ARTICLES MAKING WAVES: AN OVERHAUL OF WESTERN AUSTRALIA S LEGISLATIVE FRAMEWORK FOR THE ALLOCATION OF WATER PART I

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1 ARTICLES MAKING WAVES: AN OVERHAUL OF WESTERN AUSTRALIA S LEGISLATIVE FRAMEWORK FOR THE ALLOCATION OF WATER PART I Vivian Chung Part I of this paper argues that a strong and clear legislative framework for both the allocation of water, and combating over-allocation problems, is required. In particular, it demonstrates the possibility of achieving a balance between the three primary objectives of water allocation: sustainable use, efficient allocation and equity. Part II of this paper examines how the legislative provisions proposed in Part I facilitate the allocation of water licences, and/or water access entitlements. Western Australia has an obligation under the National Water Initiative to adopt a new, market-based mechanism for the initial allocation of water. Section 3 explores the potential of various market-based allocation methods to be adapted to achieve social-equity objectives and demonstrates the practical application of the legislative powers proposed in Part I of this paper. Section 4 examines the new entitlement system that will replace existing water licences, and focuses on how water access entitlements can be allocated in an equitable manner as between existing licensees. INTRODUCTION Put simply, water allocation is the sharing of water among users by the governmental grant and administration of legal entitlements to access water resources. It is one of the most challenging issues facing global society, especially as global warming reduces rainfall in many parts of the world and aggravates conditions of water scarcity. It has been recognised that the design of a water allocation process should achieve equitable water allocation, as well as economic efficiency and sustainability. 1 However, tension potentially exists between these three objectives. 2 The principle of ensuring social equity in allocating water 1 2 BA, LLB (Hons), Mallesons Stephen Jaques. The author would like to thank Alex Gardner, Senior Lecturer, University of Western Australia, for his supervision in writing this article. M Young Towards a National Water Policy Framework: Vision to Implementation Conference Proceedings of the United Nations Association (Victoria) Inc (Victoria, 2003); J McKay and H Bjornlund Recent Australian Market Mechanisms as a Component of an Environmental Policy That Can Make Choices Between Sustainability and Social Justice (2001) 14 Social Justice Research 387, 393; Natural Resource Management Standing Committee A National Approach to Water Trading (2002) E.Sii. J McKay and H Bjornlund Recent Australian Market Mechanisms as a Component of an Environmental Policy That Can Make Choices Between Sustainability and Social Justice (2001) 14 Social. Justice Research 387, 393.

2 162 Articles (2007) 26 ARELJ conflicts with the goal of achieving economically efficient water allocation. 3 The objective of sustainable resource use may also compete with considerations of equity. Finding a balance between these three principles is presently a particularly pertinent issue in Western Australia (WA) as the State is undertaking a comprehensive reform of its water resources management legislation. As a signatory to the National Water Initiative (NWI), WA has committed to implementing a new and more efficient water allocation process, in particular, one that adopts a market-based system of allocation. 4 At the same time, it has long been recognised that the government, as the guardian of the public interest, has the responsibility of ensuring an equitable apportionment of the water available. 5 A potential conflict arises between these two objectives. Efficient water allocation advocates the use of market-based mechanisms and price to govern the distribution of water to the most efficient user. 6 In contrast, the notion of equity suggests that everyone has a right to access water for essential life needs. The question for legislators is whether a market-based allocation mechanism, while aimed at achieving economic efficiency, can also be adapted to address social equity issues. An equal concern arises in the pursuit of the goal of sustainable use and equitable water allocation. In some areas of WA, such as the Gnangara Mound, the government is faced with the task of reducing water entitlements where the water source has been over-allocated to bring extraction back within its sustainable limit. 7 Over-allocation must also be addressed before the State can make its transition to a fully functioning water market in secure entitlements. Reducing water allocations will undoubtedly have significant social and economic impacts, with some water users suffering serious financial hardships. The question here is whether entitlements can be adjusted on an equitable basis. These challenges are further compounded by the uncertainty and lack of understanding surrounding the concept of equity. Although achieving social equity has been recognised as a fundamental goal of water allocation, 8 what constitutes equitable water allocation is not capable of precise definition. Rather, it has been recognised that equity is a value-laden concept which is See F Miller Equity Implications of Market and Property Rights Mechanisms South East Asia Geography Conference Panel: Water Governance in Context (2004). See paras 23, 58-62, 64(iii) and 72 of the National Water Initiative (NWI), available online at: < (accessed 4 April 2006). Water Conservation and Irrigation Commission v New South Wales Pastoral Company Ltd (1945) 24 NSW LVR 54, Roper J at 56. See also: G J Syme & B E Nancarrow Social Justice and Environmental Management: An Introduction (2001) 14 Soc Justice Res 343, 344; A K Dragun & V Gleeson From Water Law to Transferability in New South Wales (1989) 29 Nat Resources J 645, 653. See, for example, C Chan, P Laplagne and D Appels Productivity Commission Staff Research Paper: The Role of Auctions in Allocating Public Resources (2003), available online at: < (accessed 15 July 2006). Dr J Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 64, available online at: < See Water Conservation and Irrigation Commission v New South Wales Pastoral Company Ltd (1945) 24 NSW LVR 54, Roper J at 56. See also: G J Syme & B E Nancarrow Social Justice and Environmental Management: An Introduction (2001) 14 Soc Justice Res 343, 344; A K Dragun & V Gleeson From Water Law to Transferability in New South Wales (1989) 29 Nat Resources J 645, 653.

