Water rights and the water markets in Australia- unfinished business and a regulatory tool to improve working.Professor Jennifer McKay, School of LawSouth Australia, DWG 2015 Fortalenza

Panel on environmental flowsDr Barbara Willaarts Water Observatory Madrid –Monitoring status of surface water bodies in Spain lesson learnt and challenges ahead.

Dr Stanley Mbofho Liphadzi Water Research Commission South Africa- Sustainable Management of Water in South Africa

Dr Maria Leichner General Director Fundacion ECOS Uruguay and RFP South America CSO-GEF Network Environmental flows in Uruguay

Framework for Australia

SA and Victoria early Political Challenges in Water Allocation between States

The caption reads:’You see I intend to treat you with sisterly regard in the matter.

You will observe that the droppings I allow to go to you absolutely without condition’. The caption was a bitter critique of the ‘family’ of Federation, in which the smaller states languished at the mercy of the larger.

old inaccurate

Dethridge wheels

New technology

recent science improvements

Murrumbidgee Irrigation area NSW

Issue- the solar panels were stolen so now on the high pole!

Water licences water is not attached to land any more after 1983

Consumptive pool users only have a share of a ground water and / or surface water pool.

It is not a right, but a mere licence which can be defeated by a drought announcement or other changes.

In the Millennium drought many farmers had zero allocations for many years and the Federal Government sponsored adjustment packages to keep them on the land( like unemployment benefits) but also gave relocation packages in some areas.

Environmental flowsThe overall objective of environmental flow recommendations is to ensure that sufficient water is made available to support the needs of the entire riverine ecosystem.

Methodologies differ between the States

Previously, these assessments have focused largely on minimum flow requirements for instream fauna (such invertebrates and fish) by employing the instream Flow Incremental Methodology (IFIM) or other desktop approaches. However, new holistic methodologies that incorporate natural variability in stream flow, and the high flow water requirements of entire riverine ecosystems

Environmental flow- ideal methodThe process involves four main steps in Tasmania:

Identify freshwater ecosystem values in each catchment in order to define the objectives of the environmental flow assessment. Develop conceptual models that identify the ecosystem processes that support these values.

Identify representative river reaches, conduct assessments using hydraulic and hydrological models to characterise physical habitat and biological diversity of the system, and identify specific flow events that relate to these attributes.

Conduct hydrological analyses of flow data to define the pattern of occurrence of important flow events and the availability of important habitats for fauna.

Recommend a flow regime that meets the objectives of the environmental flow assessment, including rules for water abstraction.

Environmental flows and water planningEnvironmental flow assessments essentially describe the importance of different flows to the aquatic values of riverine systems. It is critical when interpreting environmental flow assessments that they are considered in the context of the community's environmental, economic and social objectives for the river(s) being examined. Thus, assessments provide an essential input to DPIPWE's water management planning process; however, all water users within a catchment are considered by DPIPWE during the development of water management plans. During this process, environmental water requirements are negotiated and implemented as environmental water provisions, which aim to balance economic, social and environmental values within catchments

Water Laws and plans in Australia States

Are Statutory Water Plans the right way?• YES - 61.5% • But also pointed out some concerns:

• unfairness in the processes for public consultation, • lack of knowledge of local, • cost of development and implementation of water plans, and • uncertainties in the science.

Environmental flowsThroughout Australia, environmental flow assessments are used to estimate the quantity and timing of flows required to sustain identified aquatic values in riverine environments. Typically, water management planning and other natural resource planning processes use environmental flow assessments to make informed decisions about water management.

There is no single standardised method for estimating environmental flows in Australia or in other countries; instead several  methods are available, and their application is often tailored to meet the specific requirements of each assessment

National issueResearch Projects funded•Daly Basin Projects•Environmental flow requirements for Australian arid zone rivers•Productivity and water flow regulation in the Ord River of northwestern Australia (WA)•Snowy River benchmarking study (NSW)•Assessment of the impact of private dams on seasonal flow (Vic)•Importance of flood flows to the productivity of dryland rivers and their floodplains (Qld)•Environmental Flow Requirements on the Paroo / Warrego Rivers (NSW

Environmental flows in MDB in 2011

Using the best available science, and drawing upon a wide body of peer-reviewed work, in October 2010 the Murray-Darling Basin Authority came up with a volume of water for the environment equal to 3,856 GL/year, on average. This would give a “high uncertainty” of conserving key environmental assets and ecosystem functions.

It also had a larger number of 6,983 GL/year that would give a “low uncertainty” of conserving key environmental assets and ecosystem functions

water scarce towns in MDBC

Source: EBC, RMCG et al (2011a) MDBA website

Water Act 2007

Commonwealth (under multiple powers in section 51, including the referral of powers from the States) enacts the Water Act to apply to M D Basin

Commonwealth accreditation of all State Water Plans which must aim to achieve ESD ,gives a role to Australian competition and Consumer Commission to regulate process and enhances the Commonwealth environmental water holder. Buy backs of land and water start.

