2011 Annual National Environment, Energy & Resource Law Summit From Drought to Flood Managing the Murray-Darling

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1 2011 Annual National Environment, Energy & Resource Law Summit From Drought to Flood Managing the Murray-Darling Robyn Glindemann, Special Counsel, Allens Arthur Robinson, Australia* 1. Introduction Australia has undergone an almost unprecedented change of fortune in relation to water security in the last twelve months. Whether we ascribe it to climate change, the El Niño-La Niña weather pattern, "Mother Nature" or a combination of all three, Australia's Eastern Seaboard has gone from extreme drought for the last five to seven years to record rainfall and flooding in 3 States in January and February this year bringing the earth to 100% saturation and encouraging the blossoming of life in the parched centre of the country that has not been seen for many years. In contrast, the country's south western corner and the capital city of Western Australia, Perth, has had the driest winter on record. While water planners had known the south-west was undergoing a drying phase, the (low) level of rainfall in the 2010 winter period was somewhat unexpected. It is beyond the scope of this paper to traverse the history of water management in Australia. Instead, I will give and extraordinarily brief overview of the history of regulation and then focus on one aspect of current management issues namely the management of the Murray-Darling Basin in the eastern third of Australia. How to manage the Basin and balancing the environmental, agricultural and social uses of the water in it has been the source of significant controversy in the last 4 years and shows little sign of abating. 2. Rights to Water in Australia Common Law Unlike the United States and some parts of Canada, with whom Australia shares the English common law heritage, Australia did not adopt the 'prior appropriation' doctrine of water allocation. Under that doctrine (in its original form), the appropriation of water by a person created a perpetual property right to take that quantity of water and gave that person security of that right against all subsequent users. If water became scarce, those "lowest on the ladder" who had been taking water for the shorter periods of time were expected to stop taking * The views expressed in this paper are the author's alone and do not reflect the views of Allens Arthur Robinson. 1 Much of this section of the paper is drawn from the seminal water resources text in Australia written by Alex Gardner, Richard Bartlett and Janice Gray entitled Water Resources Law (LexisNexis Butterworths Australia, 2009). It is the most comprehensive summation of water resources law, policy and management and is an essential text for all those who practice in this area in Australia. regp A v Page 1

2 water so those higher up the ladder could exercise their entitlement as fully as possible. Obviously, this doctrine has been amended by subsequent legislative enactments. In contrast, Australia adopted the riparian doctrine of water rights which states that the right to access a water resource is an incident of ownership of land adjacent to that water resource. The right to use the naturally flowing water was a usufructuary one only and did not confer any perpetual right to the water. The concept of absolute ownership of the water was rejected. The right to use the resource was shared with all other persons whose land was adjacent to the resource and so in times of scarcity, all the landowners would share the resource so that they could have access to water for "ordinary" use on their land (ie, for domestic use and stock watering). While this riparian doctrine was applied to surface waters that flowed or percolated through defined channels, a different doctrine was applied to groundwater by the common law. Like the riparian doctrine, the concept of absolute ownership of the water was rejected but the rule applied to groundwater (and diffused water that flowed unconfined across land) was the rule of capture. The surface landowner could take as much water from the underground source as he or she desired without any real regulation. Accordingly, if one landowner 'drained' the underground source, leaving none for his or her neighbour, the neighbour would not have any course of action 2. While these basic common law principles have been amended substantially by the actions of the State legislatures in Australia, where there is a gap in any given legislative framework, the common law principles continue to operate. 2.2 Legislative regulation in Australia The legislative powers of the Commonwealth of Australia are limited to those set out in the Constitution. Those powers do not include an express power to manage water. Consequently, control and management of water resources has been predominantly the domain of Australia's State legislatures which are given the broad peace, order and good government power. Each jurisdiction has enacted its own statutes and administrative regimes to manage the water resources within its boundary 3. Each jurisdiction has reserved to the Crown the right to manage the jurisdiction's water resources however, as is the prerogative of State legislatures, each jurisdiction has taken a different approach to the vesting of water Crown in the right of the State and used different formulations to control common law landowner rights to take, divert and use water. As a result, the extent to which common law rights remain in the States varies, with Victoria, Tasmania and South Australia expressly abolishing common law rights to varying degrees while, up until 2007, the Australian Capital Territory expressly reserved common law rights. 2 Xuereb v Viola CH 217 [1990] Aust Torts Reports 67,667 (NSW Supreme Court) affirming the principles set out in Acton v Blundell (1843) 152 ER 1223 and Bradford Corporation v Pickles [1895] AC The key statutes in each State are currently the Water Management Act 2000 (New South Wales), Water Act 2000 (Queensland), Water Act 1989 (Victoria), Rights in Water and Irrigation Act 1914 (Western Australia), Natural Resources Management Act 2004 (South Australia), Water Management Act 1999 (Tasmania), Water Resources Act 2007 (Australian Capital Territory) and Water Act 1992 (Northern Territory). regp A v Page 2

