Governments must modernise and bolster 17-year-old national water policy, PC finds

By Shannon Jenkins

Thursday February 11, 2021


Australia’s national water reform framework must be modernised to recognise the importance of water in the lives of Aboriginal and Torres Strait Islander people as well as meet future challenges such as the increased frequency and severity of drought, according to a new Productivity Commission report.

The draft report, released on Thursday, has examined the progress of Australian governments towards achieving the objectives and outcomes of the National Water Initiative (NWI), and has offered advice on future national water reform directions.

At 17 years old, Australia’s national water policy has reached its use-by date and will fail to overcome the looming challenges of increased population and community demands, and the effects of climate change, commissioner Dr Jane Doolan warned.

“It is time for our governments to once again lead the way on developing a new national water policy and agree a pathway to meet these challenges,” she said.

“We can expect an estimated additional 11 million people living in capital cities by 2050, and climate change is likely to mean significant reductions in water availability for most of the country and an increase in the frequency and severity of droughts and floods across the nation.”

Read more: While towns run dry, cotton extracts five Sydney Harbours’ worth of Murray Darling water a year. It’s time to reset the balance

Australians will need to become even more adept at dealing with drought, and communities, industries and the environment will need to adapt to lower water availability, the report noted.

“This will be a dominating factor for water management in the future — water managers will need to be forward-looking, adaptive and agile in how they manage water resources to meet the community’s changing needs,” it said.

“These lessons, changes and challenges provide a compelling case for continuing reform effort. Australia’s reform record provides confidence that governments, working together, can provide a forward-looking water policy framework to assist communities, industries and the environment to meet these challenges.”

A renewed and refocused NWI could form the basis for this reform effort, providing suitable guidance to stakeholders over the next 10 to 15 years.

The PC report has proposed ten elements of a renewed agreement, under the three themes of water resource management, water services provision, and supporting arrangements.

The proposed elements are:

Water resource management

  • Water access entitlement and planning frameworks,
  • Water trading and markets,
  • Environmental management,
  • Aboriginal and Torres Strait Islander people’s interests in water,
  • System integrity.

Water services provision

  • Pricing and institutional arrangements,
  • Urban water services,
  • New infrastructure development.

Supporting arrangements

  • Community engagement, and adjustment,
  • Knowledge, capacity and capability building.

While the PC’s proposal has retained many of the elements from the current NWI, some have been “significantly enhanced”, and two are entirely new: the recognition of the interests of Aboriginal and Torres Strait Islander people in water resource management; and the addition of a framework for major water infrastructure developments.

Read more: Murray-Darling Basin bipartisanship: not new, not strong

Doolan noted that while many of the fundamental policy directions in the NWI are “sound”, a lot has been learnt over the 17 years since the agreement was signed, and Australia’s future is “more people and less water”.

“So ensuring we have a forward-looking, modern, national water policy is both important and urgent. This is a strong message that the commission has heard through its consultations and submissions to date,” she said.

The PC has also made four recommendations to governments, including that water ministers meet periodically to oversee development of a renewed NWI, and to act upon advice from reviews of the new agreement.

Meanwhile, natural resource management programs should give priority to the key environmental assets identified in water planning processes, provide funding, and undertake the required works to protect those assets, the PC recommended.

“During periods of water scarcity, natural resource management should focus on the protection of reserves and refuges and making sure that their regenerative capacity is protected,” it said.

Through the National Performance Report, state and territory governments should require urban water service providers to report a financial return metric consistent with the NWI Pricing Principles, alongside the existing economic real rate of return metric.

Finally, commonwealth investment in major water infrastructure should not prioritise a particular sector or class of water user — nor be limited to providing water for primary industry — and the National Water Grid Authority should broaden its Investment Policy Framework to allow funding for all projects where government involvement may be warranted, including supporting access to essential town water supplies.

The draft report is the commission’s second assessment of jurisdictions’ progress towards achieving the objectives and outcomes of the NWI. It found that governments have made good progress against the reform agenda, with all but Western Australia and the Northern Territory having enacted legislation to create secure, NWI-consistent water access entitlements for consumptive uses.

Read more: Productivity Commission to examine national water reforms


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