Environmental flows

Based on these volumes, the Authority recommended that the increase in environmental flows should be between 3,000 and 4,000GL/year. That means between 27% and 37% reduction in water extractions by irrigators if this extra water were obtained entirely from reductions in water course extractions.

The upper limit was set at 4,000GL/year rather than 7,600 GL/year by the Authority because it believed that reducing irrigation diversions by more than 4,000 GL/year would result in unacceptably high socio-economic costs

environmental flows uncertain science

According to Freeman “…the assets and functions are now yielding numbers below 3,000GL/year”. Whether this is old or new, all science used to make public policy decisions should be scrutinised and, wherever possible, be subject to peer review. If not, the evidence is compromised.

Yet, so far, the Authority has refused to establish an independent scientific assessment panel to review its “new science”, despite an explicit request to do so by the Wentworth Group of Concerned Scientists, the Australian Conservation Foundation and others

conflict resolution measures

New model for water utilties

Model of water business enterprise. Source: McKay J (2003) & McKay J, Water Policy (2005) 1-20

References cited

• Keremane, G., Mckay, J., Ettehad, E. & Wu, Z. 2013. The Evolution of Business Models for Non-Major Desalination Plants in Australia- Issues for Governance. The International Desalination Association World Congress on Desalination and Water Reuse. Tianjin, China.

• Keremane, G. B., McKay, J & Wu, Z (2012), ‘Sustainable Water Planning in Australia-A survey of our sustainability water policy entrepreneurs’, Water, 39 (5):62-65.

• Wu, Z, McKay, J & Keremane, G.B. (2012), ‘GOVERNANCE OF URBAN FRESHWATER: Some views of three urban communities in Australia’, Water, 39 (1):88-92.

• McKay, J. M. (2008). Insubstantial Tenuous and Vague Laws - The Achievement of Ecologically Sustainable Development by Water Supply Business CEO’s , Australian Business Law Review, 36(6):432-445

Thank you for invitation

Questions?

An old conflict

They hang the man and flog the woman That steal the goose from the common,

But let the greater villain loose That steal the common from the goose.

English folk poem, 1764

Water Markets legal issues in Australia

Constitutional

Institutional Structures

Monopolistic behaviour of water barons but this can be regulated by ACL

Separation of water from land aspect liked by farmers but not the broader community.

Community adoption of sustainable development ideals, loss of roles and collectivity in rights and obligations –a move away from the yeoman farmer of the last 200 years

The Water Act 2007

Basin Plan and regional water plans how these could assist communal management and have an impact on State Water markets

Long term issuesThe longer term social impacts of the effects of water

markets are unclear and the distribution of them may not make a significant contribution to sustainable communities or

to equitable regional development (McKay and Bjornlund 2001). 2014 Paper

Compensation for loss of water allocation is limited . This was a major issue.

Water Plans at a regional level can contribute to conversations in the local region to induce a collective approach. McKay 2013

Water markets-rural community concernsWhile the available data are relatively scarce, they do suggest that

rural community members fear the effects of water markets on their communities.

There is evidence that they disagree with water markets being the primary method of allocating water Bjornlund 2004a; Tisdell and Ward 2003).

Disquiet about water markets among residents of rural communities

is centred on an apprehension that the sustainability of rural

communities will be diminished and that ‘

emerge and manipulate the market for individual or corporate benefit (Bjornlund 2004b; Tisdell and Ward 2003).

Water Markets community responseFenton found that while 50% of respondents believed that individuals had the right to sell their water allocation, approximately 65%

were nonetheless opposed to water trading. Hence people living

in rural communities appear to distinguish between the

right of individual farmers to sell their water and an evaluation of whether this is desirable; there is a disjuncture between people’s

perceptions about what is good for individuals as opposed

to what is good for their community.

Tisdell and Ward separating water entitlements from land- initial pillar of the new water markets

Water markets – the hopesmarket-oriented approach was developed.

The market-based approach was first set out in

the communique of the 1994 COAG meeting and

was developed more fully in the National Water

Initiative announced in 2004 (Council of

Australian Governments 1994, 2004a, b). The

central idea was to replace bureaucratic systems of

water allocation based on licenses with tradeable

water rights. It was hoped that markets would

ensure that water was allocated to its most socially

valuable use.

The market-based approach to policy has thus far

had only limited success. A number of problems

have become evident.

National intervention in water since 1994

INTERGOVERNMENTAL AGREEMENT ON A NATIONAL WATER INITIATIVE 2008

Between the Commonwealth of Australia and the Governments of New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory

and the Northern Territory

PREAMBLE

1. Water may be viewed as part of Australia’s natural capital, serving a number of important productive, environmental and social objectives. Australia’s water resources are highly variable, reflecting the range of climatic conditions and terrain nationally. In addition, the level of development in Australia’s water resources ranges from heavily regulated working rivers and groundwater resources, through to rivers and aquifers in almost pristine condition.

RIGHTS TO WATER

no property, common property, state property and private property

no ``best'' regulation and that a mix of regimes can be found in most cases and environmental destruction can be

found in all regimes.