3 In addition to vesting the power to control and manage the water resources within the State's constitutional boundaries, State legislation sets out the licensing and permitting regimes for taking and using surface and groundwater flows, water resource management and allocation methodology and requirements, water trading rules, offences and penalties. Further, as a result of the recent National policy reform (addressed in Section 3 of this paper) most jurisdictions (when the notable exception of Western Australia) have undertaken substantial reform of their water management legislation to conform to nationally agreed principles. That legislative reform process is not yet complete in all States. Returning to the Commonwealth, while it was not given an express power to regulate water the Commonwealth Parliament has been able to exert some influence over the management of water resources through other heads of power including: (a) interstate and overseas trade and commerce; 4 (b) corporations; 5 (c) external affairs; 6 (d) an implied nationhood power; 7 (e) financial powers; 8 and (f) the management of Commonwealth places Native Title Rights to Water Native title rights and interests are the Australian equivalent of Canada's Aboriginal rights held by its First Nations. 'Native title' was defined by the High Court of Australia in Mabo v Queensland (No 2) 10 and picked up in the Native Title Act 1993 (Cth), and includes, and is capable of including, a communal, group or individual right to water. However before indigenous people can formally exercise such rights as 'native title rights', they must satisfy the court that the right to water was part of the traditional laws acknowledged and customs observed by their ancestors and that those laws and customs continue to be substantially maintained to the present day. This is not an easy threshold to overcome. In addition, due to the actions of the colonial governments and State Crowns to vest management of water resources in themselves, many traditional rights to water have been extinguished as a matter of law, never to be revived. 4 Commonwealth Constitution, Section 51 (i) 5 Commonwealth Constitution, Section 51 (xx) 6 Commonwealth Constitution, Section 51 (xxix) 7 Commonwealth Constitution, Sections 51 (xxix) and 61 and see the statement of Mason J in Victoria v Commonwealth (1975) 134 CLR 338 at Commonwealth Constitution, Section 51 (ii) 9 Commonwealth Constitution, Section 52 (ii) 10 (1992) 175 CLR 1 regp A v Page 3

4 As a result native title rights to water are of limited importance on a day-to-day basis in Australia, although the rights of indigenous people to access water and the cultural significance of water to indigenous people is recognised in environmental and Aboriginal heritage legislation and government policy making at a State and Commonwealth level. 3. National Water Reform 3.1 If at first you don't succeed.. As noted in section 2 of this paper, the Commonwealth Government is limited by the scope of its legislative powers to manage water resources. However, this does not mean it has been uninvolved in water management. In February 1994, the Council of Australian Governments 11 (COAG) executed the COAG Water Reform Framework Agreement (Framework Agreement) which covered: pricing; water allocation; water entitlements (ie, to use water); water trading; public consultation and education; and environmental allocations. The overall goal of the Framework Agreement was to achieve an efficient and sustainable water industry. The implementation of the Framework Agreement by the States and Territories was linked to the National Competition Policy which was also being actively implemented at the time. States who failed to meet the legislative and policy reform targets set out in the Framework Agreement would be penalised by having financial grants allocated under the National Competition Policy withheld by the Commonwealth. The National Competition Council was also tasked with assessing and reporting on the progress made by the State and Territory governments. Notwithstanding the penalties attaching to the Framework Agreement, reform progress lagged in the early part of the 21 st century and so a new agreement was executed in 2004 to refocus attention on the water reform process. The 2004 Intergovernmental Agreement on a National Water Initiative (NWI) was executed in June 2004 by most States and in the Territories 12 and repeated the principles for water reform set out in the Framework Agreement. It also set out a schedule of specific actions 11 COAG is the peak intergovernment body in Australia consisting of the Prime Minister, the Premier or Chief Minister of each State or Territory and the head of the Australian Local Government Association. For more information about COAG, see 12 Tasmania signed a year later in June 2005 and Western Australia (under a new State Premier) finally executed the Agreement in regp A v Page 4