3 Making Waves: WA s Framework for Allocation of Water 163 open to a multitude of interpretations. 9 The term equitable is defined in the Oxford English Dictionary as fair and just. 10 Equity does not mean equality, but some social standard of fairness and justice. 11 The literature indicates that there are many different concepts of equity that could be applied to the allocation of water. 12 For example, strict equity regards as fair each person receiving an equal share. 13 In contrast, the notion of entitlement by need deems that equitable water distribution can be achieved if each person receives a share of water that is necessary to satisfy one s needs. 14 Entitlement by desert defines as fair a share of the water that a person has earned and therefore deserves. 15 Whether a person has earned water may be measured by the effort expended by that person, the level of resources and finances committed, or the use for the water. On the other hand, the equitable distribution of water could be based on the notion of willingness to pay : those who want water should pay for it. 16 However, not all people who want water have the same ability to pay for it. 17 The various interpretations of what constitutes equity indicate that what may be considered equitable and fair in one community may be considered to be inequitable in another. In light of this, rather than basing this paper on an assumption of a specific concept of equity, this paper seeks to suggest ways in which the legislation can provide the framework and tools that are necessary to achieve equity, whatever concept of equity that may be. Currently, WA s water resources legislation gives little support to the aim of equitable water allocation. Although the principles of efficiency, equity and sustainable use are all present in the J Falk, G Hampton, A Hodgkinson, K Parker & A Rorris Social Equity and the Urban Environment: Report to the Commonwealth Environment Protection Agency (1993) 1, 3; W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29; G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51. D Thompson (ed) The Concise Oxford Dictionary (9th ed, 1995) 457. C Hamilton Generational Justice: The Marriage of Sustainability and Social Equity (1996) 3 Australian Journal of Environmental Management 163, 163; W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29, 29; D Thompson (ed) The Concise Oxford Dictionary (9th ed, 1995) 457. For in-depth discussion on the different meanings of social-equity, see W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29; J Falk, G Hampton, A Hodgkinson, K Parker & A Rorris Social Equity and the Urban Environment: Report to the Commonwealth Environment Protection Agency (1993) 3-4; G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51. W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29, 33. D Miller Social Justice (1976) 27; W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29, 36. D Miller Social Justice (1976) 27; W Blanchard Evaluating Social Equity: What Does Fairness Mean and Can We Measure It? (1986) 15 Policy Studies Journal 29, 35. W Lucy Equity and Planning for Local Services (1981) Journal of the American Planning Association 447, 448. Ibid.

4 164 Articles (2007) 26 ARELJ objectives of the Rights in Water and Irrigation Act 1914 (WA) (RiWI Act), 18 an examination of the substantive provisions of the RiWI Act demonstrates a lack of legislative support for the goal of equitable water allocation. Similarly, the objectives of ensuring that water reform is economically, socially and environmentally sustainable were explicitly recognised in the Council of Australian Governments 1994 Water Reform Framework Agreement. 19 Social-equity considerations have, however, been largely abandoned since then. Although the NWI acknowledges that all three objectives should be present in a water allocation system, guidance is only given to the implementation of an allocation system that achieves economic efficiency and the sustainable use of resources. 20 Much of the literature and policies regarding water reform also focuses on these two goals. 21 In contrast, the principle of ensuring an equitable water allocation process has received little attention from legislators and legal commentators. 22 This paper, therefore, advances the argument that the WA legislature can provide an adequate means of achieving a balance between the three primary goals of water allocation: efficient allocation, sustainability and equity. In particular, it focuses on how legislative tools need to be in place to achieve two aspects of equitable allocation: equity as between licensees, and equity between licensees and other statutory rights users. Part I of this paper examines the legislative planning process in WA that determines how water is to be allocated. Section 1 examines the objectives of the RiWI Act in allocating water, and how water management plans are employed to achieve these objectives. Although equitable water allocation is acknowledged as an underlying objective, provisions guiding the equitable allocation of water are visibly absent from the substantive parts of the RiWI Act. Section 1, therefore, examines the types of legislative tools that should be incorporated into WA s legislation to advance the goal of equitable water allocation. In particular, it examines the tools required to achieve equity between licensees, and between licensees and other statutory rights users of water Section 4(1) RiWI Act 1914 (WA). Communiqué of the Council of Australian Governments meeting, February 1994, Attachment A: Water Resources Policy, available online at: < See, in particular, paras 1 and 5.a.; J McKay and H Bjornlund Recent Australian Market Mechanisms as a Component of an Environmental Policy That Can Make Choices Between Sustainability and Social Justice (2001) 14 Soc Justice Res 387, 389. For example, see para 37 of the NWI which fails to address how water planning will provide for equitable water allocation after stipulating social objectives as a goal of the water planning process in para 36 of the NWI. See L Godden Water Reform in Australia and South Africa: Sustainability, Efficiency and Social Justice (2005) 17 Journal of Environmental Law 181, , 194, 202; G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51, 52. G J Syme & B E Nancarrow Planning attitudes, lay philosophies, and water allocation: A preliminary analysis and research agenda (1996) 32 Water Resources Res. 1843, 1843; G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51, 52; L Godden Water Reform in Australia and South Africa: Sustainability, Efficiency and Social Justice (2005) 17 Journal of Environmental Law 181, 203; J McKay and H Bjornlund Recent Australian Market Mechanisms as a Component of an Environmental Policy That Can Make Choices Between Sustainability and Social Justice (2001) 14 Soc Justice Res 387, 387.