However, it is possible to identify conditions for the success of specific regulative systems conditions for the success of specific regulative systems. In the Australian context, I see this as the regional water plan, but there is a way to go in the administration of these and pressures such a coal seam gas.

water marketsCalls for a Commonwealth takeover of water

policy have also been justified on the basis of the

supposed desirability of a uniform policy

approach. However, given the differences in

climate and catchment hydrology between the

states and the fact that, with the exception of the

Murray–Darling Basin (which is already governed

by well-established federal institutions) there is no

real possibility of trading water between states,

there is no obvious reason to expect uniformity to

yield beneficial outcomes. Rather than a one-size-fits-all solution, it would be better to adopt policies

based on local circumstances, and the democratic

choices of local electorates.

Water Act 2007

The Water Act requires state regional water plans to be done and accredited as in the national interest

The accreditation process has not happened yet as the community are unhappy. 3 ATTEMPTS TO BALANCE ESD. Problem perception of unfairness and loss of State sovereignty

Philosophical issue can regional plans be amalgamated? Several regional interest plans do not make a whole

FIDUCIARY DUTIES MDBCUnder the Corporations Act, company directors owe their fiduciary duties to 'the company as a whole' and not to any particular shareholder

whether that shareholder is in a position to control the company or not. Even the board of a wholly owned subsidiary company

is not bound to comply with the directions of the controllers of the company.

Where a controlling member of a corporation attempts to dictate informally a course of action to the board, such a

communication is legally ineffective. The directors are under no duty to obey such a communication, and indeed would be in breach of their duty if they were to do so. See Mantziaris C, 1998

Ministerial Directions to Statutory Corporations, Parliamentary

Library Research Paper 7 1998-99, Australian Parliamentary Library

INTERGOVERNMENTAL COOPERATIONDeveloping innovative structures for intergovernmental co-operation

An earlier CAF paper observed that innovative, purpose-built intergovernmental bodies will be required to drive national reforms.

The Commonwealth Department of Finance and

Deregulation has acknowledged that:

when governments work co-operatively to develop policy objectives and consider forming bodies that are accountable to more than one government, these joint arrangements may require innovative governance structures.

The Ahead of the Game: Blueprint for the Reform of Australian Government Administration

also acknowledged the need for “fit for purpose” governance structures for intergovernmental bodies

Oecd on water Governance( urban)The OECD has noted that the formation and maintenance of a successful and effective government partnership depends

on trust, mutually agreed upon objectives, and a

governance framework that establishes the rules and guidelines for each partner.

A motherhood statement but one of great importance

I will explore the trust aspect now relying on our Australian research

Perceptions of water planners on water governance(Keremane et al 2012)

Perceptions of urban community on water (Wu et al 2012) governance

Source: McKay, 2008

I am able to achieve sustainable water management

Corporate governance legal types of WSBs by State –Urban and Rural (McKay 2008)

Who do you prefer to be governing Australia’s water resources? (Wu et al 2012)

Urban community’s view  City of Salisbury City of Charles Sturt City of Gold Coast Response Totals

The federal government 1 1 1 1

National Water Commission 2 2 3 2

State government 3 3 2 3

Water resource management regional authority

4 4 5 4

Environment Protection Authority

5 5 6 6

Council 6 6 4 5

Water supplier 7 7 7 7

Note: Ranking Order: 1=most preferable to 7=least preferable

Thank you

Questions?

water rights complex in Australia

consideration of the water rights systems alone is not sufficient for the analysis of the institutional framework

In fact, the influence of all relevant public policies on a specific commodity or on the entire resource, and their

interaction with the given property and use right arrangement, should be given explicit consideration

Reform in the national interest does not have to involve the Commonwealth Government. The

establishment of the National Electricity Market Management Company (NEMMCO) to jointly

manage the national electricity market in eastern Australia

In a limited number of cases, intergovernmental entities

have been set up by States to further co-operation across borders (e.g.. Dumaresq-Barwon Rivers

Commission which enables management of jointly “owned” water infrastructure on the

NSW/Queensland border).

There is minimal guidance available to identify situations when adoption of harmonized or

common national approaches to reform makes sense.25 The most succinct rationale for cooperating

to achieve national reform is the Commonwealth criteria for National Partnership

Payments

Guidance for Ministerial Councils suggests that they should focus on items of “strategic national significance”

defined as issues of interest for all jurisdictions and those requiring resolution of disagreement on key issues of

Australia-wide concern. COAG, 2009, Commonwealth-State Ministerial Councils Compendium, October, p.6

The Intergovernmental Agreement on Federal Financial Relations outlines the basis of Commonwealth

support for national reform or service delivery improvement in areas of State or Territory responsibility,

where it:

• is closely linked to a current or emerging national objective or expenditure priority of the

Commonwealth — for example, addressing Indigenous disadvantage and social inclusion;

• has ‘national public good’ characteristics — where the benefits of the involvement extend

nationwide;

• has ‘spill over’ benefits that extend beyond the boundaries of a single State or Territory;

• has a particularly strong impact on aggregate demand or sensitivity to the economic cycle, consistent

with the Commonwealth’s macroeconomic management responsibilities; or

• addresses a need for harmonisation of policy between the States and Territories to reduce barriers to

the movement of capital and labour.

