Murray-Darling Basin: flawed implementation - EDO NSW

Good laws are not enough: flawed implementation in the Murray–Darling Basin

In the Australian Environment Review, Rachel Walmsley and Deborah Brennan of EDO NSW examine the significant challenges impinging on implementation of laws regulating water management in the Murray–Darling Basin.

By Rachel Walmsley, Policy and Law Reform Director, and Deborah Brennan, Senior Policy and Law Reform Solicitor, EDO NSW

Originally published in Australian Environment Review, Vol 34 No 3, June 2019

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The United Nations Environment Programme issued its Environmental Rule of Law: First Global Report1 (UNEP report) earlier this year. The key findings of the report included that the real challenge for environmental laws arises not at the legislative stage but at the implementation stage when there is a need for “regulations, policies, and actions that directly affect stakeholders’ livelihoods, lands, properties, and profits”.2 The report went on to conclude that lack of political will is a significant driver of this failure. This article examines whether that finding holds true for laws regulating water management in the Murray–Darling Basin.

The fair sharing of water in our dry continent has always been a contentious and difficult area of law, even more so in the Murray–Darling Basin where the water resource is shared across four states and the Australian Capital Territory. The slow-moving disaster unfolding in the Basin is occasionally punctuated by crises, like the closing of the Murray Mouth for the first time, the mammoth algal bloom of 1991 and the recent fish kills, which gain broader public attention and sometimes prompt political action.

The latest plan to restore the Murray–Darling Basin to health, prompted by the devastation of the Millennium drought, is the Commonwealth Water Act 2007 (Federal Water Act). However, states have retained primary responsibility for regulating the sharing of this community-owned resource and water laws at the state level will continue to play a critical role in determining whether the system can be restored to health.

In the bulk of the Murray–Darling Basin, which sits within New South Wales, the operative decisions which have real and tangible effects on stakeholders start with the setting of the sustainable diversion limit (SDL) under the Federal Water Act and the making of water sharing plans under the state Water Management Act 2000 (NSW) (NSW WM Act).

Two recent reports — the report of the South Australian Murray–Darling Basin Royal Commission3 (South Australian Royal Commission) and the report of the independent inquiry into fish kills in the lower Darling4 — have demonstrated that the finding of the UNEP report that implementation of environmental laws is a key barrier to environmental outcomes holds true in the Murray-Darling, even for the fundamental planks of the state and federal legislation. This article examines the architecture and implementation of water laws in the Murray–Darling Basin at the Commonwealth and state level, with specific reference to the controversial Water Sharing Plan for the Barwon–Darling Unregulated and Alluvial Water Sources 2012 (NSW) (Barwon–Darling WSP).

Commonwealth level: sustainable diversion limit
The Federal Water Act contains a number of important and interconnected strategies to restore the Murray–Darling Basin to health, however the most important tool is the “sustainable diversion limit” which is intended to remedy the overallocation of water to consumptive use by restoring sufficient water to the environment.

The long-term average annual SDL is set for the Basin as a whole in the Basin Plan made under the Federal Water Act. This places a limit on the amount of both surface and ground water that may be extracted from the Basin. The SDL is given effect through buybacks and other acquisitions of water entitlements and through the water resource plans made by the states5 which will govern extractions of water under state-based water entitlements.

The SDL is required by the Federal Water Act to be set based on (among other things) the “best available scientific knowledge”.6 The SDL is described in s 22 item 6 of the Federal Water Act as:

The maximum long-term annual average quantities of water that can be taken, on a sustainable basis, from:

(a) the Basin water resources as a whole; and
(b) the water resources, or particular parts of the water
resources, of each water resource plan area.

Section 23(1) of the Federal Water Act goes on to provide that the long-term average annual SDL must reflect the “environmentally sustainable level of take” (ESLT), which is defined in s 4 to mean:

environmentally sustainable level of take for a water resource means the level at which water can be taken from that water resource which, if exceeded, would compromise:
(a) key environmental assets of the water resource; or
(b) key ecosystem functions of the water resource; or
(c) the productive base of the water resource; or
(d) key environmental outcomes for the water resource.

