National water reform (2018)

• It is crucial that Australia persists in managing its water resources well, given our dry and highly variable climate, and the importance of water to our economy. Some jurisdictions have become complacent.
• Since its creation in 2004, the National Water Initiative (NWI) has made a significant contribution to this objective.
• While much of the attention has been on reform within the Murray‑Darling Basin, the NWI remains nationally relevant and the principles it contains are sound.
• There has generally been good progress by States and Territories in implementing the NWI, and most of its objectives and outcomes have been met.
  • Legislative and policy frameworks are in place for water entitlements, planning, trading, accounting and the provision of water for the environment in most jurisdictions.
  • Urban water and irrigation infrastructure services have been improved through institutional and pricing reforms.
• Water reform has delivered substantial benefits to irrigators, other water users and the broader community.
  • The expansion of water trading has provided irrigators with greater flexibility to manage change and has encouraged greater efficiency.
  • There is emerging evidence of improved ecological outcomes from increased environmental water, but it will take time for the full benefits to be realised.
• However, there remains further work to do. Governments need to:
  • complete unfinished business from the NWI, including fully implementing entitlement and planning reforms, and economic regulation in some jurisdictions
  • respond to the challenges posed by population growth, climate change and changing community expectations.
• Reform priorities include:
  • maintaining the key foundations of water management, preventing the re‑emergence of outdated policies and avoiding the erosion of hard‑won reforms through backsliding
  • revising national policy settings in a range of areas, including entitlement and planning arrangements for extractive industries, and the water needs of Indigenous Australians
  • significantly enhancing national policy settings in:
    • urban water management, including clearer roles and responsibilities for supply augmentation planning, improving economic regulation, enabling decentralised solutions and more outcomes‑focused environmental regulation
    • environmental water management, including better integration with waterway management, strengthened and streamlined institutional, governance and management arrangements, and improved monitoring and evaluation for adaptive management
    • new infrastructure, where the focus needs to be on ensuring environmental sustainability and financial viability before any government resources are committed for construction.
• Water reform requires perseverance, continuity and long‑term commitment from governments. To ensure that Australia’s water resources are managed sustainably to meet changing community needs, the priorities above should be incorporated into a renewed NWI by 2020.
• Failure to act now risks the gains made to date and means opportunities for greater efficiency, improved liveability and more sustainable environments would be lost.

Chapter 1 provides background to the inquiry and how the Commission has approached its task.

Chapter 2 water reform – past, present and future gives an overview of Australia’s water resources sector and outlines the path of water reform from the 1980s, describing the outcomes and benefits of national water reform (including from the implementation of the NWI). It also outlines the future challenges facing the water sector.

In considering future water reform priorities, the Commission based its analysis on four broad areas relating to water management:

• water resource management: water planning and the system of water entitlements (chapter 3); water trading (chapter 4); and, environmental management (chapter 5)
• water services which comprises the capture, storage and delivery of water for urban use (chapter 6) and agricultural use (chapter 7)
• infrastructure for water which considers the role of government investment in infrastructure development (chapter 8)
• key supporting elements of the NWI including: water accounting, measurement and compliance; community engagement, consultation and adjustment; and, the generation of knowledge and water management capacity (chapter 9).

In each of the chapters 3 to 9, the Commission has summarised reform progress to date and the benefits this has yielded.

In the final chapter (chapter 10), the Commission has examined the value of the NWI as a policy vehicle for achieving reform and its role in progressing the reform agenda set out in this report.

Appendix A outlines the conduct of the inquiry, including consultations undertaken and submissions received.

An overall assessment of progress against the NWI’s objectives and outcomes is detailed in appendix B. Progress against the recommendations of the National Water Commission’s 2014 review is set out in appendix C.