5 Making Waves: WA s Framework for Allocation of Water 165 Section 1 also emphasises the need for a stronger legislative framework for WMPs to support the objectives of the allocation process, and to give effect to WMPs. Section 2 in Part I considers another important, but often overlooked aspect, of the allocation planning process: addressing over-allocation. Many different methods have been utilised in various Australian jurisdictions to combat over-allocation, and Section 2 examines whether they should be incorporated into WA s legislation. More specifically, Section 2 investigates how reductions in entitlements may be carried out equitably as between licensees, and between licensees and statutory rights users. Part II, which will be published in the forthcoming issue of ARELJ, contains Sections 3 and 4 of this paper, and focuses on the individual allocation of licences and water access entitlements. Section 3 examines the mechanisms by which primary allocations of water should be distributed. It argues that WA s current system of allocating water licences is no longer appropriate, especially in light of WA s obligation to implement market-based allocation methods for releasing unallocated water. 23 It demonstrates that these market-based mechanisms can be adapted to address social-equity considerations, as well as achieve efficient allocation. Section 4 explores how WA should make its transition from a system of water licences to water access entitlements. It examines how water access entitlements can be allocated in an equitable manner as between licence holders, and in particular, questions the trend of honouring legal entitlements. While notions of equity and fairness in the allocation process have largely been forgotten in the pursuit of sustainable and efficient water allocation, this paper contends that they are all fundamental objectives of the allocation process, and can be realised together. 1. THE ROLE OF THE PLANNING PROCESS IN ALLOCATING WATER 1.1 Objectives Objectives of water allocation under the RiWI Act Water allocation in WA is governed by Pt III of the RiWI Act, which is administered by the Waters and Rivers Commission (Commission). 24 The objects of Pt III are: (a) to provide for the management of water resources, and in particular (i) for their sustainable use and development to meet the needs of current and future users; and (ii) for the protection of their ecosystems and the environment in which water resources are situated, including by the regulation of activities detrimental to them; Paragraph 72 of the NWI. The Commission s power to manage the State s water resources under the RiWI Act is conferred by the Water and Rivers Commission Act 1996 (WA). Although the Commission is now the Department of Water, the Commission has not been formally abolished. The Water Resources Legislation Amendment Bill 2005, which is currently before Parliament, will formally abolish the Commission and transfer the majority of the Commission s powers to the Minister. However, at the date of publication, the Commission is formally the body responsible for administering the RiWI Act.

6 166 Articles (2007) 26 ARELJ (b) to promote the orderly, equitable and efficient use of water resources; (c) to foster consultation with members of local communities in the local administration of this Part, and to enable them to participate in that administration; and (d) to assist the integration of the management of water resources with the management of other natural resources. 25 The RiWI Act, therefore, establishes the three main objectives of water allocation to be sustainability, equitable allocation and efficient allocation. These objectives are advanced in the allocation process through Water Management Plans (WMPs) Objectives of WMPs According to the NWI: [w]ater planning is an important mechanism to assist governments and the community to determine water management and allocation decisions to meet productive, environmental and social objectives. 26 The purpose of a resource management plan is to set objectives and principles to guide routine [governmental] and private decision-making in the management of the resource. 27 WMPs are, therefore, fundamental in advancing the objectives of the allocation process: equitable and efficient allocation, and sustainable use. The importance of management plans is recognised by the NWI, which requires signatories to implement transparent, statutory-based water planning in fulfilment of their obligations under the NWI. 28 Although the NWI has indicated the need for WMPs to make management and allocation decisions to meet productive, environmental and social objectives, 29 there are no substantive provisions in the NWI requiring water plans to provide for equitable water allocation. This can be contrasted to the extensive guidance that is provided for ensuring sustainable use 30 and efficient allocation 31 of water. It has been acknowledged, however, that social equity considerations are an important part of the allocation process, and should be taken into account The legislative framework for WMPs Duty to prepare WMPs The RiWI Act provides the legislative regime for management planning in WA. 33 Under the RiWi Act, there is no duty to have WMPs in place for any or every water resource in WA. A WMP: (a) is to be prepared if the Minister directs the Commission to do so; 34 or (b) may be prepared [if the Commission thinks] it is desirable to do so Section 4(1)(a)-(d) RiWI Act 1914 (WA). Paragraph 36 of the NWI. A Gardner Water allocation planning in R H Bartlett, A Gardner and S Mascher Water Law in Western Australia: Comparative Studies and Options for Reform (1997) 239, Paragraph 23(ii) of the NWI. Paragraph 36 of the NWI. See, for example, paras 23(iv), 25(v), 35, 37(i), 43-45, 64(i), 70 & 95 of the NWI. See, for example, paras 2, 64(i), 65, 70 of the NWI. Natural Resource Management Standing Committee A National Approach to Water Trading (2002) ES 5, 2.4. Part III, Div 3D RiWI Act 1914 (WA). Section 26GU(1)(a) RiWI Act 1914 (WA).

