ATTACHMENT

 

Details of the Water Amendment (Murray-Darling Basin Agreement) Regulation 2015 (No.1)

Section 1 - Name

This section provides that the title of the Regulation is the Water Amendment (Murray-Darling Basin Agreement) Regulation 2015 (No.1) ('the Regulation').

Section 2 - Commencement

This section provides that the Regulation commences on the day it is registered. 

Section 3 - Authority

This section provides that the Regulation is made under the Water Act 2007 ('the Act').

Section 4 - Repeal of this instrument

This section provides for the Regulation to be repealed on the day after it commences. When the Regulation commences it amends the text of the Murray-Darling Basin Agreement in Schedule 1. After the text of the Agreement is amended the Regulation will have no continuing legal effect and will be 'spent'. The repeal of this instrument is consistent with the Government's aim of delivering clearer laws and reducing red tape.

Section 5 - Schedules

This section provides that each instrument that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and any other item in a Schedule has effect according to its terms.

Schedule 1 to the Regulation - Amendments

Amendments to Schedule 1 of the Water Act 2007

 

Item [1] - Clause 1 of Schedule D to Schedule 1

This item replaces clause 1. The clause retains key aspects regarding the purpose of Schedule D.  However, it updates the purposes of Schedule D to better align them with the water market and trading objectives under Schedule 3 of the Act and with the 'water trading rules' set out in the Basin Plan. The water trading rules commenced on 1 July 2014.

The introductory paragraph at clause 1 provides for the purposes of Schedule D to be consistent with the Basin Plan water trading rules. This adds to the existing requirements that the purposes of Schedule D are consistent with the laws of each contracting State, the Agreement, the National Water Initiative and policies adopted from time to time by the Ministerial Council. 

Clause 1 removes duplication between the Agreement and the Basin Plan 'water trading rules' regarding the requirement to minimise any detrimental effects from water trading upon the environment and other water users. This requirement is now dealt with in the Basin Plan water trading rules and Basin State water use approval arrangements and does not need to be included in the Agreement. See item [2] for further details.

Paragraph 1(a) retains the existing purpose of Schedule D in contributing to an efficient and effective water market by coordinating transfers of water entitlements and allocations within the geographical scope of clause 2. See item [2] for further details.

Paragraphs 1 (b), (c) and (d) provide for Schedule D to govern the adjustments of intervalley and State transfer accounts, and the administrative arrangements to enable water trade between States.

Paragraph 1(e) allows Protocols consistent with the Basin Plan to be made under Schedule D. 

Paragraph 1(f) requires a State Contracting Government to notify the Murray-Darling Basin Authority ('Authority') of any intervalley transfer described in clause 2 made within that State. This requirement ensures the Authority has relevant information from the States in order to carry out its functions in relation to transactions and accounting.  

Item [2] - Clause 2 of Schedule D to Schedule 1

This item omits the words "this Schedule applies to transfers referred to in paragraph 1(a)" and substitutes the words "this Schedule applies to transfers, between States and between valleys within the Murray-Darling Basin, of such water entitlements and allocations as are, from time to time, determined by the Ministerial Council and specified in Appendix 1". This item does not substantively change the application of Schedule D, but moves words from paragraph 1(a) (a purpose provision) to clause 2 (an application provision). See item [1] for further details. Appendix 1, which lists the entitlements and allocations that apply to Schedule 1, reflects the origins of Schedule D and the incremental approach adopted by the States to progressively allow intervalley and interstate trading in various systems. While the Basin Plan water trading rules generally require that trade be permitted unless there is a basis for an 'allowable restriction', Appendix 1 continues to be maintained by the Ministerial Council for ease of reference.

Item [3] - Paragraph 2(b) of Schedule D to Schedule 1

This item inserts the word "Broken" after the word "Goulburn". This amendment clarifies that Schedule D applies to the regulated reaches of the Broken river system.

 

Item [4] - Paragraph 2(d) of Schedule D to Schedule 1

This item replaces paragraph 2(d). This item is technical in nature and does not change the meaning of the paragraph. It clarifies that Schedule D applies to transfers relating to water for the purposes of exchange rate trade or tagged trade (or both), as the Ministerial Council may determine from time to time. This provision is subject to the restrictions in the Basin Plan regarding exchange rate trade, but is relevant to historical exchange rate trade.

Item [5] - Paragraph 3(1)(a) of Schedule D to Schedule 1 (paragraph (i) of the definition of entitlement)

This item inserts the word "Broken" after the word "Goulburn". This amendment clarifies that the regulated reaches of the Broken river system are included in the definition of entitlement, ensuring that Schedule D applies to interstate and intervalley trade in the Broken river system.

 

Item [6] - Clause 9 of Schedule D to Schedule 1

This item repeals clause 9, which sets out arrangements for adjusting State financial contributions determined under Part IX of the Agreement. The clause is no longer required as exchange rate trade has been superseded by interstate entitlement tagging, which does not require the adjustment of State financial contributions.

Item [7] - Subclause 12(2) of Schedule D to Schedule 1

This item omits the words "either or both of: (a) any changes in distribution losses; and (b) any differences in utilization, resulting from the transfer" and substitutes the words "any changes in distribution losses resulting from the transfer". This item removes the ability for exchange rate trade to take into account any differences in utilization resulting from the transfer, ensuring that subclause 12(2) complies with the Basin Plan water trading rules (which limit exchange rate entitlement trade to address transmission losses and redress the impact of previous exchange rate trades). 

