Governance and

Institutional
Frameworks
David Downie
Strategic Advisor
Centre for Regional and Rural Futures,
Deakin University

Australia Annual
Rainfall

Forecast of Total
Inflows in the Murray
System Over next 50
Years

Irrigated Agriculture
in Australia

70-80% of water use

0.4% land irrigated, 99.6%

non irrigated

25% gross value of agriculture

Agriculture 3% GDP

- 22% total exports ($33.6b)

Irrigation mainly in MDB

Typical crops are (NSW) rice,

cotton, (Vic) dairy less than
20% on horticulture, viticulture,
permanent plantings

Water Supply and

Use

Irrigated Agriculture
Financial Return on
Water Input

Aim to have prosperous irrigated

agriculture
For secure future, rivers must be
healthy:

More production from less

water

Reduce salinity & nutrient sideeffects

Water Management
History

Prior to the 1980s, water management was largely conducted by local authorities, with
separate trusts being responsible for water delivery and sewerage services

Strong connections to municipal councils

Victoria, geographically small with a relatively low population, had around 370 regional water
authorities, yet no overarching integrated policy and planning body

Melbournes water supply was managed by the MMBW, with rural supply managed by the
State Rivers Commission

Recent Water
Industry Reform

1980
1983

Public Bodies Review Committee (Victorian Parliament)

Water & Sewerage Authorities (Restructuring) Act
370 authorities restructured to 105 water boards, 7 sewerage authorities and 43
municipalities with water supply functions

1989

Water Act
Statutory rights to water (continued)
Decision making in hands of Minister not bureaucracy
Consultation processes for Ministerial decisions
Bulk water entitlements
Water trading at bulk and retail levels
Separation of service delivery from policy and regulation
Corporate planning processes, Waterway management functions,
Environment considerations

Reform Water
Authorities

Replaced local government and large Metro Authorities with expert Boards (with regional ties)
Built capability (large regional authorities) with appropriate
people
financial muscle, and
knowledge and skills
Self funding through water prices allowed authorities to
Cover operation and maintenance
Look after assets, and
Source money to grow business
Focus on customer and commercial service delivery
Clarified roles, responsibilities and incentives

Water Industry
Reform Key Events

1990s Water Act implementation progresses (first bulk water entitlement for Goulburn irrigation system,
water markets grow)
1993 Reforming Victorias Water Industry - a Competitive Future
RWC split into 5 regional RWAs
139 bodies amalgamated to 15 regional authorities
MBW split up into headworks business and 3 retail businesses
1994 Water Industry Act 1994 introduced to regulate the operation of the new
2005 Water (Resource Management) Act
Environmental Water Reserve, Water Register, unbundling, reconfigure

2006 Water (Governance) Act

Addressed identified problems, clarified high and low value uses for water

metropolitan retailers

Victorian
Institutional
Arrangements

Allocation and
Management
Entitlement
Framework

Based on Secure Property Rights

Water Act 1989 (Pt 4)
Sets out stakeholder engagement processes which must
be followed if issuing/amending entitlements
Largely based on notifications, seeking submissions,
considering submissions, panel if necessary & making
decision with ability for disallowance (BEs) or review at
VCAT (individual entitlements)
Licensing functions delegated to rural water corps &
guided by policies: see:
http://waterregister.vic.gov.au/Public/Documents/Policiesfor-Managing-Take-and-Use-Licences.pdf

For Trading, Need

Meters, Penalties

Accurate meters, remote-controlled gates

Old meters, manual gates - need to order four

days in advance

Maximum Penalties for Stealing Water:

1st Offence: $7,000 fine or 6 months jail

2nd Offence: $14,000 fine or 12 months jail

Unbundling Water
Rights

Mortgageable asset easier to trade able to be leased dont

need land choice b/w high, low
Obligation to pay can opt for more (e.g. if have drip irrigation)

Standards can go up restrictions on water use

Victorian Water
Register
The Water Register is a public register of all waterrelated entitlements in Victoria:
- bulk entitlements
- environmental entitlements
- water shares
- water licences
The Water Register:
- provides individual records
- key statistics of trades (water shares
and allocations)
- trade forms and helps track trades
- is being used as the basis for the
Australia-wide water register, under
development to help facilitate interstate trade.