7 Making Waves: WA s Framework for Allocation of Water 167 It is not necessary, or practical, to have WMPs in place for all water sources in WA. 36 Although some water sources in WA are at full-allocation, or over-allocated, 37 a significant proportion of water areas are only partially allocated and not at risk. 38 It would, therefore, be an inefficient use of the State s resources to prepare WMPs for all water sources. 39 There is also no obligation under the NWI to implement plans for all water sources; rather, whether a WMP is prepared is at the State s discretion Re-defining the duty Although it is not be necessary to impose a duty on the Commission to implement WMPs for all water sources, a more defined statutory mechanism for determining when a WMP should be prepared is required. According to the National Water Commission, WA lacks a clear, consistent framework and methodology for developing [WMPs]. 41 The current requirements for the preparation of a WMP under the RiWI Act are rather broad and discretionary. Although the Commission has a duty to prepare a WMP under a ministerial direction, the legislation fails to define the circumstances in which the Minister should make such a direction. Similarly, the legislation does not outline the circumstances in which the Commission should find it desirable to prepare a WMP. Even if the Commission should find it desirable to prepare a WMP, the wording of the provision suggests that whether it is prepared is also at the Commission s discretion. 42 Thus, the current provisions lack guidance as to when a WMP should be made. The absence of clear guidelines may result in WMPs not being implemented in areas where they are urgently required to assist in the management of a water resource. For example, an unmanaged water resource that is fully or over-allocated may have negative social impacts. Water users relying on a water source for domestic or stock purposes, or their livelihood, may find their ability to extract sufficient water diminished by over-extraction caused by other users. This also puts the sustainability of the resource at risk. To prevent these events from arising, it is important to ensure that WMPs are prepared in certain circumstances Ibid, s 26GU(1)(b). Note that in South Australia, s 76(1) Natural Resources Management Act 2004 (SA) states that regional Natural Resource Management Boards have a duty to prepare plans for all water sources in its region. For example, the Gnangara Mound. Licensed water exceeds the estimated sustainable limit in parts of 13 of the State s 44 groundwater management areas. Auditor General of Western Australia Second Public Sector Performance Report2003: Report No 7 (2003) 10, available online at: < Dr John Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 3. The estimated cost of preparing a WMP is between $300,000 and $500,000. See Auditor General of Western Australia, Second Public Sector Performance Report 2003: Report No 7 (2003) 9. Paragraph 38 of the NWI. Cf paras 26, 43 & 44 of the NWI. National Water Commission, 2005 National Competition Policy Assessment of Water Reform Progress (2006) XVI, available online at: < (accessed 1 July 2006). Section 26GU(1)(b) RiWI Act 1914 (WA).

8 168 Articles (2007) 26 ARELJ Defined criteria should, therefore, be established and inserted into the RiWI Act to act as a form of triggering mechanism. If a particular water resource satisfies the statutory criteria, the Commission should have a duty, not the discretion, to prepare a WMP. A classification regime similar to that set out in the Water Management Act 2000 (NSW) should be adopted. The Water Management Act required all water sources to be classified according to the extent: to which they are at risk; to which they are subject to stress; and of their conservation value, 43 within 12 months of the date of assent to the Act. 44 Once all water sources were classified, bulk access regimes, 45 had to be prepared for those water sources classified as high risk, high stress or high conservation value within 12 months of the date of assent of the Act. 46 Although the Commission currently employs a similar categorisation system, 47 it is only a policy that the Commission follows. Further, the policy does not require a WMP to be prepared at any level of allocation, even where the water source is fully or over-allocated. 48 The WA government should consider incorporating the categorisation system into the RiWI Act. Once water sources are classified according to their allocation level and environmental state, those identified as reaching or at full-allocation should trigger a duty on the Commission s behalf to prepare WMPs for those water areas, and a moratorium on licence applications and grants The content of WMPs The RiWI Act provides for three levels of WMPs: (a) regional management plans; (b) sub-regional management plans; and (c) local area management plans. 50 A regional management plan, sub-regional management plan, or local area management plan may relate to more than one region, sub-region and local area respectively. 51 The purpose of a regional Section 7(3)(a)-(b) Water Management Act 2000 (NSW). Ibid, s 7(4)(a); all water sources had to be classified by December A bulk access regime is defined as the set of rules established by a management plan or a Minister s plan that guides the extraction of water under access licences, Dictionary of Water Management Act 2000 (NSW). Section 7(4)(b) Water Management Act 2000 (NSW). Note that WA s categorisation system does not take into account the conservation value of the water resource as seen in the NSW legislation. For more details on the categorisation system and policy, see: WA Water and Rivers Commission, Statewide Policy No 11 Management of Unused Licensed Water Entitlements (2003) 5-6, available online at: < Dr John Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 70. Dr John Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 70. See [2.12] of this paper for a discussion about moratorium on licence applications and grants. Section 26GV(1) RiWI Act 1914 (WA). Ibid, s 26GV(2).

