2004 – 2005 - 2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
MURRAY-DARLING BASIN AMENDMENT BILL 2006
EXPLANATORY MEMORANDUM
(Circulated by Authority of the Minister for Agriculture, Fisheries and Forestry,
the Hon Peter McGauran MP)
2.
MURRAY-DARLING BASIN AMENDMENT BILL 2006
GENERAL OUTLINE
The main purpose of the Bill is to amend the Murray-Darling Basin Act 1993 (the "Principal Act") to approve and give effect to the Murray-Darling Basin Agreement Amending Agreement 2006 between the Commonwealth, New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory ("Amending Agreement") to amend the Murray-Darling Basin Agreement ("Agreement").
The effect of the Amending Agreement is to enable improved business practices for the Murray‑Darling Basin Commission’s (Commission) water business River Murray Water. The Amending Agreement also confirms that Queensland cannot be held liable for works and measures in which it is not directly involved. The Amending Agreement is subject to the approval of the Parliament of each party to the Amending Agreement.
The original Agreement was made on 24 June 1992 between the Commonwealth, New South Wales, Victoria and South Australia. It was subsequently approved by the Parliament of each party. The purpose of the Agreement is to promote and co-ordinate effective planning and management for the equitable, efficient and sustainable use of the water, land and environmental resources of the Murray-Darling Basin.
Broadly, the Amending Agreement:
· provides for appropriate contracting governments to make annual annuity contributions towards the future capital replacements and major cyclic maintenance costs of River Murray Water;
· enables annuity contributions to be accumulated and invested, and allows the Murray-Darling Basin Commission (the Commission) to borrow funds where accumulated annuity contributions are insufficient to meet costs in any year. Borrowings would require the approval of the Murray-Darling Basin Ministerial Council;
· enables the Murray-Darling Basin Ministerial Council (Ministerial Council) to recover water business costs from State governments in shares comparable to those which would apply if fee-for-service pricing were introduced. These proportions must be reviewed at least every five years;
· enables the Ministerial Council to allocate responsibility for River Murray Water structures from one constructing authority to another, subject to the agreement of the parties concerned;
· enables the Ministerial Council to alter from time to time financial thresholds above which specific Council approval must be sought by the Commission; and
· clarifies that Queensland cannot be held liable for works and measures in which it is not directly involved.
3.
The Amending Agreement also makes a number of minor amendments to:
· clarify the meaning of ‘works’ and ‘measures’;
· clarify the annual estimates approval process;
· simplify identification of the costs to which the Commonwealth Government does and does not contribute;
· give the Ministerial Council the flexibility to appoint an auditor other than the Australian National Audit Office for the Commission; and
· update the list of works and measures in Schedule C to the Agreement.
Financial Impact Statement
The Murray-Darling Basin Amendment Bill 2006 will not have a negative financial impact for the Commonwealth as the intention of the Bill is to eliminate surprises which currently occur from year to year. The proposed new arrangements will provide the Commonwealth with certainty and fore-knowledge as to the yearly contributions it makes towards the management of Murray-Darling assets. For example, future contributions should be more consistent and more predictable. It is neither anticipated nor intended that the Commonwealth Government’s total contributions will change as a result of the amendments.
4.
NOTES ON CLAUSES
Clause 1: Short title
1. This clause provides for the Act to be cited as the Murray-Darling Basin Amendment Act 2006.
Clause 2: Commencement
2. This clause provides that the provisions of the Act, other than Schedule 1, will commence on Royal Assent. Schedule 1 is to commence on a day to be fixed by Proclamation. As complementary legislation in each jurisdiction is required to carry the Amending Agreement into effect, it is planned that the timing of the commencement of the Act will coincide with the commencement of the corresponding New South Wales, Victorian, Queensland, South Australian and Australian Capital Territory Acts. Consequently, no time limit has been placed on Proclamation.
Clause 3: Schedule(s)
3. This clause provides that the Murray-Darling Basin Act 1993 and any other Act that may be specified in a Schedule are to be amended or repealed as set out in the Schedule(s) to the Act.
SCHEDULE 1 – AMENDMENT OF THE MURRAY-DARLING BASIN ACT 1993
Clauses 1 and 2: Amendments to Subsection 3(1) (definition of Agreement)
4. These clauses amend subsection 3(1) of the Principal Act to:
· Amend the definition of "Agreement" so that it includes the Agreement as amended by the Amending Agreement 2006;
· insert a definition of "Amending Agreement 2006";
Clause 3: New Section 5B
5. This clause inserts a new section 5B into the Principal Act providing that the Amending Agreement 2006 is approved by the Parliament.
Clause 4: At the end of the Act
6. This clause inserts a new Schedule 3 to the Principal Act. Schedule 3 contains the text of the Murray-Darling Basin Agreement Amending Agreement 2006 as signed by the Prime Minister of the Commonwealth of Australia, the Premiers of Victoria, New South Wales, Queensland and South Australia and the Chief Minister of the Australian Capital Territory.
7. The new Schedule 3 to the Principal Act introduces a number of key initiatives.
5.
8. Annual annuity contributions. These annuity contributions are consistent with COAG water reform principles and will reduce fluctuations which might otherwise occur in governments’ annual contributions to the Commission. They will also give a better reflection of the long run costs of providing water business services. The Commonwealth currently contributes 25 per cent of the costs of investigations and construction of River Murray Water’s water management structures in the River Murray system. The Commonwealth does not contribute to the operation and maintenance costs of these structures.
9. Recovery of water business costs from State governments. These amendments will enshrine COAG principles relating to the costs of water services in the Agreement and eliminate cross-subsidies between the States for water business costs. This amendment will have no impact on the Commonwealth.
10. Allocation of responsibility for River Murray Water structures. The Agreement currently provides that the Murray-Darling Basin Commission or the Ministerial Council must nominate which of the contracting governments will be responsible for the construction, operation and maintenance of works or the implementation of measures under the Agreement. There is no authority for this responsibility to be reallocated amongst government should it become necessary. This amendment will have no impact on the Commonwealth as it applies only to State authorities.
11. Financial thresholds. These thresholds were set in 1992 with no provision for adjusting them to account for changing values. The approvals relate to the execution of work, the implementation of measures ($2 million), the construction of work or the acquisition of an interest in land ($1 million), and the acceptance of tenders ($2 million).
12. Clarification of Queensland’s responsibilities. Queensland became a party to the Agreement on the basis that it would only contribute towards works and measures in which it is directly involved. This amendment will remove ambiguities in the Agreement that could be interpreted as widening Queensland’s liabilities. This amendment will have no impact on the Commonwealth.