After the Royal Commission, what next for Murray-Darling Basin law reform?
While most people are still digesting the recently released 756-page final report of the South Australian Murray Darling Basin Royal Commission, law reform responses are already being drafted to address some of its alarming findings.
Parliamentary responses have included private member’s bills ranging from a broad sector-based approach – for example to ban cotton exports – to a specific amendment to the water buy-back limit under the Commonwealth Water Act 2007, to calls from indigenous groups for legislation to establish a federal Royal Commission into the issue.
This blog identifies the key findings made by Commissioner Bret Walker SC and discusses what could be next for law reform in the Murray Darling Basin.
15 February 2019
By Deb Brennan, Senior Policy & Law Reform Solicitor, and Rachel Walmsley, Policy & Law Reform Director
The Darling River at Wilcannia. Photo courtesy Ruby Davies.
Key finding: Unlawful calculation of an environmentally unsustainable level of take and an unsustainable diversion limit
A key finding of the Commissioner concerned the fundamental crux of the Water Act 2007 and Basin Plan, namely the calculation of the level of water that can be extracted from the Murray-Darling Basin without compromising the environment – known as the Environmentally Sustainable Level of Take (ESLT).
The Commissioner’s most significant finding was that the ESLT was calculated unlawfully through misapplication of the law and a failure to utilise best available science, including by ignoring climate change projections.
Evidence and expert analysis presented to the Royal Commission led to the finding that the original setting of the ESLT by the Murray Darling Basin Authority (MDBA) was legally deficient in two significant respects. First, the MDBA unlawfully applied a ‘triple bottom line approach’ involving economic, social and environmental considerations instead of taking the approach required by the Act of applying only considerations relevant to the environment and maintaining the productive base of the Basin. Second, the MDBA failed in its statutory duty to set the ESLT using the ‘best available science’, both because it failed to disclose key matters, such as its modelling, for external scrutiny and because it (indefensibly in the Commissioner’s opinion) ignored climate change projections. The overall result was a water recovery figure of 2750 GL, rather than a figure of between 3980GL and 6980 GL.
The Commissioner concluded that the mechanisms subsequently used to further whittle down the amount of water to be recovered for the environment were also infected by that unlawfulness and the substitution of political compromise for science. The overall result is a Sustainable Diversion Limit (SDL) – effectively an allowable level of take – which will allow the river to remain over-allocated and will not achieve the purposes of the Water Act 2007, despite the huge investment of public funds which have been made available to restore the Basin.
Whittling tools: SDL Adjustment mechanism, supply and efficiency measures and the Northern Basin Review
The SDL adjustment mechanism (SDLAM) in the Basin Plan is intended to allow increased take of water through projects (‘supply measures’) which will create equivalent environment outcomes with less water (for example, the Menindee Lakes project which aims to reduce evaporative loss). The Commissioner found that the adjusted SDL arrived at through the SDLAM was unlawful, not only because it was derived from the original unlawful ESLT, but also because it was invalid to reduce water recovery for the environment on the basis of outcomes projected to result from supply measure projects which are not yet complete. It would not be lawful to include outcomes from supply measures in SDL unless and until those supply measures are in place and having measurable outcomes.
The implementation of Efficiency Measures (which can include for example, lining water delivery channels or upgrading irrigation systems), which were intended to decrease the SDL (and increase water for the environment) by up to 450 GL was, once again, found to be flawed due to the application of the incorrect socio-economic impact test.
The Northern Basin Review, which reduced the amount of water to be recovered for the environment by 70GL, was also found to be unlawful due to, among multiple reasons, the MDBA once again failing to comply with the Act by again applying the ‘triple bottom line approach’ and because the ‘toolkit measures’ used to justify the reduction were simply not intended as a substitute for water recovery.
The overall result is an SDL which will not achieve the objectives of the Water Act 2007.
Key finding: Governance failure
The Commissioner chronicles, in forensic detail, how it all went so wrong. The Royal Commission found plenty of blame to go around but lay most of the responsibility at the feet of the MDBA.