9 Making Waves: WA s Framework for Allocation of Water 169 management plan is to outline the matters that will guide the general management of water resources in the applicable region. 52 The purpose of a sub-regional plan is to guide the management of water resources in the applicable sub-region, including: (a) how rights in respect of water are to be allocated to meet various needs, including the needs of the environment; (b) the matters that will be taken into account by the Commission in considering [the exercise of its licensing powers]; (c) the Commission s assessment of: (i) the capacity of water sources to provide water at sustainable levels of use; and (ii) the environmental impact of developing those sources; and (d) the strategies that will be adopted or developed to implement the plan. 53 The purpose of a local area management plan is to guide the management of water resources in the applicable area, including: (a) how rights in respect of water are to be allocated, taken and used, to meet various needs, including the needs of the environment; and (b) the matters that will be taken into account by the Commission in considering [the exercise of its licensing powers] Social equity considerations As seen above, sub-regional and local area management plans define how rights in respect of water are to be allocated. These planning provisions, in keeping with the objectives of Pt III of the RiWI Act, expressly recognise that the needs of the environment should be considered by the Commission in deciding how water rights are to be allocated. 55 The Commission is also required to assess the capacity of water sources to provide water at sustainable levels of use, and the environmental impact of developing those sources, for sub-regional plans. 56 However, what is clearly absent from these planning provisions is an express recognition that the allocation of water on an equitable basis, should also be considered by the Commission in determining the distribution of water rights. This paper explores two aspects of equitable allocation: equity as between licensees, and equity between licensees and other statutory rights users bid, s 26GW(2). Section 26GX(2)(b)-(e) RiWI Act 1914 (WA). Ibid, s 26GY(2)(a)-(c). Ibid, s 26GX(2)(b) and s 26GY(2)(a). Section 26GX(2)(d) RiWI Act 1914 (WA).

10 170 Articles (2007) 26 ARELJ Under the NWI, WA has an obligation to utilise market-based mechanisms to release unallocated water. 57 However, by relying on market forces to allocate water between licensees, potential licensees may be pushed out the market by larger and wealthier irrigators or corporations. Furthermore, the RiWI Act does not require the protection of basic rights to water for domestic, ordinary and stock purposes against licensed water users in WMPs. Although there is a basic statutory right to take water for domestic and ordinary use, and stock purposes, 58 there is no provision in the RiWI Act that guarantees the security of these basic rights. This can be contrasted to other Australian jurisdictions where, in determining how water is to be allocated, basic landholder rights to water must be provided for before the rights of licensed users. 59 (a) An implied duty Can a duty to consider the allocation of water on an equitable basis be implied from the RiWI Act? The provisions of the RiWI Act regarding the content of WMPs are quite broad: sub-regional and local area management plans should outline the matters that are to guide how water rights are to be allocated to meet various needs. 60 It is arguable that the wide ambit of this provision permits the Commission to have regard to social and equitable considerations when making allocation decisions. Alternatively, a requirement to consider social equity matters in making allocation decisions for a WMP can be implied from a reading of the planning provisions with the objects of Pt III of the RiWI Act. In More v Water and Rivers Commission, 61 the State Administrative Tribunal ( Tribunal ) held that the: promotion of the orderly, equitable and efficient use of water resources incorporate considerations of personal needs and social equity into the considerations that are relevant to the Commission s performance of the allocation functions. 62 Thus, it is likely that the Commission may be empowered to consider social equity needs in determining how water rights are to be allocated. However, although it may be possible to imply into the planning provisions a requirement obliging the Commission to consider social equity considerations, is this sufficient? Given that the equitable allocation of water constitutes one of the primary aims of water allocation, an express provision obliging the Commission to consider social equity requirements when allocating water under a WMP should be incorporated into the legislation. It is foreseeable that, in the absence of an express requirement, the Commission may not to consider social equity requirements in determining the allocation of water rights. (b) An express duty To advance equitable water allocation, two types of provisions relating to social equity should be incorporated into the RiWI Act Paragraph 72 of the NWI. Sections 9(1), 10(1), 20, 21 & 25A RiWI Act 1914 (WA). See discussion at [1.3.4](b) below about the NSW and South African legislation providing for basic water needs. Sections 26GX(2)(b) and 26GY(2)(a) RiWI Act 1914 (WA) (emphasis added). More v Water and Rivers Commission [2006] WASAT 112 (More v WRC). Ibid, para 67. Note that the Tribunal stated that the objects of Pt III could be read with the licensing provisions in Sched 1 RiWI Act. In contrast, the planning provisions are in Pt III of the RiWI Act.