In general, the presumption in favour

Arose out of frustration of Howard Government with States on water reforms in NWI and non implementation of water allocation plans

Commonwealth (under multiple powers in section 51, including the referral of powers from the States) enacts the Water Act to apply to M D Basin

Commonwealth accreditation of all State Water Plans which must aim to achieve ESD ,gives a role to Australian competition and Consumer Commission to regulate process and enhances the Commonwealth environmental water holder. Buy backs of land and water start.

Water Act 2007

Instrument - state level water plan and Basin Plan

• The Water Act requires these to be done and accredited as in the national interest

• The accreditation process has not happened yet as the community are unhappy. 3 ATTEMPTS TO BALANCE ESD. Problem perception of unfairness and loss of State sovereignty

• Philosophical issue can regional plans be amalgamated? Several regional interest plans do not make a whole.

• YES - 61.5%

• But also pointed out some concerns:• unfairness in the processes for public consultation, • lack of knowledge of local, • cost of development and implementation of water

plans, and • uncertainties in the science.

Are Statutory Water Plans the right way to approach sustainable water policy? (water planners responses)

28 ANAO, Public Sector Governance Vol 1, Better Practice Guide, July 2003, <http://www.anao.gov.au>

29 Webbe S and Weller P, 2008, A Public Interest Map: An Independent Review of Queensland Government Boards,

Committees and Statutory Authorities

Governance is defined as the “processes by which organisations are directed, controlled and

held to account, encompassing elements such as authority, accountability, stewardship,

leadership, direction and control exercised in the organisation”.28 Good governance is essential

to achieving a public sector entity’s objectives in an effective and transparent manner and

assuring the community of the responsible management of public esources.

Intergovernmental bodies require each participant to invest some public resources or power in

the new entity. Yet governments remain accountable for the expenditure of their public funds,

the exercise of their public power and authority; and ultimately, for meeting the needs of the

people they represent no matter how a public body is constituted.29

28 ANAO, Public Sector Governance Vol 1, Better Practice Guide, July 2003, <http://www.anao.gov.au>

29 Webbe S and Weller P, 2008, A Public Interest Map: An Independent Review of Queensland Government Boards,

Committees and Statutory Authorities

In summary, intergovernmental bodies are established in three ways:

• through (formal or informal) agreement between jurisdictions (intergovernmental forum);

• through specific legislation by State or Commonwealth Government (statutory authority); or

• under the Corporations Act 2001 (company).

MDBA and NWC

created by legislation

statutory authority

can be staffed by one Dept public service

Accountable to Minister

subject to scrutiny of finances by Parliament

Policy standard setting for NWC abolished as of October 2014

MDBA regulation according to KPMG study for Victorian government

STANDING COUNCIL ON ENERGY AND RESOURCES

MINISTERIAL COUNCIL

Staffed by representatives from States

meets occassionally

SNOWY HYDRO

Corporations act 2001

staffed by non public servants

Finances subject to PARLIAMENTARY SCRUTINY

TRADING IS MAIN PURPOSE THEREFORE NEEDS TO NE INDEPENDENT

Australian energy regulator

regulation

Australian energy market commission

Standard setting

MDBAAll public sector organisations are required to be transparent, responsive and accountable for

their activities34 but the collective investment of public resources (and often powers) through

intergovernmental bodies makes this requirement particularly complex. As an example, the

Murray-Darling Basin Authority must account directly to the Commonwealth Minister for

Water, the State Ministers for Water (through the Murray-Darling Basin Ministerial Council),35

the Commonwealth Parliament (as a Commonwealth statutory authority) and indirectly to the

Parliaments in each participating jurisdiction and the citizens of each participating State.

MDBC TO MDBAThe former Murray-Darling Basin Commission (MDBC) was an unincorporated joint venture linking the

Australian Government and the five other governments with jurisdiction in the Murray-Darling Basin:

New South Wales, Victoria, South Australia, Queensland and the Australian Capital Territory. It was

initially established in 1988 under the Murray-Darling Basin Agreement, replacing the former River

Murray Commission which had been established in 1917 to put into effect the earlier River Murray

Waters Agreement. The commission primarily advised the Murray-Darling Basin Ministerial Council. It

consisted of a President, two Commissioners and two Deputy Commissioners from each party to the

Murray-Darling Basin Agreement. Decision-making was by consensus

MDBAOn 3 July 2008, COAG signed an Intergovernmental Agreement on Murray-Darling Basin Reform that

established new governance arrangements for the Murray-Darling Basin. In December 2008, after the

Basin states passed legislation to enable the Australian Government to amend the Water Act 2007 (Cth),

the Murray-Darling Basin Authority (MDBA) assumed responsibility for all functions of the former