5 to be undertaken by each jurisdiction to achieve the overall reform objectives. Responsibility for overseeing and reporting on progress was transferred from the National Competition Council to the newly established National Water Commission. 13 It was intended that substantial progress on achieving the goals of the NWI and completion of many of the tasks listed in the schedule to the NWI would be achieved by June However, once again progress has slowed and while many of the tasks have been completed (particularly in the eastern two-thirds of the country), 14 there are still some noticeable gaps. Nevertheless, the NWI remains the key framework document underpinning Australia's approach to management of its water resources. 3.2 The Murray-Darling Basin Agreements (a) What is the Murray-Darling Basin? The Murray-Darling Basin (MDB) consists of the River Murray and its catchment, the Darling River and its catchment and the 77,000 km of rivers, including Australia's third longest river the Murrumbridge River, that run into the catchments. The MDB covers 14% of Australia's land mass 1,059,000 km taking in parts of Queensland, New South Wales, Victoria, South Australia and all of the Australian Capital Territory. A map of the MDB is set out in Figure 1. Some other key facts about the MDB: Over 25,000 wetlands, some of them protected by the Ramsar Convention, exist in the Basin. At least 35 endangered species of birds and 16 endangered species of mammals live in the Basin, together with at least 46 species of native fish. The climatic zones traversed by the MDB range from sub-tropical to the high alpine regions in the Snowy Mountains to semi-arid on the western edges. Approximately, 30 indigenous groups or nations have traditional connections to the MDB. Agriculture relying on the Basin's water accounts for 39% of Australia's gross value of agricultural production 16. Irrigated agriculture comprises the 13 For information about the NWC, its functions and programs, go to 14 Western Australia is still to pass many of the legislative changes necessary to implement the Framework Agreement and the NWI. I am aware that much of the drafting and policy work has been done but changes of government and government priorities has allowed progress to slow to a virtual standstill. 15 In Canadian scale, the MDB covers about 11.6% of the Canadian land mass /06 figures. For more information, see Water and the Murray-Darling Basin - A Statistical Profile, to (Australian Bureau of Statistics) at regp A v Page 5

6 majority of the activity in the MDB with 65% of Australia's irrigated land being in the Basin. Suffice to say that management of this environmentally and socially strategic area is fundamental to Australia's well-being and, in part, defines our national identity. Figure 1 Map of the Murray Darling Basin regp A v Page 6