11 Making Waves: WA s Framework for Allocation of Water 171 The first provision that should be included is a duty on the Commission to consider social equity requirements in planning how water rights should be allocated. There is legislative precedent requiring the consideration of social equity matters in the allocation process. Under the Queensland Water Act, decision-making processes should effectively integrate economic, environmental, social and equitable considerations. The Minister is also required to consider the State s future water requirements, including cultural, economic, environmental and social requirements when preparing a draft water resource plan. 63 The planning provisions of the RiWI Act should, therefore, be amended to include a duty obliging the Commission to consider social equity requirements in determining how water rights are to be allocated. The duty to be incorporated should only be a duty to consider social equity requirements, rather than a duty to provide for social equity requirements. This is because the court has indicated that it is reluctant to adjudicate on matters of social equity. In Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources, 64 the NSW Court of Appeal held that the court is unlikely to intervene in considerations of equity. 65 Rather, considerations of equity are quintessentially matters for political decision-making. 66 The courts are unlikely to use the objective of equity as a substantive measure for the validity of a WMP s provisions. However, if in the Commission s opinion, it is necessary to provide water to meet social equity requirements, a provision empowering the Commission to reserve water to be allocated for this purpose should be incorporated into the legislation. Without such a provision, a WMP that has reserved water for social equity purposes may be challenged on the ground of ultra vires for exceeding the scope of the RiWI Act. 67 This provision ensures that water can be reserved where it is necessary to achieve social equity. The introduction of market-based allocation methods may push potential licensees who do not have the necessary finance out of the market. To maintain equitable access to water, the Minister may need to set aside water for those potential licensees who cannot compete with wealthier and larger licensees. The Commission may then establish policies and rules to determine in what circumstances water may be reserved for social equity considerations. This is examined in Part II. 68 The second type of provision that should be included concerns the protection of basic rights to water. As discussed above, although there is provision for basic statutory rights to extract water Section 47(g) Water Act 2000 (Qld). Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10. Ibid, Spigelman CJ, Beazley JA and Tobias JA concurring, para 143. Ibid. R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170; South Australia v Tanner (1989) 155 CLR 161; Australian Alliance Assurance Co Ltd v Attorney General (Qld) [1916] St R Qd 135; s 43(1) Interpretation Act 1984 (WA) states that subsidiary legislation is not to be inconsistent with the law under which it is made or with any other Act, and void to the extent of that inconsistency. Part II, Section 3 of this paper, to be published in the forthcoming issue of ARELJ, will have a discussion on how and when water can be reserved for social equity purposes under the auction process [3.3.1](b) and tender process [3.3.2](b).

12 172 Articles (2007) 26 ARELJ for domestic consumption and stock watering, 69 these rights are not guaranteed. Under the planning provisions, there is no duty to identify and secure water for either basic water use or the environment before the remaining water is allocated for licensed purposes. Where a water source is fully-allocated or over-allocated, this failure to secure adequate quantities of water to satisfy basic water rights may have a serious social impact. Water users relying on their right to extract water for basic human needs may find their ability to extract water compromised by overallocation to licensed users. The situation in WA can be contrasted to that of NSW and South Africa. The NSW Water Management Act and South Africa s National Water Act 1998 permit water to be extracted without a licence for basic landholder rights and basic human needs respectively. 70 The RiWI Act provides for a similar right. 71 However, under the Water Management Act, a management plan must identify the water required to satisfy basic landholder rights. 72 Priority is also given to basic landholder rights; thus, in times of scarcity, these rights must be satisfied before the rights of other licensed users. 73 Similarly, the National Water Act imposes a duty on the Minister to reserve the amount of water required for basic human needs and ecological needs before water can be licensed for other uses. 74 Accordingly, the RiWI Act should be amended to include a duty requiring the Commission to identify and reserve water to satisfy basic landholder rights before water is allocated for licensed purposes The determination of what is equitable As previously acknowledged, there is no single concept of what constitutes equitable water allocation. Studies conducted by Syme in different regions in Australia have revealed that a particular community s perception of what is fair or equitable in a water allocation process may differ from community to community. 75 This may be due to different values held by members of the community, different attitudes towards particular principles of fairness, or the context in which water allocation decisions are made. 76 There is no single principle of equity that can be applied to all communities. The different perceptions of equity revealed in the studies highlight the need for extensive community consultation during and after the management planning process. This ensures that what each community considers to be fair and equitable is reflected in the allocation process Sections 9(1), 10(1), 20, 21 & 25A RiWI Act 1914 (WA). Section 52 Water Management Act 2000 (NSW); s 22(1)(a) and Sched 1 National Water Act Ibid. Section 20(1)(b) Water Management Act 2000 (NSW). Ibid, ss 5(3)(b) & 9(1)(b). Section 16(1) and (2) National Water Act G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51; J Syme & B E Nancarrow Planning attitudes, lay philosophies, and water allocation: A preliminary analysis and research agenda (1996) 32 Water Resources Res G J Syme, B E Nancarrow & J A McCreddin Defining the components of fairness in the allocation of water to environmental and human uses (1999) 57 Journal of Environmental Management 51; J Syme & B E Nancarrow Planning attitudes, lay philosophies, and water allocation: A preliminary analysis and research agenda (1996) 32 Water Resources Res 1843.

