Proposed Basin Plan consultation report

Basin Plan compliance

34.Issue

Submissions expressed concerns that obligations under the Basin Plan, the consequences of non-compliance and the pathway to compliance were unclear. Furthermore, it was suggested that a compliance auditing role be established under the Basin Plan to provide assurance that various elements had been implemented appropriately. Submissions also questioned what type of measures would be taken to discourage breaches, including water theft, and what MDBA’s role would be if an individual water holder exceeded their entitlement.

RESPONSE

MDBA will develop guidance material for compliance in consultation with stakeholders to complement the Basin Plan.

MDBA will exercise its functions in a consultative manner, working with Basin states, other Australian Government agencies, the Basin Officials Committee, operating authorities, infrastructure operators and holders of water access rights to ensure that the objectives of the Basin Plan are met.

In establishing its compliance and assurance role, MDBA will seek to implement a best-practice compliance model that aligns compliance interventions with behaviour and allocates resources based on risk and cost effectiveness. The approach assumes that most of the regulated community will voluntarily comply with legislation if provided with the relevant information and assistance. It promotes voluntary compliance, with an emphasis on engagement and cooperative assistance.

Should these strategies fail to result in an acceptable level of compliance, a hierarchy of responses is available, including statutory enforcement.

Basin states remain responsible for the delivery of day-to-day compliance programs dealing with individual water holders based on state legislation. While MDBA has a significant interest in the effectiveness and consistency of these activities, it does not envisage playing a direct day-to-day regulating role in this space.

MDBA will generally operate at a strategic level, working to improve its understanding of compliance issues across the Basin, seeking cooperative solutions to significant compliance issues, researching and developing proactive strategic interventions, and educating and supporting people and organisations regarding their rights and obligations.

To this end, MDBA will develop a compliance and assurance strategy that will articulate its overarching compliance policy and how it will develop its compliance and assurance program. This will include the provision of information on the obligations of the Basin Plan and the Act, the various compliance tools available, and how they will be used.

The proposed Basin Plan has been amended to introduce a new audit function into chapter 12 to enhance the clarity of MDBA’s approach to compliance and assurance.

35.Issue

Submissions highlighted concerns that setting Cap credits at zero penalised those who had faithfully implemented management systems to comply with the Cap. Submitters expressed the view that existing Cap credits and debits should be rolled over to allow for the continuation of effective long-term management, and avoid long-term averaging being restarted.

‘...is also concerned that the Register of Take will commence at a zero balance. This negates the prior careful management and restraint in many valleys, including the Lachlan, that have maintained extraction at a level below the MDB Cap in recent years and have accumulated a Cap credit.’

Submitters also expressed concern that resetting Cap credits would reduce water availability to irrigators in the initial years of the new SDL compliance regime, thereby reducing reliability and impacting on the property rights of irrigators. Submitters felt this could invoke the risk assignment provisions in the Act related to the reliability of entitlements, and that water users could justifiably seek compensation under such circumstances.

Several submissions expressed concern that the setting of Cap credits and debits to zero would provide a perverse outcome by encouraging states to increase take to ensure Cap credits were zero in 2019.

RESPONSE

There is a fundamental difference between the Cap and SDLs. The Cap was introduced to limit further growth in diversions whereas SDLs are required to be set at a level that is environmentally sustainable. Further, the Baseline Diversion Limits (BDLs) adopted for the proposed Basin Plan are, in several cases, different to the Cap, reflecting the extent to which state arrangements have evolved since the introduction of the Cap. For example, in valleys where the BDL is lower than the Cap, this difference has generated Cap credits. It would not be appropriate to continue the credits generated when the Cap is not the BDL used for the purposes of the Basin Plan.

Because of these differences, MDBA’s view is that it is not appropriate to roll over Cap balances when SDLs come into effect in 2019. Commencing the new arrangements with a zero credit does not affect the reliability of existing entitlements. Water entitlements under existing water plans do not need to change to implement SDLs because of the government’s commitment to ‘bridge the gap’. Therefore, existing entitlements do not need to be affected by the transition from the Cap to SDLs.

