National Water Reform 2020

• Water is critical to the economy, the environment and the wellbeing of Australian communities. But highly variable rainfall patterns, with frequent droughts and floods, make it a challenging resource to manage.
• Since the mid–1990s, governments have implemented a program of national water reform, with the most recent agreement — the National Water Initiative (NWI) — signed in 2004.
• This national water policy has served Australia well, but it is 17 years old. It has reached its use-by date and it will struggle in the face of the challenges ahead — increased population, increased community demands and the likely effects of climate change.
• It is time for Governments to once again lead the way on developing a new national water policy and agree a pathway to meet these challenges. The NWI needs to be modernised and strengthened to create an agreement that will provide clear and sensible guidance to governments, communities, industries and environmental managers over the next 10 to 15 years.
• This inquiry responds to the Australian Government’s request for the Commission to undertake its second assessment of jurisdictions’ progress towards achieving the objectives and outcomes of the NWI, and to provide practical advice on future national water reform directions.
• Jurisdictions have made good progress against the reform agenda. Reforms have been widely supported by the water sector, industry and stakeholders. And they have contributed to sizeable benefits — providing the foundations for sustainable resource management and the capacity for water to move to its highest value use and facilitating a more efficient and financially sustainable sector.
• But reform needs to be adaptive — reflecting lessons learnt from experience, evolving as the broader policy context changes and proactively dealing with anticipated challenges. Seventeen years of NWI implementation has provided a wealth of experience and knowledge including from managing through extreme and prolonged droughts.
  • There have also been shifts in community expectations since the NWI was signed, for example, about the role of water in promoting liveability and urban amenity, and about access to water for Aboriginal and Torres Strait Islander communities.
• To ensure water security is maintained for communities and industries in the face of these challenges, governments and water utilities are gearing up to spend billions of dollars over the next decade on infrastructure. It is critical that this investment is spent wisely to maximise the benefits to water users, and avoid sharp price increases or excessive costs for taxpayers.
• Australians will need to become even more adept at dealing with drought, and communities, industries and the environment will have to adapt to lower water availability.
  • For cities, this will mean considering all potential water sources.
  • For the environment, it will mean using available water to best effect.
  • For irrigators, markets will continue to provide a tool that supports adjustment to drier conditions.
• The key challenges ahead provide a compelling case for continuing reform effort through a renewed NWI.

Media requests

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Australian Governments need to modernise and strengthen the National Water Initiative

Water is critical to the economy, our environment and the wellbeing of all Australians.

Our national water policy has served us well, but it is 17 years old. According to a Productivity Commission report released today, it has reached its use-by date and it will now struggle in the face of our future challenges of increased population, increased community demands and the likely effects of climate change.

Commissioner Dr Jane Doolan said, “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.”

“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.”

“To position governments and communities to face these challenges, the nation’s long standing water reform framework, the National Water Initiative (NWI), needs to be modernised and strengthened to create an agreement that will provide clear and sensible guidance to governments, communities and industries over the next 10 to 15 years,” Associate Commissioner Drew Collins said.

To this end, the report provides draft advice on modernising the NWI and strengthening its governance arrangements. It identifies the major water management issues to be addressed, and the potential policy directions for a renewed NWI.

“Whilst many of the fundamental policy directions in the NWI are sound and need to be maintained, there are some significant gaps. The NWI needs to be refocused to provide strong guidance on how to adapt water management to best meet our needs in a changing climate. It needs to recognise the importance of water in the lives of Aboriginal and Torres Strait Islander people and provide greater direction on water service provision in cities and towns,” Dr Doolan said.

“We have also learnt a lot over the 17 years since the NWI was signed and we need to bring that experience into a renewed NWI. For example, in water accounting and compliance — to improve community confidence in water management, and in environmental management — to ensure best use of water for the environment and the community,” she said.

Mr Collins said, “A new NWI will need to provide guidance on new water infrastructure developments. Billions of dollars will be spent over the next decade by governments and water utilities and it is critical that investment is spent wisely to maximise the benefits to water users and avoid sharp price increases or excessive costs for taxpayers.”

“Our 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,” Dr Doolan said.

The report on National Water Reform is a draft report. The Commission encourages interested parties to read the report and make submissions and / or attend upcoming public hearings, details of which can be found at www.pc.gov.au

Media requests

02 6240 3330 / media@pc.gov.au