Politician calls for overhaul of Australian water laws

Australia's Deputy Prime Minister, John Anderson, has called for the strategic framework for reform of the Australian water industry adopted by the Council of Australian Governments (COAG) in 1994 to be overhauled.

“The COAG water reform agreement was a watershed; providing a sound framework for the States to get their houses in order and establish a better balance between water use and environmental protection,” Anderson wrote in the rural weekly newspaper, The Land.
. “But the slowness and even failure of some States to implement the reforms – and in some cases selective interpretation – have left the on-ground reality a pale shadow of what might have been.

“Water property rights are not being recognised and the COAG agreement is effectively being used to prevent the States from investing in new water development projects or to upgrade existing infrastructure, even where they stack up ecologically.”

Anderson supported the two key objectives of the water reform agreement – firstly, achieving ecological sustainability, and secondly, developing a more commercial approach to water pricing.

He also supported the cap on diversions in the Murray Darling Basin, but indicated that its implementation in many valleys had been botched by the New South Wales Government.

Anderson argued that the COAG agreement provided for the States to recognise water property rights and they therefore had a moral obligation to ensure that where these rights were removed, compensation or adjustment assistance was available.

The Australian Federal Government provides hundreds of millions of dollars to the States as bonus payments under National Competition Policy (NCP) and this, says Anderson, is the most appropriate source of assistance to irrigators.

“If it is good enough for the Australian Constitution to require just terms compensation for the acquisition of property, it should be good enough for the States. It is a question of justice,” Anderson wrote.

Anderson said he was equally concerned by the way the COAG water agreement was being interpreted under the umbrella of NCP. “I believe it is being assigned objectives that go beyond its remit and are against regional development. While it is right to seek greater commerciality in water pricing, there must be limits.

“We know those limits have been exceeded when the interpretation of NCP bars further public investment in new water developments projects and the extension and/or upgrading of existing infrastructure.

“Governments cannot be expected to ignore the significant regional development opportunities that can be unlocked by new water investment simply because the rate of return doesn’t measure up to some bureaucrat’s yardstick. If a new water development proposal stacks up environmentally and it can be developed commercially, that is great, but governments must be free to make a contribution if they want.”

Anderson said that government investments in other infrastructure, such as roads, schools and hospitals, was not required to earn a real rate of return, and it was hard, therefore, to apply a different rule for water.

“Governments recognise the public good component of other infrastructure investment and it is no less appropriate to take this approach with water, especially as water utilities are monopoly suppliers.”

Anderson said the issues surrounding water policy highlighted the need for the current review of NCP to closely scrutinise the so-called public interest test. “The public interest test must be capable of delivering more than a narrow ‘minimum cost to the consumer’ type assessment. Critical factors such as the regional and/or sectoral impact of reforms and the potential economic and employment benefits that can flow via investment in regional industries must be taken fully into account,” he said.

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