The litany of failures of the MDBA include: failures in consultation and transparency, particularly with regard to Traditional Owners, secrecy and failure to provide key information and modelling to Basin States and even to its own consultants, cherry-picking legal advice and misinterpretation of its own Act, political compromise overruling science, misleading public statements, “pseudo provision of information through obfuscation”, improperly pressuring the CSIRO to change its reports and chronically failing in its statutory obligation of transparency.
Evidence and analysis of these serious governance failures led the Commissioner to conclude that the MDBA has breached or failed to implement its own Act on multiple occasions and committed what the Commissioner described as “maladministration’’ and, in the instance of its failure to incorporate climate science into its modelling, “gross negligence.’’
Where to from here?
While the Commissioner found that little optimism survived his survey of the implementation of the Water Act 2007 and Basin Plan, we remain optimistic that the situation is retrievable and that the Act and Basin Plan can still be properly implemented. But this won’t happen without some difficult decisions being made.
Urgent priorities now are reform of the MDBA to address the governance failures, and lawful recalculation of the ESLT and SDL to ensure that they are capable of achieving the objectives of the Act and properly address climate projections.
The key recommendations that need to be prioritised are therefore:
- Reform the MDBA. The Royal Commission has recommended (rec. 49) that an oversight body similar to the former National Water Commission be tasked with auditing the effectiveness of the MDBA. The Productivity Commission’s Five-year Assessment of the Murray-Darling Basin Plan makes other recommendations about restructuring the MDBA. Urgent reform must create a governance structure and culture which is capable of lawfully implementing the Water Act 2007, with the requisite transparency and scientific approach.
- Implement the legislative changes the Commissioner has recommended (rec 38) to ensure that the MDBA’s factual and scientific findings remain free from political interference.
- Recalculate the ESLT and the SDL on the basis of the best available science including climate change projections (rec. 1, 2, 5, 13, 14, 15, 25, 30, 34) and subsequent amendment of each statutory instrument reflecting the current unlawful figure.
- Remove restrictions on buy-backs for both the recovery needed to satisfy a lawful ESLT and to replace efficiency measures (rec. 8 and 15). This will involve publicly confronting what the Commissioner described as the ‘myth and exaggeration’ which currently surrounds discussion of the impacts of buy-backs. In relation to this recommendation, we note a private member’s bill - the Water Amendment (Purchase Limit Repeal) Bill 2019 - was introduced on Wednesday into the Senate and is intended to remove the limit on how much water can be bought back for environmental purposes.
While these are the most urgent priorities, there are multiple additional recommendations which also need to be acted on, including the role of the Basin’s First Nations people in the process, the lenient 20% buffer to non-compliance with the SDL, the approach to the removal of constraints (ie, physical barriers to water movement in the system) and the recommended Auditor-General investigation of the Efficiency Measures.
A limitation of the South Australian Royal Commission process was the failure by Commonwealth agencies (including the MDBA) to fully participate. This has the consequence, in some instances, that evidence went unchallenged or issues were not able to be fully investigated (in particular the issues around Efficiency Measures). As noted, there have been calls for a more comprehensive federal Royal Commission to be instigated as a critical next step.
In addition, the Royal Commission’s findings strongly indicate that multiple decisions under the Water Act 2007, and indeed the Basin Plan itself, are vulnerable to legal challenge. The Commonwealth Government may be tempted to amend the Act to retrospectively validate the approach taken in the Basin Plan, instead of making the difficult decisions that will protect the Murray-Darling and preserve what the Commissioner described as the “splendid optimistic venture” that is the Water Act 2007. This would be an unfortunate outcome both for the health of the Basin and the communities which depend on it but also for the enormous effort and expenditure of public funds which has occurred and will continue to occur in implementing the Act.
It is therefore likely that next steps for water reform will involve both amendment bills in the parliament and potential challenges in the courts.
The EDO NSW continues to work with a broad range of clients including irrigators, community groups and peak conservation organisations in the Basin on both specific water issues and on broader water law reform at both the state and federal level. For more information about our work see our Murray-Darling Basin page and our water law submissions page.