Regarding concerns that zeroing of credits might lead to states increasing take to ensure Cap credits are zero in 2019, it is unlikely that states would be able to significantly increase take and reduce credits because of the constraints of their existing water plans and water management law.

36.Issue

Submissions raised concerns that the method of determining compliance with the long-term annual diversion limit provided too much leeway and that the 20% cumulative balance was too high or should be removed. There were also concerns that significant use of cumulative credits in one year could result in short-term environmental impact. Other submissions were concerned that the 20% cumulative balance was too low to cover adequately the range of model and data uncertainties, particularly when compared with the current Cap arrangements.

‘The proposed 20% buffer for compliance on meeting SDL’s is too great. This will allow for regular extraction above sustainable limits. History shows that these extractions will never be repaid or when it isn’t as critical.’

RESPONSE

The cumulative debit and credit provisions in the method of compliance, including a maximum debit of 20%, were chosen to align with the current process used for compliance with the Cap. The Cap compliance process has developed over a number of years and has proven effective in checking Basin state compliance with the Cap. The debit/credit provisions are necessary to accommodate the uncertainties that can occur in assessing permitted take, particularly for many of the large regulated systems where hydrologic models are used. Some submissions have misinterpreted that the 20% maximum debit would mean that SDLs could be exceeded by 20% in every year. This is not the case, as 20% is a cumulative maximum debit. For a 10-year period this means that the maximum cumulative debit can be no more than an average of 2% of the SDL per year.

The accredited water resource plans developed by Basin states will also play an important role in implementing SDLs and ensuring compliance. The requirements in chapter 9 of the proposed Basin Plan, especially part 3, in relation to the incorporation and application of the long-term annual limit, will ensure that water resource plans would limit diversions to no greater than the SDL under a repeat of the historical climate conditions (1895-2009), while retaining the features that allow the level of diversions to vary from year to year depending on climate variability. Accredited plans will also limit the ability of states to adjust allocations to water access rights in response to accumulated credits.

The submissions that expressed concern about the 20% cumulative balance being too low made the point that 20% of SDLs was a lower absolute margin than 20% of long-term valley Caps. However, MDBA is satisfied that 20% is an adequate margin. The Cap is based on comparing diversions that would have occurred under baseline conditions (e.g. under the level of development as at 30 June 1994, including the rules and other factors that applied at that time) with actual diversions for an accounting period. Part of the reasons for possible annual differences in this comparison is the changes that have occurred since 1994 to the rules, operating arrangements and how entitlements are used. These reasons will be reduced by the role played by accredited water resource plans in determining annual permitted take.

While the 20% maximum debit provision has been retained, the relevant section in chapter 6 of the proposed Basin Plan has had a note added to clarify the role of water resource plans.  Also, section 6.13 has been amended to require a state to bring any cumulative balance back to zero rather than below the 20% maximum debit. The requirements in relation to the incorporation and application of the long-term annual limit in part 3 of chapter 9 and other parts have also been reviewed and revised to ensure that water resource plans do have the features necessary to ensure ongoing compliance with SDLs.  

37.Issue

Submissions described the reasonable excuse provision in section 6.13 (1)(b) of the proposed Basin Plan as inappropriate as it gave states an ‘escape clause’ for compliance against SDLs.

RESPONSE

MDBA does not agree that this provision will provide an “escape clause” for Basin states. This provision was introduced primarily to address two scenarios. A Basin state can report a reasonable excuse should a potential non-compliance be as a result of:

• 
  situations that impact on actual take that are outside the control and interest of the Basin state, or
  
• 
  instances where the Basin state acts in accordance with the obligations established under a water resource plan yet the SDL has still been exceeded.
  

Should a Basin state determine that a reasonable excuse exists in an instance where an SDL in an SDL resource unit is exceeded then the Basin state will be required to report to MDBA and provide details of the steps it will take to bring the SDL resource unit back in to compliance.

A note has been added to section 6.13 clarifying that a reasonable excuse may be claimed if the excess is due to the operation of an accredited water resource plan or circumstances beyond the State’s control.

Prior to the commencement of compliance with SDLs in 2019, MDBA will prepare a guideline on how the reasonable excuse provisions will be applied. This will provide further clarification and guidance to support the reasonable excuse provisions of the Basin Plan.