National Water Reform (2018)

National approach needed to prepare for next drought crisis

A renewed national water reform agenda is needed so we are prepared for our next severe drought, said a draft report released by the Productivity Commission today.

The report warns that population growth and impacts of climate change mean there will be substantially more people but less water in future, a simple equation to which the solution is a reinvigorated National Water Initiative (NWI).

'There is no doubt that the National Water Initiative and national water reform has been responsible for many successes, in particular in improving rural water efficiency and addressing environmental sustainability,' Productivity Commission Commissioner Dr Jane Doolan said.

'But the National Water Initiative is now 13 years old and we need to refocus our efforts to ensure we are prepared for some very substantial future challenges and so we don’t make costly decisions about our water supply as we did during the last Millennium Drought,' she said.

Overall, water reform under the NWI has delivered significant benefits to irrigators, other water users and the broader community. Trading has allowed water to be used to keep fruit trees and grapevines alive during times of drought and has become a vital business management tool for irrigators.

Future challenges include population growth particularly in urban areas: by 2050, there is expected to be up to 13 million more people living in Australia’s capital cities than at present. And although greater water efficiency hardly needs an additional argument in support, changes in climate strongly suggest we will have less water in the future.

'Our challenge is more people and less water. So a renewed focus on national water reform is critical if we want affordable services in the future. We need to make sure that all options are on the table when we are making decisions about water supplies and in shaping our suburbs. This includes reuse of stormwater and wastewater where it is cost effective,' Associate Commissioner John Madden said.

It is also important that we learn from history when investing in infrastructure in the irrigated agricultural sector. Governments have to provide firm foundations to support investor confidence.

'Investments in irrigation infrastructure suggested for northern Australia need to provide real benefits to the community or taxpayers will be left to foot the bill for the ongoing costs of poor infrastructure as they have in the past,' Dr Jane Doolan said.

The report on national water reform is a draft report and 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 .

A separate review on the Murray Darling Basin Plan will be undertaken by the Productivity Commission in 2018.

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

Chapter 2 describes 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 three broad areas of the water sector:

• 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)
• key supporting mechanisms including: water accounting, measurement and compliance; community engagement and consultation; and, the generation of knowledge and water management capacity (chapter 8).

In each of the chapters 3 to 8, the Commission has summarised reform progress to date and the benefits this has yielded. In doing so, areas of unfinished business from the NWI have been identified.

The areas of unfinished business have been considered alongside the current and emerging challenges identified through submissions, consultation and the Commission’s research to form the basis of further reform opportunities analysed in each chapter. On the basis of that analysis, draft findings and recommendations for future policy actions have been made.

In determining draft recommendations, the Commission’s guiding principle was that reforms must advance the efficient and sustainable use of Australia’s water resources and deliver a net benefit to the community. Draft recommendations are based on examination of the likely costs and benefits of any given policy. Where such an examination was not possible, a judgment was made based on the weight of evidence before the Commission.

In the final chapter (chapter 9), the Commission has examined the value of the NWI as a policy vehicle for achieving reform and how the NWI might best be leveraged to progress the reform agenda set out in this draft report.

An overall assessment of progress against the NWI’s objectives and outcomes are detailed in appendix B. Progress against the recommendations of the NWC (2014c) is set out in appendix C.