated and in many areas, over-allocated. Western Australia has many water resources that are not yet fully-allocated. Other jurisdictions have implemented market-mechanisms, including auctions and tenders to release unallocated water. In NSW for example, auctions were more acceptable when a larger number of smaller parcels of water were offered for sale rather that a small number of large parcels. This allowed smaller bidders to participate in the market.

22 Department of Water Securing Western Australia’s water future

There is general support for the FIFS policy, as seen in the comments on the FIFS 2011 review. Key points are: • a discussion paper for public consultation on the review of the FIFS policy was released in September 2011 and 82 written submissions were received from a range of government agencies, industry and community groups, and individuals • of the 82 written submissions, 12 made no comment on FIFS, seven criticised FIFS, and 63 supported the continuation of FIFS either to full allocation of a water resource or to a threshold followed by a market-based mechanism such as a public auction • there were some concerns that auctions may reflect only the economic value of water and some stakeholders did not support auctions under any circumstances • some form of merit-based selection was supported by a few stakeholders • some of the stakeholders have expressed concern that if water is auctioned, smaller users may not be able to compete with larger companies, or that one specific industry would be in a position to outbid other industries.

3.3.6 Recovering over-allocated resources

A resource is over-allocated when it exceeds the statutory allocation limit. A resource can be over-allocated when more water is extracted than can be sustainably maintained. For example, reduced rainfall in a drying climate can impact the allocation limit and can lead to over-allocation. This leads to deterioration of the water resource impacting on the security of licensees and the provisions for the environment. In Western Australia we do not have the same level of over-allocation as that experienced by other states. We need a clear and transparent mechanism to prevent our state experiencing the same problems, particularly in the context of climate change that is resulting in diminishing sustainable levels of abstraction. There are current mechanisms in the legislation to recoup entitlements, but these are cumbersome. Currently, over-allocated water is only recovered through the limited recouping of unused entitlements. This mechanism was never intended to address over-allocation. A process for returning over-allocated systems to the allocation limit needs to be included in the legislation to increase transparency and provide security to water users. The specific methodology for recovering over-allocated systems will be developed through a consultative process in the development of statutory water allocation plans and statutory allocation limits for each resource. The adoption of a statutory allocation limit is needed to provide a legal and enforceable base for abstraction, which is required to return the allocation to a sustainable level. The statutory allocation limit will set a cap on the total volume of water entitlements that can be allocated within a water resource. Without an allocation limit, the value of

Department of Water 23 Securing Western Australia’s water future

entitlements can be eroded leading to business and investment uncertainty, and any water market will not operate efficiently. This would mean that the most productive use of water may not be achieved. Where a water resource is already over-allocated or becomes over-allocated, the Minister may consult on a pathway to lower volumes to match the statutory allocation limit. Pathways for reduction may vary considerably, and could be linear, stepped or be other combinations. This recovery mechanism can work under the improved licensing/management regime and the water access entitlement regime. It is proposed to maintain the existing policy on managing water entitlements (Management of unused licensed water entitlements 2003) to vary the entitlement if the quantity of water that may be taken under the licence has consistently not been taken, taking into account extenuating circumstances or operational strategies (the use-it or lose-it policy). This policy would not apply in the case of water access entitlements. The Murray-Darling Basin jurisdictions (NSW, Victoria, South Australia, the ACT and the Commonwealth) have signed an Intergovernmental agreement on addressing water over-allocation and achieving environmental objectives. This agreement includes both surface water and groundwater. The parties have agreed to provide $500 million over five years to address over-allocation. In NSW large cuts to entitlements in grossly over-allocated groundwater resources occurred more than 10 years ago with large compensation payouts and structural adjustment packages exceeding $100 million. In the ACT there are no over-allocated or over-used water resources. The Northern Territory has implemented land-use planning processes to avoid over-allocation of water resources. In Queensland water resource plans and resource operations plans propose large cuts to groundwater entitlements. South Australia has implemented allocation reduction programs with stakeholder input, usually without compensation to entitlement holders. In Tasmania over-allocation is not a serious problem. In Victoria water allocated for consumptive use has been returned to the environment to achieve an environmental water reserve.

3.3.7 Risk assignment framework and compensation

In this reform, risk assignment means allocating the risk of making permanent cuts to water entitlements between the government and the water user. At present, government is liable to pay compensation where entitlements are cut permanently, unless the cuts are ‘fair and reasonable’ in respect of other licence holders in the area. This legal capacity has not been tested. Reform will provide water users and government with better clarity on risks. Currently the government may be liable for permanent cuts that are made due to reasons outside its control, such as due to climate and natural events. Change is needed to