7 (b) Managing the MDB 17 The importance of managing the MDB (or at least parts of it) was recognised not long after federation with the River Murray Waters Agreement 1914 between the Commonwealth and the MDB States (New South Wales, Victoria and South Australia) executed to divide the waters of the River Murray between the States and the Commonwealth, together with the costs of water works feeding off the River. The shortcomings of the 1914 Agreement (which was revised in 1948 and 1958) as well as the need to integrate the management of the river with broader land use management policy eventually led to the drafting of a new Murray Darling Basin Agreement in 1987 which was formally executed by the MDB States in Queensland joined the Agreement in 1996 and the ACT joined in The 1992 Agreement established a Ministerial Council that set the major policy issues for the MDB and authorised major works associated with the MDB. The Murray Darling Basin Commission which had been established in 1988 was continued and was tasked with implementing the policy set by the Ministerial Council and generally managing the day to day administration of the 1992 Agreement. While it didn't appear to have any independent corporate entity, the Commission could hold and dispose of property and enter into contractual arrangements for the purpose of discharging its functions. Fast forward to 2004 and on the same day that the NWI was signed, the MDB States (which now include Queensland and the Australian Capital Territory) and the Commonwealth executed the Intergovernmental Agreement on Addressing Water Over-Allocation and Achieving Environmental Objectives in the Murray Darling Basin Agreement colloquially referred to as the "Living Murray Agreement". The Living Murray Agreement sought to recover 500GL of water annually for reallocation to the environment and to sustain six ecologically significant sites within the MDB. The Living Murray Agreement arrangements were eventually embodied in part in the Water Act 2007 (Cth) (the Water Act) which was passed in the dying days of the Howard Liberal/National Federal Government. 18 After Kevin Rudd led the Australian Labor Party to form government in late 2007, the new Government, together with the Labor-led MDB States, renegotiated the Living Murray Agreement resulting in the Agreement on Murray-Darling Basin Reform in July 2008 (2008 MDB Agreement) and consequential amendments being made to the Water Act. The Living Murray Agreement objectives (to sustain 17 For a more fulsome summary, see Gardner et al Water Resources Law, n1, chapter 7 18 The Water Act was also intended to implement aspects of the NWI. Its passage through parliament was delayed due to the failure of some States to support the Constitutional basis for the Act. regp A v Page 7

8 the six significant sites) were retained and the program is administered as part of a broader 'Water for the Future' program. The amendments to the Water Act, required as a result of the 2008 MDB Agreement, included the reconstitution of a number of the entities that managed the MDB. A diagrammatic representation of the institutions that now have a role to play in managing the MDB is in Figure 2 but in essence: The Ministerial Council established in the 1992 Agreement has been reconstituted; A new Basin Officials Committee has been established to advise the Council and be responsible for the high level decisions around operation of the MDB; A new Murray Darling Basin Authority (Authority) has been formed to replace the old Commission; and A new Basin Community Committee is formed to advise the new Authority and the Ministerial Council. Figure 2 (from the Murray Darling Basin Authority website, regp A v Page 8

9 The balance of this paper will focus on one aspect of the Water Act and the functions/responsibility of the institutions referred to above namely the Murray- Darling Basin Plan. 4. The Murray Darling Basin Plan 4.1 Legislative Process Part 2, Division 2 of the Water Act (Sections 19 to 52 inclusive) set out the requirements for the development and content of the Murray Darling Basin Plan (the Basin Plan). Section 19 sets the general intention: (2) There is to be a Basin Plan for the management of Basin water resources. The Basin Plan will provide for limits on the quantity of water that may be taken from the Basin water resources as a whole and from the water resources of each water resource plan area. It will also provide for the requirements to be met by the water resource plans for particular water resource plan areas. (3) The [Murray Darling Basin] Authority must prepare a Basin Plan and give it to the Minister for adoption. The Minister may adopt the Basin Plan without modification or direct Authority to amend the Plan. Section 20 sets out the purpose of the Basin Plan which is "to provide for the integrated management of the Basin water resources in a way that promotes the objects of the Act". The objects of the Act are set out in section 3 and include, relevantly: (a) (b) (c) (d) to enable the Commonwealth, with the Basin States, to manage Basin water resources in the national interest; to give effect to relevant international agreements; to promote the use and management of the Basin water resources in a way that optimises economic, social and environmental outcomes; and without limiting the previous two objectives: (i) (ii) (iii) to ensure the return to environmentally sustainable levels of abstraction in over allocated resources; to protect, restore and provide for the ecological values and ecosystem services of the Basin; subject to (i) and (ii), to maximise the net economic returns to the community from the use and management of the Basin resources. Section 21(4) of the Water Act says that when exercising the powers and functions in relation to the Basin Plan, both the Authority and the Minister must take into account the principles of ecologically sustainable development and act on the basis of the best available scientific knowledge and socio-economic analysis. Section 22 sets out the mandatory content of the Plan: regp A v Page 9