These provisions create a two-step process under which first the water needs of the environment are identified, and second any water above and beyond those needs is made available for consumptive use (for example, for irrigation or community use).

The setting of the SDL, and the associated “buybacks” of water entitlements, have been politically contentious since the community consultation undertaken in 2011 with the Guide to the Proposed Basin Plan,7 which culminated in its public burning, and remains so today.

The findings of the South Australian Royal Commission chronicle, in forensic detail, the subsequent flawed implementation of the SDL including through:

  • adopting a “triple bottom line approach” which attempted to optimise environmental, social and economic outcomes in setting the ESLT
  • failing to implement best available science in that the method used to arrive at the ESLT and SDL lacked transparency and was unable to be replicated
  •  failing to act on the best available science in that it failed to have regard to the effects of climate change
  • politics, rather than science, driving the setting of the SDL

This already inadequate level of water recovery was further reduced through two processes — the Northern Basin Review 8 and the SDL Adjustment Mechanism 9 — both of which were similarly found by the South Australian Royal Commission to be legally flawed and infected by political compromise.

This demonstrates that good legislation with a solid foundation in science can go seriously awry at the implementation stage as decisions have to be made which have impacts on people, communities and businesses.

Government response
There has been a surprisingly muted reaction from both levels of government to the alarming findings by the South Australian Royal Commission that the Basin Plan — in which billions of dollars have been invested — has a legally flawed foundation and fails to address the impacts of climate change already being felt in the Basin.

By the time the Royal Commission report was delivered there had been a change in government in South Australia. The new government issued a media release noting, quite reasonably, that consideration of the recommendations would involve decisions of the Basin states and the Commonwealth. However, it is notable that the media release opened with government reaffirming its commitment to the SDL contained in the current Basin Plan.

The Commonwealth Minister for Agriculture and Water Resources similarly issued a media release indicating that the report would be considered while minimising its findings with the assertion that the federal government had received consistent legal advice for the last 7 years that the Basin Plan “is lawful and was lawfully made”.

The federal Opposition has made commitments including a review into the climate change impacts on the Basin and removal of the current cap on the buyback of environmental water10 which, while positive, is of limited utility without an amended (and lawful) SDL.

The only detailed response so far has been from the Murray–Darling Basin Authority which, in characterising the South Australian Royal Commission’s findings as to the lawfulness of the SDL as “simply a different opinion”, doesn’t appear to have treated this issue with the seriousness it deserves.

We now face the concerning possibility that the findings of the South Australian Royal Commission on the unlawful implementation of the SDL may sink without a ripple, at least until the next crisis triggers another review of how the laws are being ineffectively implemented in the Basin.

Meanwhile the Basin states are preparing water resource plans to implement the Basin Plan (including the SDL). Such water resource plans are expected to incorporate or reference existing plans or rules made under state laws (being water sharing plans in New South Wales). The example of the Barwon–Darling WSP also illustrates the challenge identified in the UNEP report that sound principles in environmental law are too often undermined by questionable implementation.

State level: Barwon–Darling WSP
The management and sharing of water in New South Wales is regulated by the NSW WM Act. The guiding principles of that Act are the water management principles set out in s 5 of the Act. Section 5(1) identifies the general water management principles, which include ecological, social, cultural and economic principles which are unlikely to all be separately achievable and will require some degree of trade off. The water management principles specific to water sharing are of a different character and are set out in s 5(3):

(3) In relation to water sharing:

(a) sharing of water from a water source must protect the water source and its dependent ecosystems, and
(b) sharing of water from a water source must protect basic landholder rights, and
(c) sharing or extraction of water under any other right must not prejudice the principles set out in paragraphs (a) and (b)

The meaning of this provision was held by the Land and Environment Court of New South Wales11 and quoted with approval by the Court of Appeal 12 to mean:

…every drop of water that is necessary to protect the water source is a drop not available for any other purpose. Every drop necessary to protect water dependent ecosystems is not available for basic landholder rights. Every drop
available for basic landholder rights is not available for persons extracting under other rights [emphasis added].13

The water management principles create an approach which is not dissimilar to the approach taken in the Federal Water Act, through an SDL limiting consumptive extraction on the basis of an ESLT.