13 Making Waves: WA s Framework for Allocation of Water 173 New South Wales has followed this approach. A number of New South Wales s water sharing plans have been amended after concerns were raised by stakeholders regarding the social and economic impacts of the across-the-board method of reducing water entitlements to maintain sustainability. 77 The water sharing plans have now been amended to take into account historical use in determining how much each water user s entitlement should be reduced. 78 Consequently, certain legislative mechanisms need to be present to enable each community s perceptions of what is fair and equitable to be reflected in WMPs. 79 The RiWI Act provides for community consultation during the management planning process. The RiWI Act states that a plan, or amendment to a plan, may only be: prepared; modified; or revoked and a new plan substituted, after consultation with any water resources management committee that is in existence for the region, sub-region or area that it relates to. 80 Committee members must be selected substantially from persons who are: residents of; employed in, or operate, a business, in the area for which the committee is established. 81 The function of the committee is to among others ensure that the Commission is informed of, and has access to, community views on matters relating to water resources. 82 This ensures that stakeholders are able to participate in the original planning process, and that no changes to WMPs are made before the community is consulted. The committee may also include persons who: are representatives of a local government; are officers of public authorities having functions in the area; have knowledge and experience relating to the water needs and practices of local communities, including Aboriginal communities; or are members of the board of management of the Commission. 83 It is clear, however, that the ultimate decision of the Commission or the Minister as to what is fair and equitable may not be considered to be fair and equitable by everyone. The NSW Court National Water Commission, 2005 National Competition Policy Assessment of Water Reform Progress (2006) 2.19, available online at: < (accessed at 1 July 2006). National Water Commission, 2005 National Competition Policy Assessment of Water Reform Progress (2006) 2.20, available online at: < (accessed at 1 July 2006). See also [2.1.3] of this paper for a discussion on clawback. Section 26GZ RiWI Act 1914 (WA). Section 26GL(1)(a) RiWI Act 1914 (WA). Section 26GM(1)(d) RiWI Act 1914 (WA). Section 26GL(2) RiWI Act 1914 (WA).

14 174 Articles (2007) 26 ARELJ of Appeal in Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources 84 has indicated that the courts are reluctant and unwilling to intervene in determinations of fairness and equity. 85 This is because considerations of equity are quintessentially matters for political decision-making. Thus, as long as the Minister s decision is in the broad interests of equity, it is unlikely that the courts will intervene where a decision operates to the detriment of some persons The legal effect of WMPs In order for the provisions relating to social equity discussed above to have effect, WMPs must have sufficient legal effect on the Commission. The issue is whether there is currently the necessary legislative support for WMPs for the provisions to be effective. (a) Non-statutory plans WMPs in WA can be either statutory or non-statutory. However, no statutory plans have been developed to date. 86 All WMPs that have been prepared for the purposes of administering the RiWI Act have been non-statutory. 87 Thus, what is the legal effect of non-statutory plans? Non-statutory plans constitute policies that guide the Commission s discretion in determining whether or not to grant a licence. Consequently, the Commission in exercising its discretion may still make licensing decisions that diminish a reserve identified for basic water rights. However, the Tribunal may still apply non-statutory policies when a decision to grant or refuse a licence application is appealed. As a non-statutory plan is not a statutory policy, the Tribunal is not legally bound to have regard to it. 88 However, authorities indicate that if the Commission has adopted a general policy in exercising a discretionary power, the Tribunal will ordinarily apply the policy unless cogent reasons can be shown against its application. 89 Thus, non-statutory plans are only effective where the Commission, or its delegates, choose to have regard to the plans. (b) Statutory plans The NWI requires WA to implement statutory plans. 90 However, the effectiveness of a statutory WMP in WA is undermined by the limited legal effect they have on the Commission and other governmental bodies. Although WMPs specify how water rights are to be allocated, 91 they are only a guide for the management by the Commission of the applicable water resource. 92 The Commission is only [2005] NSWCA 10. Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10, Spigelman CJ, Beazley JA and Tobias JA concurring, para 144 Ibid. National Water Commission, 2005 National Competition Policy Assessment of Water Reform Progress (2006) 5.11, available online at: < (accessed at 1 July 2006); Dr John Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 6. Ibid. Section 28 State Administrative Tribunal Act 2004 (WA); More v Water and Rivers Commission [2006] WASAT 112, para 32. Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, Brennan J at 645 applied in More v Water and Rivers Commission [2006] WASAT 112, paras and Clive Elliott Jennings and Co Pty Ltd v Western Australian Planning Commission (2002) 122 LGERA 433, para 24. Paragraph 23(ii) of the NWI. Note that it is also implicit in the text of the NWI that WMPs are to be binding: see, for example, paras 29 & 32(i) of the NWI. Sections 26GX(2)(a) & 26GY(2)(a) RiWI Act 1914 (WA).