10 Item 1 Item 2 Item 3 Item 4 Description of the Basin water resources and the context in which they are used Identification of individual water resource plan areas Identification of the risks to the condition of the Basin water resources Management objectives are outcomes to be achieved Item 5 Strategies to manage or address the risks identified in Item 3 Item 6 Item 7 Item 8 Item 9 Item 10 Item 11 Item 12 Item 13 The maximum long term annual average quantities of water that can be taken on a sustainable basis from the Basin water resources as a whole as well as individual water resources The long-term annual average quantities of water that may be taken, on a temporary basis, year by year from individual water resources The method for determining whether the long-term annual diversion limit (which is the sum of the quantities identified in Items 6 and 7 for a particular resource) has been complied with An environmental water plan A water quality and salinity management plan The requirements that a water resource plan prepared by a Basin State for a particular water resource within its jurisdiction must comply with to be accredited under the Water Act Rules for trading or transferring water rights in the Basin A program for monitoring and evaluating the effectiveness of the Basin Plan The average quantities referred to in Item 6 are called the 'long term average sustainable diversion limits' and the average in Item 7 is the 'temporary diversion provision'. Ultimately these are the legal limits on the amount of water that may be taken from the water resources in the Basin. It is important to note that while the Basin Plan will provide for the management of the Basin as an integrated whole, including settling the amount of water that can be used, it will be the management/allocation plans for individual resources within the Basin prepared by the relevant Basin State that will be the plan of most relevant to water users on a daily basis. Once the Basin Plan has been settled, new water management/allocation plans prepared by the Basin States (including new plans to replace expired existing plans) will have to conform to the Basin Plan. 4.2 Preparing the Basin Plan Preparation of the Basin Plan has always been recognised as a relatively gargantuan task and one that was not going to be easy as it represented a fundamental shift in the way a significant portion of the country's water supply was to be managed. Sections (inclusive) of the Water Act set out (at a very high level) the procedure to be followed by the Authority to prepare the Basin Plan. Section 41 rather innocuously says regp A v Page 10

11 that "as soon as practicable" after commencement of Part 2 of the Water Act, the Authority is to prepare a Basin Plan and present it to the Minister for approval. When the latest intergovernmental agreement on the MDB was executed in 2008, the parties agreed a timetable that would see the Authority release a draft plan in mid-2010 with a final Basin Plan approved in The first step taken by the Authority was to release a concept statement in June 2009 followed by a series of short fact sheets to introduce the various concepts and terms to be included in the Plan. Then at around 4 pm on Friday 8 October, the Authority released a document called "Guide to the Proposed Basin Plan" (the Guide). With a 223 page Overview document and 20 volumes of technical and sub-basin specific information, the Guide was intended to "present proposals to the community for discussion" 19. The Guide is intended to be a plain English explanation of the proposed Basin Plan and represented the end point of some 18 months of consultation and research. The Authority chose to release the Guide as an additional consultation step in the development of the Basin Plan because it recognised the complexity involved in developing the Basin Plan a task the Authority noted had not been undertaken to this scale anywhere else in the world. 20 The Authority's intention following the release of the Guide was to consult with stakeholders until early November 2010 to seek further feedback and comment on the proposed Plan as described in the Guide, before finalising a draft Plan for release in late 2010/early 2011 for a 16 week public consultation process as required by section 43(4) of the Water Act. Unfortunately, reaction to the Guide was not as the Authority had hoped and the timetable for development of the Basin Plan is now very uncertain. 4.3 How much water does the Basin (ie, the environment) need? 21 The Authority first determined the amount of water needed for the environment in the Basin in order not to compromise: key ecosystem functions; key environmental assets, including ecosystem services, water-dependent ecosystems and sites with ecological significance; the productive base of the water resource; and the key environmental outcomes of the water resource (including ecosystem functions, biodiversity, water quality and water resource health). 19 Guide, Overview Volume, page ix. The Guide can be viewed at 20 Guide, Overview Volume, page xi 21 For further detail see the Allens Arthur Robinson client focus publication in relation to the Guide "Focus: Murray Darling Basin Plan Guide released" (13 October 2010) ( regp A v Page 11