MDBC. The MDBA is a Commonwealth Government Statutory Agency responsible for planning the

integrated management of the water resources of the Murray-Darling Basin, and is part of the portfolio of

Sustainability, Environment, Water, Population and Communities, reporting to the Minister for

Sustainability, Environment, Water, Population and Communities. Members of the Authority are

appointed by the Minister in consultation with the States, and are selected as experts in the areas of water,

the environment, natural resource management and agriculture, rather than as representatives of

stakeholders. Members include the Chair, Chief Executive, and four part-time members. A new Murray-

Darling Basin Ministerial Council was also established comprising the Commonwealth Water Minister,

who also chairs the council, and one minister from each of the Basin States and the ACT.

mdbaUnder the Agreement on Murray-Darling Basin Reform – Referral (2008), States and Territories agreed

to pass legislation to refer power to the Commonwealth Parliament in accordance with s. 51(xxxvii) of the

Constitution. The referred subject matter includes the management of Basin water resources to meeting

critical human water needs, water charging in relation to Basin water resources, and the transformation of

entitlements to water from a Basin water resource to enable trading in those water entitlements.49 State

legislation provides that the reference may be terminated – for example, in Victoria, the reference may be

terminated by the Governor in Council.

MDBADifficulties reaching agreement on a single accountability model for the work of the MDBA has led to a

complex governance structure. The preparation of the Murray-Darling Basin Plan is overseen by the

Commonwealth Minister and the six-member MDBA, with the Minister acting as the final decisionmaker.

The Ministerial Council and Basin Officials Committee are consulted on the Basin Plan. On the

other hand, the Ministerial Council is the decision-maker in relation to the planning and management of

the equitable, efficient and sustainable use of water, land and other environmental resources, with some

scope for delegation to the Basin Officials Committee.

The Commonwealth provided up-front funding of $3.3 billion as part of the agreement with Basin States

to establish the MDBA. The Commonwealth and Basin States also make annual contributions to the

MDBA. A new Chair was appointed in January 2011, while one Authority member resigned in February

2011.

AUST ENERGY MARKET COMMISSIONState statutory authority

An intergovernmental body can also be established by enacting legislation within a State

jurisdiction. Consistency can be achieved through either application of laws or mirror

legislation in participating jurisdictions.

There are currently only two examples of State statutory authorities – the Australian Energy

Market Commission (established under South Australian law

CORPORATION ACTExamples

• Australia and New Zealand School of

Government (Limited by guarantee)

• National E-Health Transition Authority (Limited

by guarantee)

• Australian Energy Market Operator (Limited by

guarantee)

• Austroads (Limited by guarantee)

• Australian Housing and Urban Research

Institute (Limited by guarantee)

• Snowy Hydro Limited (Limited by shares)

COMPANY LIMITED BY gUARANTEECompany limited by guarantee

A company limited by guarantee will generally be formed for a not-for-profit purpose, and will

have jurisdictions or Ministers as members of the company, rather than shareholders. Their

memorandum and articles of association are usually prescriptive, and will dictate that the

company is registered to provide a specified service to the public or a particular segment of the

population.

The OECD has noted that the formation and maintenance of a successful and

effective government partnership depends on trust, mutually agreed upon objectives, and a

governance framework that establishes the rules and guidelines for each partner.36

Degree of difficulty and effort put into by the CEOs in achieving ESD

Source: McKay, 2008

Source: McKay, 2008

The ESD process is transparent

There is a huge amount of trust between the State gov. and this organization

Frequency PercentValid

PercentCumulative

PercentValid 0 - Strongly

disagree8 4.4 4.4 4.4

1 2 1.1 1.1 5.5

2 23 12.6 12.6 18.0

3 24 13.1 13.1 31.1

4 27 14.8 14.8 45.9

5 - neither disagree or agree 32 17.5 17.5 63.4

6 18 9.8 9.8 73.2

7 26 14.2 14.2 87.4

8 18 9.8 9.8 97.3

9 4 2.2 2.2 99.5

10 - Strongly agree

1 .5 .5 100.0

Total 183 100.0 100.0

Source: McKay, 2008

Source: McKay, 2008

I am clear on what it means to this organisation to achieve sustainable water management

Ownership of the non-major desalination plants in Australia

Period

 

1985-90 1991-95 1996-00 2001-05 2006-10 2011-12Year not known

Total

QLDPublic     6   8     14

Private 1 9 19 20 30 4 2 85

NSWPublic     2   5 1 1 9

Private 2 2 5 6 27 2 1 45

SAPublic     3   2     5

Private 1 4 11 14 13 9   52

VICPublic       1 3     4

Private   2 1 6 7     16

WAPublic     2 3 10     15

Private 3 3 4 10 43 20 2 85

NTPublic     3 1       4

Private   1     2     3

TotalPublic 0 0 16 5 28 1 1 51

Private 7 21 40 56 122 35 5 286

Source: Keremane et al., 2013

Location of the non-major desalination plants in Australia (N =337)

