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National Competition Policy: water reform: where now?



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Water Reform: Where Now?

Paul Swan

National Competition Council

2

Today’s Today’s Today’s Today’s presentation presentation presentation presentation

❶ CoAG Water Reform Agreements

� The Role of the NCC

� The next NCC report on water reform

❹ Reform Progress to Date

❺ Where Now? Key challenges

❻ What this means for Queensland

1. The CoAG Water 1. The CoAG Water 1. The CoAG Water 1. The CoAG Water Reform Reform Reform Reform Agreements Agreements Agreements Agreements

The Need for Reform - The Need for Reform - The Need for Reform - The Need for Reform -the Queensland Context the Queensland Context the Queensland Context the Queensland Context

• The bulk of Queensland’s rivers are coastal and Queensland’s water resources are less heavily committed than the Southern States but

• parts of Queensland may experience water shortages if current usage continues • While salinity has not been an issue in the past, recent studies suggest the potential is

large and is yet to emerge

The Need for Reform

• Extensive and unsustainable use of water has lead to problems for

- farmers

- rural towns

- the environment

COAG water reform COAG water reform COAG water reform COAG water reform

To address these problems, significant policy changes were necessary

In 1994 COAG endorsed a framework of reform to promote an efficient and sustainable industry

Components of Water Reform Components of Water Reform Components of Water Reform Components of Water Reform Framework Framework Framework Framework

$ $ pricing reform and full cost recovery � Clear lines of responsibility between government and water authorities

� Establishing secure access to water separate from land

� permanent & interstate trading

� providing water for the environment

! public education and consultation

2. Who is the NCC? 2. Who is the NCC? 2. Who is the NCC? 2. Who is the NCC?

• 5 Councillors, 20 Secretariat staff

• The central role of the NCC is to report on reform progress

-NCC recommends to the Treasurer whether States have made sufficient progress for NCP payments.

Who is the NCC? Who is the NCC? Who is the NCC? Who is the NCC?

The role of The role of The role of The role of governments governments governments governments

• The agreement of all governments decided what reforms were included

• The role of Governments is to implement the agreed reforms

- Many policy options to meet the requirements of the agreement

• Concerns with the policy

option chosen must

be addressed with governments

The Role of the The Role of the The Role of the The Role of the NCC NCC NCC NCC

• The NCC’s role is to report

& assist

compliance with the NCP agreements - If government policy/implementation breaches the CoAG agreement

, NCC concern

• Reports of progress for water reform in June 1999 and June 2001

- the NCC has also conducted supplementary assessments

3. The Next NCC 3. The Next NCC 3. The Next NCC 3. The Next NCC Report on Water Report on Water Report on Water Report on Water Reform Reform Reform Reform

June 2001 June 2001 June 2001 June 2001 Assessment Assessment Assessment Assessment

• The next assessment of water reform will occur in June 2001

• In November 2000, CoAG agreed to extend the life of the NCC until September 2005

• There will be annual assessments after June 2001

June 2001 Assessment Framework:

National Competition Council Level 12, 2 Lonsdale Street MELBOURNE VIC 3000

Ph: 03 9285 7479 Fax: 03 9285 7477 Email: info@ncc.gov.au

4. Progress to 4. Progress to 4. Progress to 4. Progress to Date… Date… Date… Date…

Legislation Legislation Legislation Legislation

• All States and Territories have now passed legislation that underpins the reform process

- this has taken somewhat longer than originally envisaged

- Qld, NSW, WA and the NT all passed significant Water Acts late in 2000

Urban Water Urban Water Urban Water Urban Water Reforms Reforms Reforms Reforms

• Urban reform is well advanced - all jurisdictions have largely implemented full cost recovery in urban sector

- service providers now earn positive RoR

- cross-subsidies are being wound back

- consumption based pricing is leading to people conserving water

Rural Water Rural Water Rural Water Rural Water Reform Reform Reform Reform

• Rural reform still has some way to go - All states are making progress to implement full cost recovery

- allocation and trading regimes are being put in place. T

rading is leading to water

going to the most productive uses

- investment decisions now based on rigorous appraisals of economic viability and ecological sustainability

Other Areas of Other Areas of Other Areas of Other Areas of Reform Reform Reform Reform

• All governments established clear lines of responsibility in the areas of resource management, regulation, service provision

• Local people have a greater say in the management of water, particularly in irrigation districts

• All sectors (urban, NMU, irrigation) now subject to annual benchmarking

5. 5. 5. 5. Where Now? Where Now? Where Now? Where Now?

Rural full cost Rural full cost Rural full cost Rural full cost recovery recovery recovery recovery

• Full cost recovery in rural water pricing is a key reform challenge

Rural Full cost Rural Full cost Rural Full cost Rural Full cost recovery recovery recovery recovery

• In June 2001, the NCC will report on: - schemes where full cost recovery is met - those with price paths to achieve beyond 2001

- those where full cost recovery unlikely to be achieved with CSOs made transparent

- cross subsidies made transparent

Water Property Water Property Water Property Water Property Rights Rights Rights Rights

• Jurisdictions are continuing the process of establishing clear property rights for water

Water Property Water Property Water Property Water Property Rights Rights Rights Rights

• In June 2001, the NCC is looking at the efficacy of water property rights across all governments

• NCC is looking at the delivery of the overall package to ensure sufficient certainty in property rights

• NCC paper on property rights released on the website in February 2001

Environmental Environmental Environmental Environmental Flows Flows Flows Flows

• All governments have begun the process of setting environmental allocations in planning and legislation

Environmental Environmental Environmental Environmental Flows Flows Flows Flows

• Progress has been slow and there is a long way to go. Needs to all be in place by 2005

• Needs to be supported by better understanding or river health, and ecology of flow regimes

Water Trading Water Trading Water Trading Water Trading

• All governments now recognise the benefits of water trading

but….

Water Trading Water Trading Water Trading Water Trading

• Evolution of successful trading policies is mixed across the States

- Some states are well advanced while others are yet to address community concerns to the concept

- There is a need to look beyond intrastate to interstate trades

6. 6. 6. 6. What this means What this means What this means What this means for Queensland for Queensland for Queensland for Queensland

In Summary

• Continued progress with full cost recovery -urban and rural • Finalised WAMPs and WRPs to be assessed against Water Act 2000 and Queensland’s

implementation timetable

• Any new investment in rural schemes to be assessed against Qld’s economic viability guidelines

• Removal of impediments to trade