24 Department of Water Securing Western Australia’s water future

remove the impost on the taxpayer and clarify who bears the risk under certain circumstances. New risk assignment provisions will be included in the legislation specifying that the risk of permanent cuts to the entitlement is borne by the water user rather than the government if the cut is due to climate or natural events alone. If the cuts are not due to climate or natural events alone, the risks could be shared between the government and the water users. Where the government bears the risk, for example, through a change in government policy, compensation is payable unless cuts to water entitlements are fair and reasonable. This means that cuts have to be equitable, but not necessarily equal. Compensation is not payable for the recouping of unused licensed entitlements, or for temporary allocation announcements. The amount of compensation will be determined using prevailing government compensation payment mechanisms, such as the use of the Valuer-General. A review mechanism is being considered to provide an additional avenue of redress to water users outside of the State Administrative Tribunal. The review mechanism will have a broader role than the question of risk assignment and compensation. Risk assignment and compensation is applicable under the improved licensing/management regime and the water access entitlement regime. Under the NWI, government bears the risk of allocation reduction arising from any change in government policy. The user bears the risk arising from seasonal or long term changes in climate, or periodic natural events such as bushfires and drought. The risk of reductions associated with improvements in the knowledge of water systems is shared between governments and users. New South Wales and Queensland have adopted the NWI risk assignment framework. South Australia, Victoria and the Northern Territory do not pay compensation. 3.4 Linked policy considerations

3.4.1 Environmental water

Provisions on water for the environment are spread across several pieces of legislation. Change is needed to provide transparency and security for environmental water. It is proposed to consolidate existing provisions and make it explicit that provision is to be made for environmental water in water resource management, where appropriate. Environmental water needs are determined through various management activities, including allocation planning where a comprehensive analysis includes consideration of the following factors: • the timing and flows/levels of water the environment needs to maintain system integrity and associated values (ecological, social and cultural)

Department of Water 25 Securing Western Australia’s water future

• the significance of those values at a local, state and national level • the significance of the resource’s ecological assets • what information is available about the resource and its water dependent environment • the type of infrastructure used to access water and the type of management this allows • climate and reliability of supply needed for environment and consumptive use. The criteria that will be used to determine environmental water provisions will be set out in regulations or statutory water allocation plans. The guidance in the subsidiary legislation will be dynamic in the sense that they will relate to prevailing conditions. Environmental water provisions will continue to be outside of the allocation limit/consumptive pool.

3.4.2 Water quality

Current rules on water quality are spread over several pieces of legislation. It is therefore proposed to consolidate existing provisions and make explicit that water quality requirements are to be taken into account in all applicable decision-making processes.

3.4.3 Basic water

Basic water is for essential purposes including water for stock and the water we need to survive. This applies to every person, irrespective of whether they are a property owner or not. This does not apply for water that is used for commercial purposes. Currently basic rights for surface water are of a much broader scope than basic rights connected to groundwater. Surface water that may be taken under basic rights is found in s.20(1) of the Rights in Water and Irrigation Act 1914, with s.20 (2) limiting the land owners from taking only sufficient water to irrigate lawns and gardens of not greater than two hectares. The crop grown must not be commercially traded. The basic right for groundwater is in s.25A(2) of the Rights in Water and Irrigation Act 1914. A volumetric limit is imposed by the Garden Bore Exemption Order. This limit is set as a volume of water that is needed to irrigate a garden that is not greater than 0.2 hectares in area. Change is needed to remove the inconsistency between basic water for groundwater and surface water systems and to condition basic water so it reflects domestic and stock needs. Therefore it is proposed to consolidate existing legislation and establish basic water for groundwater and surface water users that will include the conditions under which this provision may be exercised. The removal of inconsistencies will not disadvantage existing users. Note that basic water includes the right of native title holders to be able to access water resources (either surface water or groundwater) for traditional purposes. This

26 Department of Water Securing Western Australia’s water future

does not include water for commercial purposes which will be met through a licence or a water access entitlement.

3.4.4 Protection and management of public drinking water sources

Rules for the protection of water in public drinking water source areas are contained in a number of Acts and sources are treated differently depending upon whether they are located inside or outside the metropolitan area. Superior protection is afforded under the metropolitan regime as there is, for example, the capacity to declare ‘reservoir protection zones’, unlike that in country areas. Change is needed to uniformly protect water quality in public drinking water source areas in metropolitan and regional areas. It is proposed to consolidate and modernise the existing legislation to provide for a single legislative framework for public drinking water source areas that applies in both metropolitan and regional areas. In modernising the legislation penalties related to degradation of water quality in these areas will be increased. The legislation will enable the preparation of public drinking water source area reports, and provide the Minister the power to declare a temporary public drinking water source area for a specified period where there is a need to take drinking water at short notice.

3.4.5 Protection and management of public water supply

Present legislation provides that sustainable management of water resources includes accounting for use and development for domestic purposes. This intent, strengthened to ensure adequate and safe public water supply will be carried into new legislation. Legislation will enable specification of a purpose for allocated water, assigning of a priority for a purpose and for the setting of a performance measure. Public water supply is presently accorded a high priority in water planning. This approach will continue in the setting of statutory allocation limits and statutory water allocation plans strengthened by the capacity to assign purpose, priority and performance to ensure provision for current and future use of public water supply.