Source: Keremane et al., 2013

Business models of non-major desalination plants in AustraliaType of

Business Model

QLD NSW SA VIC WA NT Total

Public Private Public Private Public Private Public Private Public Private Public Private Public Private

BOO1 3 6 1 1 0 11BOO (NC) 1 1 1 0 3

BOO 10yrs 1 0 1

D&C2 2 15 1 11 2 21 2 6 6 12 2 3 15 68D&C hire 1 0 1

DCM3 1 1 0DCOM4 19 4 4 2 7 1 5 3 8 10 43

Alliance 2 2 0

EPC contractor5 5 3 1 5 3 2 4 8 15

EPC Contractor /Consortium holding

1 0 1

O&M6 4 1 3 1 1 2 1 11O&M/Hire 2 0 2

Service Provider 1 2 0 3

Sale 23 0 23Hire 5 9 1 1 14

Short term hire 1 0 1

Turn Key Lump Sum 1 1 1 1

Total 9 44 6 31 5 43 4 13 11 64 4 3 39 198

Source: Keremane et al., 2013

Capacity of the non-major desalination plants in Australia

Source: Keremane et al., 2013

Non-major desalination plants and type of feed water

Brackish Water Seawater Others* Waste Water Unknown

Western Australia 57 23 13 6 30

South Australia 26 7 8 3 18

Northern Territory 5 3 0 1 0

Queensland 40 24 15 9 16

New South Wales 24 5 5 7 16

Victoria 3 2 2 3 11

Total 155 64 43 29 91

Note: * Others include tap water and river water

Source: Keremane et al., 2013

Barry O'Farrell to testify at Australian Water Holdings corruption inquiry

Published: April 14, 2014 - 12:48PM

Mr Pearce said he felt "like a schoolboy being called in to explain to the headmaster why he hadn't done his homework" when he walked into the meeting on May 27, 2011.

The commission is investigating allegations that the family of corrupt former Labor minister Eddie Obeid were "secret stakeholders" in Australian Water and stood to make up to $60 million from a proposed public-private partnership.

Mr Di Girolamo, a prominent Liberal Party fund-raiser and associate of the Obeid family, lobbied the O'Farrell government over the proposal.

The company also allegedly billed the state-owned Sydney Water secretly for millions of dollars in "administrative" expenses - including limousines and donations to the NSW Liberal Party - under a contract to supply water and sewerage infrastructure.

Within minutes of Mr Di Girolamo entering the witness box, Mr Watson had accused him of attempting to "milk it and get every cent you could get out of Sydney Water Corporation".

"I reject that, Mr Watson," Mr Di Girolamo said.

Australian Water became one of the biggest donors to the NSW Liberal Party in the months before the March 2011 election that swept Labor from power and installed the Barry O'Farrell-led Coalition.

Read more: http://www.smh.com.au/nsw/barry-ofarrell-to-testify-at-australian-water-holdings-corruption-inquiry-20140414-36mfs.html#ixzz34mTSDf00

Australian water holdingsMr Pearce said he felt "like a schoolboy being called in to explain to the headmaster why he hadn't done his homework" when he walked into the meeting on May 27, 2011.

The commission is investigating allegations that the family of corrupt former Labor minister Eddie Obeid were "secret stakeholders" in Australian Water and stood to make up to $60 million from a proposed public-private partnership.

Mr Di Girolamo, a prominent Liberal Party fund-raiser and associate of the Obeid family, lobbied the O'Farrell government over the proposal.

The company also allegedly billed the state-owned Sydney Water secretly for millions of dollars in "administrative" expenses - including limousines and donations to the NSW Liberal Party - under a contract to supply water and sewerage infrastructure.

Within minutes of Mr Di Girolamo entering the witness box, Mr Watson had accused him of attempting to "milk it and get every cent you could get out of Sydney Water Corporation".

"I reject that, Mr Watson," Mr Di Girolamo said.

Australian Water became one of the biggest donors to the NSW Liberal Party in the months before the March 2011 election that swept Labor from power and installed the Barry O'Farrell-led Coalition.

Read more: http://www.smh.com.au/nsw/barry-ofarrell-to-testify-at-australian-water-holdings-corruption-inquiry-20140414-36mfs.html#ixzz34mTSDf00

The new NSW Energy Minister, Anthony Roberts, suspended coal seam gas (fracking) company Metgasco’s drilling rights, halting operations at the disputed Bentley site in the state’s north. Mr Roberts says ICAC discovered links between Metgasco and former Labor powerbroker Eddie Obeid, while community consultation on the project was effectively bypassed. The matter has now beenreferred to the ICAC corruption commission.

But while the Northern Rivers community celebrates, elsewhere, members of the Central Coast and Hunter communities say the approval processes for the disputed quarry extension at Calga and T4 Coal Port extension at Newcastle showed similar disregard for community consultation. Notably, Tony Kelly, the Labor MP who now faces prosecution after ICAC found that he engaged in corrupt activities, was the Planning Minister when the mining company Rocla Materials first applied for the new quarry at Calga.

privatization of water supplyFlow is an Australian company backed by Australian, NZ and international investment. In March 2013 global asset management leader, Brookfield Infrastructure, took a 51 per cent shareholding in Flow Systems

Bundled water and energy infrastructure and services can reduce costs, enable innovation, underpin sustainability and deliver greater customer empowerment. Flow works with developers and Governments to unlock these benefits and deliver new multi-utility solutions.