15 Making Waves: WA s Framework for Allocation of Water 175 under a duty to consider statutory plans in exercising its licensing discretion. 93 There is no duty to act in accordance with the provisions of a WMP. Similarly, whether a water licence application is granted or refused is at the Commission s discretion. 94 The Commission, in exercising that discretion, is only required to have regard to all relevant matters, including whether the proposed taking and use of water is in keeping with a [statutory WMP]. 95 The discretionary nature of these provisions makes it possible for the Commission to make licensing decisions which exceed the allocation limit, or reduce water identified for basic water rights. Indeed, administrative law doctrine indicates that, as long as the decision-maker has had regard to the relevant consideration, the decision cannot be held to be void by the court on the basis of not according the relevant matter the appropriate weight. 96 Generally, it is for the decision-maker, and not the court, to decide the appropriate weight to be given to a relevant consideration. 97 A decision will only be void on the ground of unreasonableness because of the inadequacy of the weight given to a consideration in exceptional cases. 98 This means that even if water is identified for basic landholder rights, the Commission may still make licensing decisions which could affect the security of a landholder s right to water. The lack of legally binding force behind WMPs potentially undermines the RiWI Act s objectives of sustainable and equitable use of WA s water resources. In order for WMPs to effectively carry out the objectives of the allocation process, the RiWI Act should be amended to give statutory plans stronger legal status. There are precedents for making WMPs binding in other Australian jurisdictions. In Victoria, an approved management plan is binding on every person, including every public statutory body, unless otherwise specified by the Minister in the Government Gazette. 99 In considering an application for a licence, the Minister must give effect to an approved management plan. 100 Similarly, in Queensland, if there is a conflict between a water resource plan and a water allocation, the plan prevails Ibid, ss 26GX(2) and 26GY(2). Schedule 1, cl 7(2)(g)(iii) RiWI Act 1914 (WA). Schedule 1, cl 7(1) RiWI Act 1914 (WA). Ibid, Sched 1, cl 7(2)(g). Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, Mason J 41. Ibid. Ibid; Associated Provincial Pictures Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 230, ; Council of Civil Services Unions v Minister for the Civil Service [1985] AC 374, Lord Diplock at 401. Section 32A(11) Water Act 1989 (Vic). Ibid, s 53(2)(e). Similarly, a bulk entitlement must be granted in accordance with an approved management plan, s 40(2) Water Act 1989 (Vic). Section 123(2) Water Act 2000 (Qld). See also South Australia: s 152(1) Natural Resources Management Act 2004 (SA).

16 176 Articles (2007) 26 ARELJ However, New South Wales s legislation takes a different approach. Under the Water Management Act, the Minister: must take all reasonable steps to give effect to the provisions of any management plan and, in particular, to ensure that any environmental water rules established by the plan are observed. 102 It imposes on the Minister a positive duty to take reasonable steps to give effect to a management plan. It is clear that if WA is to achieve the objectives of the allocation process, and to implement the NWI, the RiWI Act should be amended so that WMPs are legally binding. At the least, WMPs should be binding on the Commission. A more complex issue is whether WMPs should be binding on other statutory bodies, to the extent that they are affected by the plans. NSW has adopted the position where public authorities 103 have a duty to have regard to the provisions of a management plan to the extent that they apply to that authority, 104 but are not required to act inconsistently with its own legal obligations. 105 In contrast, Victoria s management plans are binding on all persons, including statutory bodies, unless otherwise specified by the Minister in the Government Gazette. 106 Victoria s approach may be preferable as it ensures that the provisions of a WMP are not overridden by instruments of other statutory bodies. It has been recognised that a person may not be required to apply for a licence under the RiWI Act where they are authorised by another written law to extract and use the water. 107 One example can be seen in the Energy Operators (Powers) Act 1979 (WA), where an energy operator may use water to which the Water Agencies Powers Act 1984 (WA), or a relevant Act such as the RiWI Act, applies. 108 There is no limitation requiring water to be extracted in accordance with the RiWI Act, or a WMP under the RiWI Act; rather, the only limitation is that the right to use water be exercised in such a manner as will cause the least interference with the rights, benefits and privileges of other persons under any relevant Act. 109 This means an energy operator can extract water even if it is inconsistent with the provisions of a statutory plan as it is not binding on other statutory bodies. Thus, there is a strong argument for management plans to be legally binding on statutory bodies, as well as the Commission Section 48 Water Management Act 2000 (NSW). The Water Management Act 2000 (NSW) defines a public authority to be: (a) a Minister of the Crown, (b) a Government Department or Administrative Office, (c) a statutory body representing the Crown, (d) a statutory State owned corporation within the meaning of the State Owned Corporations Act 1989 (NSW), (e) a council or county council within the meaning of the Local Government Act 1993 (NSW), but does not include any person or body declared by the Water Management (General) Regulations 2004 (NSW) not to be a public authority. Section 49(1) Water Management Act 2000 (NSW). Ibid, s 49(3). Section 32A(11) Water Act 1989 (Vic). Dr John Marsden Water Entitlements, Water Plans & Trading for Western Australia (2006) 6-7. Section 42(1) Energy Operators (Powers) Act 1979 (WA). Ibid, s 42 (2)(b).