3.4.6 Managing at the state level

An area needs to be proclaimed before licences can be issued. The current approach is to proclaim surface water and groundwater areas, which entails a lengthy and cumbersome process, including the need for approval by the Governor. It is suggested to remove the need for proclamations, and substitute this process with something simpler, such as a Ministerial Order.

3.4.7 Compliance and enforcement

Enforcement refers to offences and their related penalties. Current offences and penalties are out-dated and not applied uniformly to surface water and groundwater resources. In addition, penalty amounts are not uniform with similar offences

Department of Water 27 Securing Western Australia’s water future

throughout the Act, nor are they consistent with other Western Australian legislation including environmental legislation, or water legislation in other jurisdictions. Change is needed to provide clear rules on offences and connected penalties, and to ensure these are a deterrent to breaching the Act and protecting responsible water users. It is proposed to ensure that all appropriate offences are included in the legislation and penalties are a sufficient deterrent.

3.4.8 Drainage

Rules for drainage management are contained in a number of Acts and are treated differently depending on whether they are located inside or outside the metropolitan area. Change is needed to uniformly manage drainage in metropolitan and regional areas, and clarify that a broader range of drainage management activities is covered by the legislation. It is proposed to consolidate and modernise the existing legislation to provide for a single legislative framework for drainage that applies in both metropolitan and regional areas. The legislation should allow for drainage and water management plans that will ensure drainage management issues are considered upfront in the land use planning process. There is also a need to declare a drainage course anywhere in the state as this will ensure drainage is taken into account in the development process. Note that wider drainage reform is outside the scope of this reform package, but work is progressing to develop future options.

3.4.9 Injections

Clarification and provision of security and safeguards on the injection of water or fluids into or through aquifers/underground water resources is required. Additional work on developing policy and any regulations with specific criteria needs to be developed with further consultation. Regulating injections in a specific water resource may only be triggered where there is an identified risk to the water resource, other water users or the environment. The current legal framework is based on the taking of water. Innovation and technology provides for mechanisms by which water or fluids can be injected into the ground that may be recovered at a later time – the current legal framework does not accommodate this. This regulation will provide clarity and security of future take of water to those undertaking injecting activities. It will also encourage injecting activities that may reduce demand on current water supplies. Injection of water for future consumptive use or for the extraction of energy, such as managed aquifer recharge or geothermal energy has the potential to impact water resources. The new legislation fills a gap given the Environmental Protection Act

28 Department of Water Securing Western Australia’s water future

1986 only has provision for penalties for contaminating water resources. This proposal is not suggesting addressing contamination issues, but rather it is proposing to manage new water supplies. At this point, there is nothing preventing someone from injecting (non-contaminated) water into the ground, even if this affects the quantity or quality of the water resource, other water users or the environment. The above only relates to injections into or through aquifers / underground water resources. It does not cover water injection activities outside of a water resource which are regulated by other legislation, including hydraulic fracturing stimulation for unconventional gas.

3.4.10 Interception by plantations

Plantations intercept rainfall and thereby impact on the water resource, other water users and the environment. It is proposed to include consideration of plantations in the development of statutory water allocation plans or statutory allocation limits, including the contribution to water quality and inclusion of existing plantations as an unregulated user. However, additional work on an operational policy and any regulations needs to be developed through further consultation to detail how consideration for plantations will work in practice. This may, for example, consider approaches such as setting a threshold where regulating interceptions by plantations for a specific water resource would only be triggered where scientifically robust analysis has identified the risks and benefits of plantations to the water resource, other water users or the environment.

Department of Water 29 Securing Western Australia’s water future

Glossary

Improved The improved licensing/management regime is an enhanced licensing/management version of the current licensing regime. It is made up of regime elements that relate to licensing, allocation and broader improvements to the current legislation. Water access A water access entitlement regime consists of a water access entitlement regime entitlement instrument and abstraction arrangements. This would only be triggered where statutory water allocation plans provide for water access entitlements.

Water access This is a perpetual or ongoing entitlement or right to exclusive entitlement access to a share of water from a consumptive pool, which is the amount of water that can be made available for consumptive use in a particular area. The size of a consumptive pool is defined in a statutory water allocation plan. The water access entitlement is an instrument owned by the entitlement holder. Given their property right status (i.e. an asset such as a car or tractor), entitlements can be traded (bought, sold, leased, assigned), subdivided, amalgamated, mortgaged and bequeathed.

Statutory allocation limit The maximum volume of water that can sustainably be taken from a water resource for consumptive use.

Statutory water allocation A statutory water allocation plan takes into account local plan issues relevant to the specific water resources and contains a consultative mechanism to include the views of the community in decision-making processes. The heart of the plan is the allocation limit, the boundary, and the specified water sharing arrangements.

Consumptive pool The amount of a water resource that can be made available for consumptive use in a particular water resource plan area, under the rules of the water resource plan for that water resource plan area.

30 Department of Water

Department of Water 168 St Georges Terrace, Perth, Western Australia PO Box K822 Perth Western Australia 6842 Phone: 08 6364 7600 Fax: 08 6364 7601 www.water.wa.gov.au 09 2013

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