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Legal and Constitutional Affairs References Committee
18/05/2011
Water Act 2007

FOERSTER, Dr Anita, Research Associate, Centre for Resources, Energy and Environmental Law

GARDNER, Associate Professor Alexander, Private capacity

Evidence was taken via teleconference—

CHAIR: I welcome our witnesses, Dr Anita Foerster and Associate Professor Alexander Gardner. Do you wish to add anything about the capacity in which you appear?

Prof. Gardner : I am an associate professor at the University of Western Australia.

Dr Foerster : I am appearing today in the personal capacity of a private individual, but I am speaking with respect to a submission made to this inquiry by a group of water law academics.

CHAIR: We have your submission No. 75. Do you wish to make any amendments or alterations to that submission?

Dr Foerster : Not at this point, no.

CHAIR: We invite you to make an opening statement at the conclusion of which we will invite members of the committee to ask questions.

Dr Foerster : Thank you very much. The main arguments of our submission were that the Water Act reflects a commitment made by state and federal governments in the National Water Initiative 2004 to return extraction in the Murray-Darling Basin to sustainable levels and a recognition that this would involve a transitional period of returning water to the environment to address past overallocation and overuse of water resources. The act has very clear objectives and related legal duties and standards to this effect to achieving environmentally sustainable levels of extraction. It does not solely prioritise environmental considerations and it does not disregard social and economic considerations. Rather we think it establishes a framework in which environmental commitments are to be implemented taking into account economic and social factors. In this respect it commits specifically to optimising economic, social and environmental outcomes from the use and management of water resources and contains a number of mechanisms to this effect. A good example of this are the mechanisms within the act to move to more sustainable levels of water allocation over a transitional period until 2014, or 2019 in Victoria, giving time to implement the new sustainable diversion limits.

Overall, we think the act provides already for an integrated treatment of economic, social and environmental factors in decision making about water resources and for the purposes of preparing a basin plan to return extraction to sustainable levels and to optimise economic, social and environmental considerations in the long term. We consider that it does not require any amendment.

CHAIR: Thank you. Associate Professor Gardner would you like to make an opening statement?

Prof. Gardner : I think Anita has made our opening statement but I would like to add that I sent by email to Owen this morning—

CHAIR: We do have the joint statement on the Water Act 2007.

Prof. Gardner : Just to make sure that the record is correctly presented you might like to note those minor amendments.

CHAIR: Thank you very much we have noted and received that on behalf of the committee. We will move to questions.

Senator JOYCE: You have used the words 'taking into account'. What precisely do you mean when you talk about socioeconomic issues being taken into account?

Dr Foerster : A good place to start there is the decision-making procedures around the sustainable diversion limit in the act. There is a definition in the act for the sustainable diversion limit to be set at an environmentally sustainable level of take which is defined as the level of water that can be taken from a water resource which if exceeded would compromise key environmental assets, key ecosystem functions, the productive base of the water resource and key environmental outcomes. Within some of those factors there such as key ecosystem functions and the productive base of the water resource, there is a clear recognition that social and economic uses of water depends on a healthy, functioning river. The act makes specific reference to values such as water resource health, mitigating pollution and limiting noxious algal blooms which all have to be taken into account in the determination of the sustainable diversion limit. These are factors that guarantee ongoing social and economic use and that is part of the consideration that is built into the definition of the sustainable diversion limit in the act.

As you will see in the way that has been dealt with in the guide to the basin plan, the Murray-Darling Basin Authority has determined an amount of 3,000 up to 7,600 gigalitres would be needed by the environment to achieve an environmentally sustainable level of take. From that point they looked at how you would need to optimise social, economic and environmental outcomes around decision-making procedures in the act. They determined that they would only look at the range of 3,000 to 4,000 gigalitres per year. I think that is an example of factoring in social and economic considerations within the substantive decision-making around the sustainable diversion limits.

Senator JOYCE: So do you believe that the current guide to the draft complies with the act?

