Stop, water thief! Major changes to NSW water management laws

NSW has delivered a major legislative response to the recent water management controversy, with the amendment of the Water Management Act 2000. It provides more rigorous monitoring and enforcement measures – including tougher metering requirements and more significant penalties – but also more flexibility and control for Government in managing the State's water resources.

Catalyst for change

A wave of controversy struck the Murray-Darling Basin States and Territories in August 2017, when the ABC's Four Corners expose was broadcast. The program included allegations of illegal water take from the Murray-Darling Basin and raised issues about government transparency and accountability.

Since then, there have been parliamentary inquiries at Federal and State level, government audits, corruption commission, ombudsman and regulatory agency investigations, a Royal Commission in South Australia (which is currently in progress) and a number of other reviews.

Among the various responses:

• the Murray Darling Basin Authority, the agency managing the cross-border water management issues and the Murray Darling Basin Plan under the Commonwealth Water Act 2007, released the Murray Darling Basin Water Compliance Review;
• the NSW Government commissioned the Matthews Review (an independent review of water management and compliance by the former National Water Commission head), it pledged to implement the Matthews recommendations and issued a Water Reform Action Plan, and it has also commenced some criminal prosecutions; and
• at least one environmental group has commenced civil enforcement proceedings against an agricultural operator, claiming the operator has pumped water in contravention of its licence conditions.

The NSW Government has also reviewed aspects of its water management legislation, and has secured the passage of important legislative changes. Most recently, the Water Management Amendment Act 2018 (Amending Act) received assent on 27 June 2018 and most of it has now commenced.

The Amending Act is intended to deliver the legislative amendments required to implement the Government's Water Reform Action Plan.

Minister Niall Blair's second reading speech for the amendment Bill focused on restoring community confidence in water management, while acknowledging that the Bill "is just the start of a long process".

Here is a snapshot of some key features of the Amending Act.

Enforcement options

The Natural Resources Access Regulator (NRAR), recently established under the Natural Resources Access Regulator Act 2017 as another response to the water controversy, will take over the role of compliance and enforcement from Water NSW and the Department of Industry.

In addition to criminal prosecution, under the Amending Act the Minister and the NRAR will have the power to:

• carry out compliance audits;
• enter into enforceable undertakings; and
• share intelligence between agencies and jurisdictions.

The regulations can also prescribe a methodology for estimating the amount of water taken in a given situation. This should reduce the evidentiary burden for enforcement actions considerably.

The Amending Act also increases criminal penalties for taking water without a water access licence (WAL). Tier 1 penalties for corporations will be raised to $5 million and tier 2 penalties for corporations will be raised to $2 million and for individuals to $500,000.

Comprehensive metering (almost)

Monitoring of water meters can incentivise compliance and gather data which are essential for strategic planning and management as well as enforcement.

The Amending Act significantly expands requirements for metering of water take, but allows for exemptions for some types of extractions, such as floodplain harvesting and possibly others in yet to be released regulations. Consequently, some have argued that the "no meter, no pump" recommendations of the Matthews and MDBA reviews were not fully implemented in the Amending Act. It is expected that 5% of users, mainly small scale operators, will continue not to be metered under the changes.

Metering conditions can be imposed on WALs and licences under the Water Act 1912 (NSW) (which the Water Management Act is gradually replacing).

Unlike the current arrangements, where meters are publicly provided, water users will now own their meters, and they will be required to maintain them properly and report operating faults with 24 hours of becoming aware of them.

The amendments also insert a rebuttable presumption for basic landholder rights; where water is taken by the holder of a WAL and basic landholder rights (which do not need a WAL), it is presumed to be taken under that WAL and not under the basic landholder right. It is then up to the WAL holder to prove otherwise. This applies the extensive regulatory regime for WALs to a lot of water take which so far has been much less regulated.

New register for water availability and use

The Government has responded to calls for greater transparency by requiring the creation of a central public register, with information about WALs and other licences and approvals, as well as water balance and meter readings, and information about water availability for taking. Calls from some stakeholders for real time data will be moderated by the need to protect commercially sensitive information.

Better control of environmental water

Serious allegations have been made in the media about some larger scale operators extracting environmental water, which has been bought with Federal taxpayer money over the last decade of Government water buy-backs. This water is used to increase the flows and river health, especially during periods of low flow.

The amendments clarify that temporary water restriction orders can be issued to manage environmental flows, in addition to "coping with a water shortage" or managing a "threat to public health or safety".

The exclusion of Crown liability is extended to cover flooding effects from the release of environmental water in good faith.

Other changes affecting water use

The Minister is given some additional powers to manage extraction limits, such as to:

• amend the share or extraction components of WALs;
• introduce new mandatory WAL conditions (after publicly exhibiting them for at least 28 days);
• suspend Basin management plans during extreme events; and
• assign individual daily extraction components between users.

The Government has emphasised that there is no intention to reduce water allocations or compensation rights under the Amending Act.