The way in which water sharing principles are to be applied under the Act is set out in s 9(1) of the NSW WM Act as follows:

(1) It is the duty of all persons exercising functions under this Act:
(a) to take all reasonable steps to do so in accordance with, and so as to promote, the water management principles of this Act, and (b) as between the principles for water sharing set out in section 5 (3), to give priority to those principles in the order in which they are set out in that subsection.

This provision makes it clear firstly that the water management principles are to be applied in the development of water sharing plans under the Act, including when the plan is prepared by the Minister, and secondly that the water sharing principles in s 5(3) are to guide the priority in which water is allocated in water sharing plans.

Two aspects of the Barwon–Darling WSP demonstrate the flawed implementation of this part of the Act relating to water-dependent ecosystems and the water sharing rules applying to A class licences.

However, an initial and critical point to note is that the Barwon–Darling WSP itself makes it very difficult to assess what water is proposed to be delivered to the environment (in that the rules in cll 15–17 identify environmental water by reference to what is left over following the application of access rules) and what environmental outcomes it seeks to achieve (in that the objectives of the plan in cl 10 are vague motherhood statements, lacking any clear and measurable criteria for success). It is almost as though the plan was drafted to resist evaluation. These deficiencies can only make more difficult the Natural Resources Commission’s 14 current review into the extent to which the Barwon Darling WSP has materially contributed to the environmental, social and economic outcomes of the Act.15

Threatened species and ecological communities: the water source’s dependent ecosystems
The Barwon–Darling WSP started from a relatively low evidence base in a number of respects, including in relation to the needs of six fish species listed as threatened or vulnerable under the Fisheries Management Act 1994 (NSW) or the Environment Protection
and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) and an endangered aquatic ecological community listed under the Fisheries Management Act.16

Instead of applying the precautionary principle and providing adequate water for the water-dependent community and species, the Barwon–Darling WSP provides under cl 78(b) for the plan to be amended if there was evidence after 5 years that the access rules were having an adverse impact. Even this limited protection was watered down by express provision in the clause that any such amendments will not apply to certain classes of licence, must not alter the long-term average annual extractions under others and must “take into account the socio-economic impacts”.

This provision, therefore, not only fails to implement ss 5(3) and 9(1)(b) of the NSW WM Act but actually inverts the statutory priorities by allowing amendments to be made for the benefit of a water-dependent ecosystem only to the extent that those amendments will not affect certain licence classes.

The Murray Cod, which is one of the main species affected by the recent fish kills, is part of endangered ecological community in the area of the Barwon–Darling WSP (ie, the aquatic ecological community in the natural drainage system of the lower Murray River catchments) and is listed as vulnerable under the EPBC Act. It is therefore a component of a water-dependent ecosystem which should have been protected had the water management principles in s 5(3) of the NSW WM Act been properly implemented.

A class licences
The Barwon–Darling WSP (which is made under the NSW WM Act) made a number of changes to access rules for one type of water access licence (A class licences), which significantly benefited the agricultural holders of such licences. Those changes increased the impacts of A class licences through rules allowing take during “low flow” and “no flow” events, changes to carry-over between water years and changed restrictions on pump sizes. The background document to the Barwon–Darling WSP17 demonstrates that the decision to allow take under “no flow” and “low flow” conditions was made despite acknowledgments that significant literature had identified that environmental needs for water were greatest at such times.

The changed access rules demonstrate, once again, a decision which prioritises take under a water access licence above the water needs of the environment in direct conflict with the duty under ss 5(3) and 9(1)(b) of the NSW WM Act.

More concerningly, some of these provisions were amended (to the benefit of licence holders) after the final publicly available version of the draft plan and before the final plan was approved by the Minister.

Government response
These two aspects of the Barwon–Darling WSP are, on their face, contrary to the express requirements of the framework in the primary legislation and yet the plan has remained in effect for almost 7 years.

The recent fish kills in the lower Darling caught public, and political, attention and resulted in an independent inquiry into the causes. The final report of that inquiry found that the main impact on the frequency, duration and magnitude of ecologically important low flows was extraction under A class licences following the commencement of the current Barwon–Darling WSP. This finding prompted the Commonwealth Government to announce that it would “seek to secure A class licences to protect low flows”.18 The scale of this buyback of A class licences is not clear, nor is the timing.