Item [8] - Paragraph 12(3)(b) of Schedule D to Schedule 1

This item omits the words ", or the previous calculation of State financial contributions". This amendment is consistent with item [6], which removes the ability of State financial contributions to account for exchange rate trade. 

Item [9] - Paragraph 12(4)(c) of Schedule D to Schedule 1

This item repeals paragraph 12(4)(c), removing the ability for a Protocol referred to in subclause 12(1) to attempt to minimise any adverse effect that any conversion or any type of transfer may have on: water users, other than the transferor or transferee; and the environment. The amendment is consistent with item [7] (which limits exchange rate entitlement trade in compliance with the Basin Plan water trading rules) and reflects the protections afforded by the Basin Plan in relation to detrimental effects upon the environment from water transfers. The third party protections removed from this paragraph continue under the Basin Plan water trading rules.

Item [10] - Subparagraphs 12(4)(d)(ii), (iii) and (iv) of Schedule D to Schedule 1

This item repeals subparagraphs 12(4)(d)(ii), (iii) and (iv), removing the ability for a Protocol referred to in subclause 12(1) to provide for taking account of: any change in the level of reliability of supply of an entitlement resulting from the conversion or transfer; the extent to which the volume of water represented by an entitlement has been used; and any other matter which the Authority considers appropriate. The amendment is consistent with item [7], which limits exchange rate entitlement trade in compliance with the Basin Plan water trading rules.     

Item [11] - Clause 14 of Schedule D to Schedule 1

This item repeals clause 14, which requires environmental assessments of the potential impacts of water trade. This clause is no longer required as States have separated water access entitlements from water usage. Environmental assessments of potential impacts are managed through water use approvals and not trades of water access entitlements.

Item [12] - Subclause 16(5) of Schedule D to Schedule 1

This item repeals subclause 16(5) and substitute subclauses 16(5), 16(5A) and 16(5B).  The subclause requires the independent audit to occur if: the Authority is not satisfied that any volumetric errors in the monthly reconciliation process between the States and the Authority can be rectified; or the Basin Officials Committee determines that the Authority is to arrange for the audit to be undertaken.

Subclause 16(5A) requires the Authority to arrange for an auditor to examine whether there is any discrepancy between: information provided by each State Contracting Government under sub-clause 16(4); information provided under clause 8 of Appendix 3 to Schedule 1; and information set out in the Transfer Register. However, due to the repeal of subclause 16(5), the requirement to arrange an audit after the end of each year no longer applies.

Subclause 16(5B) requires the Authority to arrange for the auditor to make recommendations to the Ministerial Council about any amendment to the Transfer Register as the auditor thinks desirable in view of any discrepancy as described in subclause 16(5A). The Authority is required to arrange for the auditor to make recommendations to the Ministerial Council as soon as practicable after the audit is completed.

Item [13] - Subclause 16(6) of Schedule D to Schedule 1

This item omits the words "paragraph 16(5)(b)" and substitute with "sub-clause 16(5B)". The item is a consequential amendment as a result of item [12].

Item [14] - Subclause 16(7) of Schedule D to Schedule 1

This item replaces subclause 16(7), which continues to require the Authority to recalculate any adjustment to the cap on diversions or any annual diversion target, pursuant to clause 8, in respect of which relevant alteration has been made to the Transfer Register under subclause 16(6).  However, the requirement for the Authority to recalculate any calculation pursuant to clause 9 is removed, as clause 9 (which sets out arrangements for adjusting State financial contributions determined under Part IX of the Agreement) is repealed by item [6].

Item [15] - Subclause 17(1) of Schedule D to Schedule 1

This item repeals subclause 17(1), which covers reporting requirements in relation in relation to assessment criteria for environmental impacts of water trade. This subclause is no longer required as clause 14 (which requires environmental assessments of the potential impacts of water trade) is repealed by item [11].

Item [16] - Subclause 17(2) of Schedule D to Schedule 1

This item omits the words "(2) By" and substitutes "By". It is a consequential amendment as a result of item [15].

Item [17] - Paragraph 17(2)(b) of Schedule D to Schedule 1

This item omits paragraph number "(2)". It is a consequential amendment as a result of item [15].

Item [18] - Paragraph 17(2)(d) of Schedule D to Schedule 1

This item repeals paragraph 17(2)(d), which requires the Authority to report on any adjustment to the contribution of a State Contracting Government approved by the Ministerial Council under sub-clause 9(2). The subclause is no longer be required as clause 9 has been repealed by item [6].

Item [19] - Clause 18 of Schedule D to Schedule 1

This item replaces clause 18, which requires the Authority to prepare and give to the Ministerial Council and the Basin Community Committee ('the Committee') a report on interstate transfers. This item modifies the reporting and timing requirements and requires the Authority to conduct the report: as soon as practicable after the end of 2 years following the commencement of the Basin Plan water trading rules (which commenced on 1 July 2014); or at any other time the Committee determines from time to time. The clause continues to require the report to address the operation of this Schedule and the markets for interstate transfers of entitlements and allocations. This item adds the requirement for the report to address any other matter that the Committee directs or that the Authority considers appropriate.

Item [20] - Appendix 1 to Schedule D to Schedule 1 (table items dealing with the Water Act 1989 (Vic) and the Water (Resource Management) Act 2005 (Vic), column headed "SOURCE")

This item inserts the word "Broken" after the word "Goulburn", clarifying that the Broken river system is a source for the purposes of Appendix I to the Agreement.