Dr Foerster : I am only speaking in respect of the sustainable diversion limits. In that respect I think they followed the decision-making procedure set up in the act. Yes, I would say it does comply with the decision-making procedure set up in the act around sustainable diversion limits.

Senator JOYCE: That is a fair answer. So you are basically saying that what is in the current guide to the draft complies with the act and is an appropriate outcome.

Prof. Gardner : I think Anita is approaching that question as a lawyer would approach that question not as a politician would approach that question. I will explain briefly, by reference to the way in which the High Court might address this question. It is based on the way in which it adjudicates the implementation of international obligations by Commonwealth parliamentary legislation. The court is absolutely loathe to get into a judgment of the merits of the decision, of what the legislation says. It is looking only at the proper exercise of power. This is actually articulated in the amendment I sent through this morning. It adopts an approach of saying: can the legislation—or applying it to this situation, theguide to the Basin Planbe considered in a sense by a court as reasonably appropriate and adapted to achieving the purposes of the convention? That does not mean that the court would say: 'We think this is the right decision. We think this is the best implementation of the international obligations that could be made.' The court takes a much broader view and says: 'Because we are not getting into the merits of it, we are simply saying: "Could this be considered as reasonably appropriate and adapted?"' That gives both the executive and the legislature a broad range of discretion as to how those obligations are implemented. I think the latter part of your question put a prospect to Anita that is not the way a lawyer would address the question.

Senator JOYCE: I am very glad you are speaking for Anita. I want to continue with this. Basically, as Anita and you have said, the outcome is appropriate as determined by the legislation; therefore, there is a congruency between the outcome in the guide to the draft as it relates to the legislation. That has also been agreed across. It is just that the outcome is not agreed to by the Australian people. That is the problem we have got. Seeing it is congruent it would suggest that, if you want a different outcome, you would have to amend the legislation so you did not have to deal with those inconsistencies that would be brought up to the High Court between what was the outcome and what was the legislation. You believe that the Australian Government Solicitor is a competent interpreter of the act? Would you believe that to be the case?

Prof. Gardner : I think probably as good as most of us, yes.

Senator JOYCE: Good. So, if there was a congruence between the AGS's interpretation of the act and the actual guide to the draft, it would suggest to you that the guide to the draft is probably a fair outcome?

Prof. Gardner : I am not sure I have got your question. Would you mind repeating it?

Senator JOYCE: The Guide to the Proposed Basin Plan has already been tabled and everybody has seen it. If the Australian Government Solicitor had a strong understanding of exactly what was in there—that is, they were a pre-eminent resource of legal opinion in determining that outcome—then you would have to say that the Guide to the Proposed Basin Plan was a pertinent document as bringing about a congruence between what the act says and what the outcome should be.

Prof. Gardner : Yes, I would be inclined to agree. I think the AGS opinion from Robert Orr is very helpful. There is one element that I would probably add to—and I can elaborate on that if you like—but I guess the thrust of your question is whether the AGS's opinion is a reasonable guide on how to approach the question of whether the Basin Plan guidelines comply with the requirements of the act. As I read that opinion, I see no suggestion to the contrary.

Senator JOYCE: The AGS itself says as you said in your opening statement, or as Anita said. You did not talk about equivalence of outcomes. Anita actually used the word 'integrated' and, as we know, 'integrated' does not equal equivalence. You talk about 'taking into account', which also does not mean equivalence. You 'talk about 'optimising', but of course optimising is just what you do with what is left over. 'Optimise' does not in itself suggest equivalence; it suggests that you do the best you can with what you have and what you are left with might be very little. I can optimise what I can do with 5c, but that is not about me having the equivalent amount of money as the person beside me.

If we made a promise about equivalence, not one thing you have said thus far talks about equivalence between socioeconomic and environmental outcomes. You talk about optimising socioeconomic outcomes and you talk about integrated socioeconomic outcomes, but you do not talk about equivalence between those outcomes, do you?