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The recent revelations about the business practices of Australian Water Holdings (AWH) uncovered by ICAC’s public inquiry are disgraceful.

 

And despite these disgraceful practices Sydney Water saw fit to award a further contract to AWH.

 

What this highlights is the urgent need for transparent procurement processes for all water servicing in NSW that will ensure mums, dads and businesses get the best possible services at the best cost.

 

It is no longer good enough for Sydney Water to manage government procurement of all water related infrastructure in their area. Large projects, such as the one awarded to AWH, should be made contestable and an independent market operator should procure the best servicing strategy and solution available in the market.

 

The water sector is one of the most unproductive sectors in the Australian economy and Sydney Water is a negative contributor to the NSW economy.

 

ICAC’s revelations highlight the system that allows these unproductive practices to exist. Remember it was not Sydney Water who complained to ICAC about AWH – it was the Sydney Morning Herald.

Corporation

2005).

Some perennial ideas can be dismissed on the

basis of simple physical arguments. Water is heavy.

A kilolitre (kL) of water, currently delivered to

urban consumers for around 70 cents, and to irrigators

for a fraction of this amount, weighs a

tonne. It follows that any scheme for transporting

water over long distances, without the assistance of

gravity, will involve prohibitive energy costs for

pumping (Quiggin 2005).

The most recent scheme of this kind to receive

serious attention was the proposal by the Tenix

corporation to construct a canal from the Kimberleys

to Perth, a distance of 3700 kilometres

water marketswhich had ceased to be used (dozers). The introductionof trade gave owners of such rights anincentive to exercise them and sell them, effectivelyincreasing the volume of extraction rights.Second, the policy failed to take account of thewater cycle as a whole. Stream flows are only asmall part of a system in which rainfall initiallyflows over the surface of the land, or into the watertable, before entering streams and river systems.Removal of water from one part of the systemaffects its availability in others.Tradeable, and therefore valuable, rights over irrigationwater were created, but water could beappropriated at other points in the cycle at no cost.Groundwater could be extracted from bores,surface flows of water could be captured by farmdams, and rainfall could be captured by tree cropsbefore it even entered the system. Given the incen

The technologies currently favoured for desalination

and recycling depend on filtering using reverse

osmosis. These technologies are energy intensive,

and their feasibility therefore depends on energy

costs.

The cost of supply of water from the desalination

plant now being constructed in Perth has been estimated

at $1.16 per kL, an estimate that includes

the purchase of electricity generated by wind

power. Other cost estimates are higher, often

around $1.50 per kL, reflecting differences in the

cost of constructing plants in suitable location,

delivery from the plant to consumers and assumptions

about operating load.

Recycling is generally less energy-intensive than

desalination. However, it raises a range of real or

perceived health and aesthetic concerns, reflected

in the defeat of a proposal for recycling in a referendum

held in Toowoomba, and in the political

judgement of the Queensland government that a

referendum should be held for the whole of southeast

Queensland.

Water marketsmarket-oriented approach was developed.

The market-based approach was first set out in

the communique of the 1994 COAG meeting and

was developed more fully in the National Water

Initiative announced in 2004 (Council of

Australian Governments 1994, 2004a, b). The

central idea was to replace bureaucratic systems of

water allocation based on licenses with tradeable

water rights. It was hoped that markets would

ensure that water was allocated to its most socially

valuable use.

The market-based approach to policy has thus far

had only limited success. A number of problems

have become evident.

The second major issue was the treatment of risk.

The 2004 COAG meeting communique specified

a framework that assigns the risk of future reductions

in water availability as follows:

• Reductions arising from natural events such as

climate change, drought or bushfire to be borne by

water users.

• Reductions arising from bona fide improvements in

knowledge about water systems’ capacity to sustain

particular extraction levels to be borne by water users

up to 2014. After 2014, water users to bear this risk

for the first 3 per cent reduction in water allocation,

the relevant state or territory government and the

Australian government would share (one-third and

two-third shares respectively) the risk of reductions of

between 3 per cent and 6 per cent; state/territory and

the Australian government would share equally the

risk of reductions above 6 per cent.

• Reductions arising from changes in government

policy not previously provided for would be borne by

governments.

• Where there is voluntary agreement between relevant

state or territory governments and key stakeholders,

a different risk assignment model to the

above may be implemented.