12 Relying on 'best available science' and its own analysis, the Authority concluded that to meet these requirements, surface water of between 22,100 and 26,700GL per year (GL/y) would need to be reserved or allocated for the environment. Based on the current distribution of surface water in the Basin, the Authority concluded that the amount of additional surface water needed for the environment is between 3000 and 7600 GL/y (longterm average). 22 This range informed the Authority's determination of sustainable diversion limits for the Basin. The Authority modelled the socio-economic impacts of a range of scenarios in which water was reallocated to the environment (ie, away from consumptive uses) within the ranges it determined would be required for additional environmental water. It concluded that the socio-economic impact of diverting more than 4000 GL/y of water away from consumptive uses would compromise the Water Act objective of optimising economic, social and environmental outcomes. Accordingly, the Authority decided to consider and propose sustainable diversion limits based on reallocations to the environment of 3000 to 4000 GL/y. It proposed reallocations to the environment on three scenarios of 3000, and 4000 GL/y. The Authority noted that a reduction in current water diversions of 3,000-4,000 GL/y (or greater than 29%) would represent a reduction in gross value of irrigated agricultural production of around 13-17%, or $ billion per year. 23 The Authority concluded that (on average) 13,700 GL/y of water in the Basin is currently diverted for consumptive use. Therefore, the sustainable diversion limit for surface water in the Basin must be between 9700 GL/y and 10,700 GL/y. Crucially, this implied average cuts to water available for consumptive use of between percent from all diversions (ie, including watercourse and interception diversions), or between percent if cuts were sourced only from watercourse diversions (of which irrigation diversions comprise a major part). It is important to note that the above figures represent the average cuts throughout the Basin necessary to comply with the proposed Basin-level diversion limit. Limits applicable in individual water resource areas differ across the 29 resource plan areas for surface water: in some areas, no reductions are required; in others up to 45 percent reductions in watercourse diversions could be required. 4.4 Reaction to the Proposed Diversion Limits The response of the public, irrigators, environmentalists and others to the Guide, and in particular to the proposal to remove GL/y of water from consumptive use, was swift and was (mostly) negative. A sample of the headlines follows: "Tortuous Water Battle" Australian Financial Review, 25 October 2010, p See section 6 of the Guide 23 See section 7 of the Guide regp A v Page 12

13 "Farmers fume over Murray-Darling cuts" The Australian, 7 October 2010 "Water tension spill over in Basin States" The Australian, 8 October 2010 "Farmers say jobs will flow out with water" The Weekend Australian, 9 October 2010 "Plan will save river, kill towns" The Weekend Australian, 9 October 2010 "Basin Plan forced to put environment above people" The Australian, 11 October 2010 "Cuts spark fears for food security" The Australian, 11 October 2010 "Farmers pour scorn on water blueprint" The Australian, 13 October 2010 "Outrage and missiles as farmers vent fury" The Australian, 15 October 2010 As noted earlier in this paper, the Murray-Darling Basin supports nearly half of the country's agriculture industry and through that many towns and supporting industries and services. To suggest this would be threatened by reducing water availability 24 struck deeply in these proud communities. What was of particular concern was the Authority's view that the terms of the Water Act required the Authority, when drawing up the Basin Plan, to place environmental outcomes ahead of economic and social considerations. In essence, the Authority seemed to be saying that it could not take a "triple bottom line" approach. Recognising that this view was causing considerable difficulty in conducting public consultation, the Authority announced it would commission an expanded detailed study into the likely social and economic impacts of the Plan and the proposed sustainable diversion limits on local communities with the report to be delivered in March/April It also extended comment on the Guide to December The Commonwealth Environment Minister, Tony Burke (who had been in the job less than two months) then sought and released advice from the Australian Government Solicitor apparently contradicting the Authority's position 26. The advice noted the overall objective of the Water Act and the Basin Plan was to give effect to relevant international agreements which recognised economic and social factors in their decision making. More particularly, the advice said: 24 Granted in times of drought there was not much anyway but we are a nation of optimists! 25 Murray-Darling Basin Authority Press Release, 17 October See the media statement from the Hon. Tony Burke MP dated 25 October 2010 at The legal advice can be found at regp A v Page 13