Dr Foerster : Perhaps I could comment on that. No, we do not talk about equivalence, and we have used the words you mentioned—'integrated' and 'optimising'—but what we are getting back to is that the act really reflects a commitment made by all governments in the National Water Initiative and throughout the water reform process to return the rivers of the Murray-Darling Basin to sustainable levels and a recognition that to do that we need to return water to the environment. That is really, in essence, about guaranteeing the future social and economic use of our Murray-Darling Basin resources.

CHAIR: Perhaps we could wrap it up there, Senator Joyce.

Senator JOYCE: I have a final question. Anita, you talked about 'depending on the health' and 'limiting noxious algal blooms'. These are all pertinent things, but if they are the human issues you are talking about—limiting noxious blooms and limiting algal blooms—then you would have to concede that what you have is predominantly an environmental act.

Dr Foerster : I think there are very strong environmental commitments within the act, but they are there because it was decided that we needed to move back to a sustainable level of water allocation in order to go on using Murray-Darling Basin water resources for our human purposes. I think that is the underlying recognition and purpose of the act.

Prof. Gardner : Perhaps I could add to that. I sense that Senator Joyce's questions may be picking up on a theme of the submission of the National Irrigators Council. Correct me if I am wrong, but that submission quotes that the purposes of the National Water Initiative were to optimise economic, social and environmental outcomes. That is part of the opening phraseology of paragraph 23. If you go to paragraph 23, it has 10 subparagraphs that articulate what 'optimises economic, social and environmental outcomes' means. When you use that phrase you do need to ask what it means. One of the things it means is articulated in subparagraph iv), and it says 'complete the return of all currently overallocated or overused systems to environmentally-sustainable levels of extraction'.

That purpose is specifically picked up in the Water Act. You could say it is a transitional purpose of the Water Act. It was referred to by Minister Malcolm Turnbull in the second reading speech on the initial enactment of the Water Act. I think you have to understand that for a period of time, to achieve the return to sustainability, more water needs to be returned to the environmental purposes. That is, I think, what Anita has been explaining, That, I think, is consistent with the act. I think the AGS opinion is concurrent with that, except that perhaps it does not emphasise the transitional nature as much as it might.

CHAIR: Thank you for that. We need to move on, and I remind all senators of the time constraints and the program we have agreed to.

Senator CROSSIN: If we are actually talking about a river being productive and having a productive base for the water solution, then does the Water Act encompass that concept?

Dr Foerster : I take you back to the definition in the act for sustainable diversion limits, which refers specifically to maintaining and not compromising the productive base of the water resource. I think there is a recognition in there that social and economic use, we understand as productive use of water resources, depends on having a healthy functioning river system—a healthy working river.

Senator CROSSIN: So what are you implying there—that a functioning river which is also healthy must consider social and economic factors when you look at the environment?

Dr Foerster : I am not sure I understand your question.

Senator CROSSIN: If you are going to look at a functioning river, which means you would look at the health of the river—that is, the environment—would you not also, then, assume that economic factors are part of a healthy river system?

Dr Foerster : Obviously there are very extensive social and economic uses of the water resources of the Murray-Darling Basin, and what I am saying is that they rely on having a healthy functioning ecological system that is supplying water to those uses. The act as a whole has this strong environmental standard in it but it also has a requirement to consider best available socioeconomic information; it makes a number of references to optimising social and economic outcomes, maximising economic outputs from the use of water resources. So it is quite an integrated decision-making framework set up by the act, not purely an environmentally driven decision-making framework.

Senator CROSSIN: You would say that the act, then, is specific but in practical application flexible enough to achieve those outcomes?

Dr Foerster : I think we really have to distinguish between what the act can do and how far it can go in setting up a decision-making framework that then needs to be applied in practice. In this submission we have stated that we think the act puts forward an appropriate integrated decision-making framework for the purposes of preparing a Basin Plan that will return our systems to an ecologically sustainable level of allocation, and also optimise economic, social and environmental considerations. We think the act sets a framework to be able to do this. The implementation is obviously another question.