(COAG 2004a)

Yet there is no reason to suppose that the

Commonwealth would do any better than the

states. As shown by the examples above, the

Commonwealth has been as willing as any state

government to put short-term political objectives

ahead of the long-term goals of water policy. Moreover,

on most of the issues that need to be resolved

if progress is to be made, the Commonwealth

government is as divided as the states

water marketsCalls for a Commonwealth takeover of water

policy have also been justified on the basis of the

supposed desirability of a uniform policy

approach. However, given the differences in

climate and catchment hydrology between the

states and the fact that, with the exception of the

Murray–Darling Basin (which is already governed

by well-established federal institutions) there is no

real possibility of trading water between states,

there is no obvious reason to expect uniformity to

yield beneficial outcomes. Rather than a one-size-fits-all solution, it would be better to adopt policies

based on local circumstances, and the democratic

choices of local electorates.

Acf http://www.acoss.org.au/images/uploads/4204__EnergyEquity_low_res.pdf

Water, sewage% expenditure 1.13 0.94 0.88 % expenditure 0.90 0.74 0.67 0.63 0.61 0.67

Energy supply — electricity and gas9

1998–99 $/week 12.85 15.87 17.72 19.85 23.08 17.87

% expenditure 3.75 3.29 2.73 2.33 1.97 2.56

2003–04 $/week 16.4 20 23.27 25.46 31.68 23.59

% expenditure 3.97 3.31 2.71 2.34 2.11 2.64

http://www.acoss.org.au/images/uploads/4204__EnergyEquity_low_res.pdf

http://www.acoss.org.au/images/uploads/4204__EnergyEquity_low_res.pdf

Water, sewage

1998–99 $/week 3.89 4.55 5.71 6.92 8.5 5.91

% expenditure 1.13 0.94 0.88 0.81 0.73 0.85

2003–04 $/week 3.71 4.48 5.77 6.84 9.12 5.98

% expenditure 0.90 0.74 0.67 0.63 0.61 0.67

Energy supply — electricity and gas9

1998–99 $/week 12.85 15.87 17.72 19.85 23.08 17.87

% expenditure 3.75 3.29 2.73 2.33 1.97 2.56

2003–04 $/week 16.4 20 23.27 25.46 31.68 23.59

% expenditure 3.97 3.31 2.71 2.34 2.11 2.64

Institutional change North 4 elements

the agent

the source

the process and the direction of change and needs to be dynamic

origin

external or internal demand or supply induced

Institutional change van de venInstitutional design

Institutional adaptation

Institutional diffusion and collective action

4 incentives of change based on

function rational actor

social learning change in context

isomorphism including path dependency alternative institution dominant group

NIE say change is functional increasing efficienty

but the power component is the central incentive Ingram Wegerich

Power

Institutional change

is it continuous and evolutionary

or discontinuous and revolutionary

Direction of change since 1940’sCentralism Craven

But it is not that simple Brown AJ

More decentralised approaches have grown but a strong trend for uniform laws

local givernment nota lame duck incrased in importance

decentralisation though provatisation

contracting out of services

new strategies for community enegement and

Place management beer, bellamy and podger

Water markets community responsesmarkets among residents of rural communities is centered on an apprehension that

the sustainability of rural communities will be diminished and that ‘water barons’ emerge and manipulate the market for individual or corporate benefit (Bjornlund 2004b; Tisdell and Ward 2003).

).

central action and devolution within the pressures for strnger central action lie at least as many pressures for devolution in the resources and capacity to deal with today’s pressing social, economic and environmental challenges

Brown AJ

IN THE REAL WORLD OF PUBLIC POLICY AND POPULAR POLITICAL CULTURE, THE VAST BULK OF CITIZENS OPERATE ON AN ENTRENCHED ASSUMPTION THAT Australia has many more than the 6 States

Victoria vs SA

Victoria vs SA

The caption reads: ’You see I intend to treat you with sisterly regard in the matter.

You will observe that the droppings I allow to go to you absolutely without condition’. The caption was a bitter critique of the ‘family’ of Federation, in which the smaller states languished at the mercy of the larger.

APPEALS TO Prime Minister Deakin

Appeals to Prime Minister DeakinSouth Australia is appealing to the

Commonwealth, shown in the figure of the dapper Prime Minister Alfred Deakin, also of course a

Victorian. ‘Here Deakin’, he says, ‘make him turn

off the tap. Look at the dribble he’s leaving me.’

New model for water utilities

New governance model for water utilities

Framework of laws in Australia

Complexity in water

Nrm regions

MDBA- dispel myth of plenty of water

• Two million people

• 14% of Australian land area

• 40% of the gross value of agricultural output using over 50% of water

• 94% of rainfall evaporates

• 4% runs off

• 2% groundwater recharge

• Mean annual runoff 23,850 GL presently 11,200 GL

References cited

• Keremane, G. B., McKay, J & Wu, Z (2012), ‘Sustainable Water Planning in Australia-A survey of our sustainability water policy entrepreneurs’, Water, 39 (5):62-65.

• Wu, Z, McKay, J & Keremane, G.B. (2012), ‘GOVERNANCE OF URBAN FRESHWATER: Some views of three urban communities in Australia’, Water, 39 (1):88-92.

• McKay, J. M. (2008). Insubstantial Tenuous and Vague Laws - The Achievement of Ecologically Sustainable Development by Water Supply Business CEO’s , Australian Business Law Review, 36(6):432-445