14 8. The Plan has multiple objects and purposes and must deal with a wide variety of environmental, economic and social considerations are of relevance to decision-making. It is necessary to consider the relationship between socio-economic considerations and the obligation to give effect to the relevant international agreements where in applying the particular provisions of the Act that give effect to the agreements, the discretionary choice must be made between a number of options the decision maker must, choose the option which optimises the economic, social and environmental outcomes In considering the need to set sustainable diversion limits in the Plan which are required to be set so as not to compromise 'key environmental assets', the advice said (at paragraph 28) that 'the [Authority] and the Minister could not identify an environmental asset as key if this was not necessary to achieve the specific requirements of the Water Act (such as those under s21) and would have significant negative social and economic effects'. Of course, if one of the international agreements underpinning the Water Act did actually give primacy to environmental impact, and not a triple bottom line approach, then the Authority's interpretation of the Basin Plan objectives would appear to be the better one. But the legal advice released by the Minister did not go to this level of detail. The Authority's response to the Minister's statement was to state that the Australian Government Solicitor had reviewed the Guide before its release, but 'to the extent that this latest advice suggests that the Authority has greater leeway in relation to social and economic considerations than previously advised, we welcome the advice'. 27 At the end of the day, section 3 of the Water Act is not drafted as clearly as was previously thought which has led to the "difference" of opinion between the earlier advice sought by the Authority and the advice released by the Commonwealth Environment Minister. In early February 2011, the Federal Opposition successfully established an inquiry by the Legal and Constitutional Affairs References Committee in the Commonwealth Parliament's Upper House, the Senate, to investigate the provisions of the Water Act and the direction for preparation of the Basin Plan. The terms of reference for the inquiry specifically require the committee to consider (a) any ambiguities or constraints in the Act which would prevent a Basin Plan from being developed on an equally weighted consideration of economic, social and environmental factors; (b) the differences in legal interpretations of the Act; (c) the constitutional power of the Commonwealth to legislate in the area of water; (d) the role of relevant international agreements and the effect of those on the parts of the Act which direct the Basin Plan to give effect to those agreements and their effect on the Act more generally; (e) any amendments that would be required to ensure that economic, social and environmental factors are given equally weighted consideration in developing the Basin Plan; and 27 Murray Darling Basin Authority Media Release dated 26 October 2010, regp A v Page 14

15 (f) any other related matter. 28 The Committee is due to report back to the Senate by 11 May There is no doubt that the Authority will be paying attention to the Committee's findings. 4.5 Where to from here? Unfortunately, the debate over the importance of environmental matters over economic and social ones and the "battle of legal opinions" has not allowed the Basin planning process to move forward. In early December 2010, the chair of the Authority, Mike Taylor AO, resigned. While the Authority is an independent entity under the terms of the Water Act, and so can (indeedmust) be independent from the Government and its opinions, the very public disagreement between the Authority's chair and the Minister was quite unusual. In a parting press release dated 7 December 2010, Mr Taylor said that the Authority 'has sought, and obtained, further confirmation that it cannot compromise the minimum level of water required to restore the [Murray-Darling] systems environment on social or economic grounds'. The Government has subsequently appointed a former New South Wales Government Minister, Craig Knowles, as the new chair from February On his first day on the job, Mr Knowles committed to delivery of a draft Basin Plan to the Minister for approval in 2012, while stating he disagreed with the previous chair's approach to addressing economic and social issues in the Plan. 29 What isn't clear is to what extent the draft Basin Plan will adhere to the principles outlined in the current Guide and just how much the Authority will "go back to the drawing board" in preparing the draft Basin Plan in The urgent need to find water for the environment within the Basin was made very stark when the overwhelming picture was one of parched wetlands and dry river beds. However, with the record floods in Queensland, New South Wales and Victoria in January and February 2011 and consistent rainfall since then resulting in abundant water flowing through the streams and rivers that comprise the Basin (in part), the natural human instinct to relax in times of "wealth" appears to have come into play. One can only hope that that instinct can be overcome so that by the time the next drought inevitably comes, we will have a proper plan to in place to protect the Basin and all it supports. 28 Senate Legal and Constitutional Affairs References Committee, Inquiry into the Provisions of the Water Act 2007, Terms of Reference, see 29 "Knowles pours cold water over plan", Australian Financial Review, February 2011, p 4 regp A v Page 15