Prof. Gardner : If I can address that briefly, I think one of the tensions in the act—it is identified in some of the submissions and it is identified in the AGS opinion—is that there is not a whole lot of definition about what those four elements of the environmentally sustainable level of take mean. They take on meaning when you apply them to the ground and the water. Where possibly some of the difficulties have arisen is that the MDBA has taken an expert's approach to identifying those and yet there is the inevitable trade-off of which ones you identify, how much water they need as to what would ultimately be the sustainable diversion limit. Do you get my point?

Senator CROSSIN: I do, yes.

Prof. Gardner : I think it is possible to say that where the act does not speak is how exactly do you do that. As Anita has pointed out, our submission is that the act goes far enough and that it is very difficult to devise legislative guidance; rather, it is a case of devising effective administrative implementation of the statute. It is possible to say with hindsight that the MDBA may have got it a bit wrong. I say 'may' because I am a bit distant for judging these things. If you look at the level of community reaction—and maybe this is Senator Joyce's concern—how much consultation was there and could there have been to identify those key environmental assets which then had ramifications for what should be the sustainable diversion limits? I note that the new chairman, Craig Knowles, has been emphasising the local consultation that should be undertaken. This is an enormous process and understandably the MDBA did not embark upon it before as an explicit exercise—'Well, let's get the guidelines out and then we can have that consultation.' Maybe it should have been staged a bit more. Those are things you learn administratively. I do not think it means you have got to run away and amend the act.

Senator CROSSIN: Thank you; that is good. I do not have any other questions.

Senator XENOPHON: I have just one line of questioning consistent with my previous questions today. This relates to section 22 of the act, item 6, which makes reference to the mandatory content of the Basin Plan to determine the SDL. Item 6 says:

The maximum long-term annual average quantities of water that can be taken, on a sustainable basis, from: (a) the Basin's water resources as a whole; and (b) the water resources, or particular parts of the water resources, of each water resource plan area.

I think that the witnesses are familiar with that aspect of the Water Act.

Dr Foerster : Yes.

Senator XENOPHON: I refer to paragraph 6 on page 4 of your submission, and in particular paragraph 8 where you say:

It is important to view the provisions of the Water Act in relation to the Basin Plan in light of previous efforts to achieve sustainable levels of water extraction in the Basin.

The dilemma I have is that the complaint from South Australian irrigators is that they have been early adopters of water efficiency measures—they had to—and therefore cannot access much of the $5.8 billion set aside for water efficiency measures. They say that that puts them at a disadvantage to other states. Those irrigators who borrowed money—their own money—to get through the drought and well before the last drought are at a disadvantage to those who can access the water efficiency payout where they get to keep half the water and get their infrastructure done for free. How should that be taken into account in the context of determining an SDL for a particular area if there is evidence of early adopters?

Prof. Gardner : Anita, do you want to have first go at that or should I?

Dr Foerster : I would just make a quick point. The SDL is determined on the basis of what is going to constitute an environmentally sustainable level of take for that particular region. What you are getting at is how we implement this, which is the process in which the state water resource plans must be accredited under the Basin Plan, and the adjustment mechanisms that you are talking about are rolled out. That is a different question to setting the sustainable diversion limit itself. Alex, would you add anything?

Prof. Gardner : I think it is a very good question.

Senator XENOPHON: I am happy for you to take it on notice.

Prof. Gardner : I think it is better to take it on notice. But I will add that it is a question that has beset this issue of determining sustainable yields and adjusting to them for quite some time. It is probably one that we are better off giving a bit of careful thought to and making a written submission about because, Anita is right, ultimately the implementation at the state level may be a significant aspect of how you deal with that problem.

Senator XENOPHON: But it may not be in the context of an SDL. I am conscious of time constraints, but I guess the issue I have for the South Australian irrigators is that there is, I suppose, an SDL ultimately for the entire basin but within that there are 23 separate water resources plan areas.

Prof. Gardner : I suspect that, as Anita explained earlier—I am not sure that you had joined us by that time—

Senator XENOPHON: Yes.