Planning
Framework
Long term /
Strategic /
Consultative

15-YEAR
Long-term water resource assessment
Identify a permanent reduction in availability and appropriate response.
Could include permanent changes to entitlements.

Comprehensive
stakeholder consultation at
each level

Processes prescribed in Act

for long-term assessment,
sustainable water
strategies, drought
response plans

Obligations on water corps

and CMAs to engage on
their strategies.

10-YEAR
Regional sustainable water strategies
Identify risks to water quantity/quality over next 50 years and
appropriate response. Includes urban use, rural use and environment.

5-YEAR
Water supply-demand strategies
Assess urban supply/demand over 50 years.
Address shortfalls.

Regional river health strategies

Establish objectives for rivers.
Set priorities to achieve these objectives.

Short term /
Responsive /
Unilateral

1-YEAR
Drought response plans
Local management rules
Seasonal allocation / reserve policy
Environmental watering plans
Annual restrictions/bans and allocations.
Priorities for supply.

Sustainable Water
Strategies Key
Focus

Central

Supply shortfalls in Melbourne &

adjacent regional cities;
improvements to river health

Northern

Managing through drought

Gippsland

Sustainable use;
protection of waterways

WSWS -

Interception

Water Authorities
Water Authorities State Owned Water Corporations
Owned and regulated by Victorian Government
Boards appointed by Government
Operate under commercial principles

Drought response infrastructure

In response to 2006 conditions, the previous government invested in

major infrastructure including:

Desalination plant (150+ GL p.a. [121,650 acre feet])

Expanding network of pipes and connections

Upgrading Northern Victorias irrigation system

Northern Victoria Irrigation Renewal Project

(Modernising the GMID)
425 GL in total savings -

Improved Service
Delivery/Renovation/Rationalisation

Bass Strait

Stage 1: 225 GL for $1b

($100m irrigators)

Food Bowl farmers 75 GL p.a.

Environment

Melbourne*

75 GL p.a.

75 GL p.a.

Stage 2: 200 GL for $1b

State and Federal Investment
up to 100 GL for irrigators
up to 100 GL for environment

Victorian Water
Grid

Lessons Learned in
Australian Water
Reform

Political Will
The will to reform must be accepted at a politically effective level. The economic importance of water and
water related services at high standards and lowest possible cost must be recognised as a key national
objective.

Government Role Policy / Legislative

Government must maintain ultimate control but retain only a policy/legislative role.

Reform Team
Government must establish a committed team of multi-disciplinary professionals AND key community
stakeholders from outside the industry to set the framework to drive the reform (not existing water
decision makers -but utilising their knowledge.) . Key champions of reform must be identified early and
engaged in the effort.

Long Journey Over Many Electorial Cycles

Reform is a long journey or the battle will be lost in the early stages

Lessons Learned in
Australian Water
Reform (2)
Reform Ingredients Framework
The framework must cover:
Measurement and accounting for the resource (sometimes takes many years and can run alongside reform)
Statutory volumetric rights (capacity share) which are tradeable
Reserve powers should remain in the hands of most powerful politicians not bureaucrats
Extensive community consultation in all phases of development of the framework and finalisation of water rights
A statutory based register of all entitlement and allocation decisions
Water trading at bulk and retail levels as the means of allocating water not Government/Ministerial/bureaucratic orgs
(including environmental water)
Institutional separation of policy ,service delivery and regulation (and customer complaints) for water supply
,sewerage ,waterway and catchment management functions (PERHAPS THE MOST IMPORTANT ELEMENT OF ALL)
Creation of financially viable regional authorities to undertake service delivery with skill based Boards , performance
reporting and community obligations to perform. These authorities are independently regulated to determine prices of
monopoly and must be empowered to charge customers. Social programs should be run separately or the whole
reform program will be lost.(viz. Apple does not provide subsidies)
Recognition of environmental standards , establishment of env. managers and the need for sustainability
Long run water supply planning involving the community is critical as climate variability and demand happens faster
than you think.

Lessons Learned in
Australian Water
Reform (3)

Restrictions are for Emergencies Only

Restrictions are almost invariably economically expensive and do not benefit the environment. There is
plenty of water and price is the only variablelet the market and the community determine if they want to
pay more or conserve.

Mult-Tier Framework
There must be a nationally agreed framework agenda involving the commitment of national /regional and
local governments to the broad agenda and direction.