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Riverbed near Moree, NSW.

Conclusion
The experience in the Murray–Darling Basin at both the state and federal levels serves as a stark example of the findings of the UNEP report which identified the real challenge of environmental laws as being not at the legislative stage but at the implementation stage where decisions are made that “directly affect stakeholders’ livelihoods, lands, properties, and profits”.19 There are certainly more examples of implementation failures in the Basin, particularly in relation to institutional failure at the state and federal levels. However, these examples serve to show that even the fundamentals of the primary legislation can be lost when political considerations are given precedence.

The solutions offered by the UNEP report focus on the strengthening of institutions and building the capacity of the public to meaningfully engage in environmental decision-making, including through access to information and access to justice. While reform in those areas is certainly warranted (and to a degree in New South Wales is already occurring), even a highly motivated and well-resourced community could drown in the sheer volume of reports, plans, inquiries, policies and programs currently underway in the Basin.

There is a serious question to be asked about whether the short-term demands placed on politicians are compatible with the long-term focus needed for (and often lack of short-term results inherent in) environmental decision-making. The Environmental Defenders Office’s soon-to-be-released law reform report Fair Flows: Water Laws for a Resilient Murray–Darling Basin20 will outline institutional and other reform which can be made to address these and other implementation failures in the short term. In the longer term it may be necessary to consider handing implementation of environmental laws over to independent agencies to remove short-term political thinking from the equation altogether.

Footnotes
1. United Nations Environment Programme Environmental Rule of Law: First Global Report (2019).
2. Above n 1, at 79.
3. Murray–Darling Basin Royal Commission (SA) Report (2019).
4. R Vertessy and others Independent Assessment of the 2018–19 Fish Deaths in the Lower Darling Final Report (2019) www.mdba
.gov.au/sites/default/files/pubs/Final-Report-Independent-Panel-fish-deaths-lower%20Darling_4.pdf.
5. Water Act 2007 (Cth), s 55(2).
6. Above n 5, s 21(4).
7. Murray–Darling Basin Royal Commission (SA) Guide to the Proposed Basin Plan (2011) .
8. Murray–Darling Basin Authority The Northern Basin Review: Understanding the Economic, Social and Environmental Outcomes from Water Recovery in the Northern Basin (2016); Basin Plan Amendment Instrument (No 1) 2018 (Cth).

9. Basin Plan Amendment (SDL Adjustments) Instrument 2017 (Cth).
10. This was the intent of the Water Amendment (Purchase Limit Repeal) Bill 2019 (Cth) which was introduced by the Australian Labor Party in the Senate on 13 February 2019.
11. Harvey v Minister Administering the Water Management Act 2000; Tubbo v Minister Administering the Water Management
Act 2000 (2008) 160 LGERA 50; [2008] NSWLEC 165; BC200804598.
12. Tubbo Pty Ltd v Minister Administering the Water Management Act 2000; Harvey v Minister Administering the Water Management Act 2000 (2008) 302 ALR 299; [2008] NSWCA 356; BC200811314 at [31] per Spigelman CJ.
13. Above n 11, at [208].
14. The New South Wales Natural Resources Commission has a statutory role in reviewing water sharing plans made under the NSW WM Act. It is currently undertaking a review of the Barwon–Darling WSP: New South Wales Natural Resources Commission, 2018–2019 Water sharing plan reviews.
15. The Environmental Defenders Office submission to this inquiry will be made available here: ww.nrc.nsw.gov.au/announcements/barwon-darling.
16. Department of Primary Industries: Office of Water (NSW) Water Sharing Plan for the Barwon–Darling Unregulated and Alluvial Water Sources: Background Document (2012) 40 para 6.2.1.2.
17. Above n 16.
18. National Party of Australia, Federal Government Responds to Independent Report into Fish Deaths, 10 April 2019.
19. Above n 1, at 79.
20. EDO NSW Fair Flows: Water Laws for a Resilient Murray-Darling Basin (forthcoming) www.edonsw.org.au.