Prof. Gardner : there was the initial bracket of what could be a return of the water to the environment, remembering that that includes productive processes. Then there is a taking into account of the process of optimising economic, social and environmental factors. It is probably at that stage that you start to look at the efficiency indicators and take account of who had been the early movers and what levels of efficiency they have. You pointed out the difficulties of accessing Commonwealth funding for the efficiency innovation. That is perhaps another question and maybe that program needs tweaking. When it comes to setting the sustainable diversion limits, it is possible—and Anita and I would like the chance to—

Senator XENOPHON: That would be valued. While you are considering that, the final issue is this: other witnesses have talked about having a holistic approach to look at issues of water buybacks, where the water buybacks are done differently for the areas that were early adopters, because there is a greater value for water in those areas, in an equity sense, and any other program so that there is an acknowledgement of early adopters in the context of having a sustainable basin.

Prof. Gardner : In other words, there should be an appreciation of the value of the water in different regions when the buyback criteria are applied.

Senator XENOPHON: Yes, in terms of early movers on water efficiency measures.

Prof. Gardner : That is another very good point. I would have thought, to the extent that we could address it, we would have a look at it, but I suspect that that is less a matter of sustainable diversion limits, of course, and much more one for the actual process of implementation and Commonwealth environmental water holders.

Senator XENOPHON: Your input would be very valued because you are at least attempting to address this more than some of the other witnesses, which I am grateful for. That is it from me. You will not hear from me again until 3.30 your time.

CHAIR: Thank you, Senator Xenophon. We will hear from you then.

Senator BIRMINGHAM: I heard the evidence you gave to Senator Joyce and others which continues to reinforce the point that, yes, you need sustainability in the system for irrigators, the economy and the local community, but of course sustainability is not a singular point in the spectrum. It is a case of choosing where in the spectrum you get that sustainability, and, indeed, sustainability for the productive base of the water resource is only one part of the definitions under the environmentally sustainable level of take. How much flexibility do you think there is for the government, bearing in mind the international treaty obligations in the act, when it comes to meeting the other three points in the definition of environmentally sustainable level of take—the key environmental assets, the key ecosystem functions and the key environmental outcomes?

Dr Foerster : I would just say that the way the act addresses this builds in discretion for the decision-maker around determining the sustainable diversion limit according to this definition and talks about the level of water use that, which if exceeded, would compromise key assets, key functions et cetera. Around the words 'compromise' and 'key', there is a fair bit of discretion built into the decision-making framework for the Murray-Darling Basin Authority to work with in answering that question.

Prof. Gardner : I agree with Anita's point. The only point I would add is perhaps a difficult one to articulate an answer to at short notice. Because it is using the external affairs power and giving effect to international obligations, one of the ways in which we define how to give effect to international obligations is to look at the recommendations of the conference of the parties that meet on those conventions. One may want to have a look at the recommendations to get some guidance on how the executive might give effect to those definitions. Does that help you?

Senator BIRMINGHAM: It is a useful suggestion. With regard to the guide to the Basin Plan that was released by the Murray-Darling Basin Authority, do you believe that that document and the work that the MDBA released in association with that satisfactorily identify what the key assets, key functions and key outcomes are?

Dr Foerster : I do not think that is a question necessarily for us. It goes to the implementation of this statutory framework for decision making. I do not think I can comment on the merits of the work that the Murray-Darling Basin Authority has done in that respect.

Prof. Gardner : I generally agree with Anita on that point, but I would add two qualifying propositions. One is that I have not had the chance to read all of it. It is an enormous body of work. As a lawyer, you do not tend to read all of that sort of thing, but this morning I was looking for some exploration of the 'productive base' concept. I thought that in volume 2 of part 1 there was not much discussion, but it may be that it is in another part of the material. I just add that comment. It is perhaps only half-informed.

CHAIR: Thank you very much to both the witnesses. We appreciate your time.

Prof. Gardner : May I add one more point please, just briefly.

CHAIR: Just briefly.

Prof. Gardner : I am also an adjunct professor at the Australian National University, which is why I have a fair bit of interest in this material.

CHAIR: Thank you very much.