Government dives into the murky world of water rights, licensing and allocation

WATER is always likely to be a contentious issue in a place as dry as Western Australia.

But efforts in recent years to regulate water usage in the state have been hampered by challenges that range from simple cost structures to more fundamental questions of ownership.

Water Minister Graham Jacobs is the latest to oversee efforts to reform water management in WA as part of the state’s obligations to the National Water Initiative, signed by then-premier Alan Carpenter in 2006.

Mr Jacobs is currently awaiting the outcome of an Economic Regulation Authority inquiry, which follows two failed attempts by his Labor predecessor John Kobelke to introduce new regulations to licence and charge fees for certain commercial water users in the state.

Twice the state’s Legislative Council rejected Mr Kobelke’s regulations.

In the main, that was as a result of efforts by powerful Manjimup and Pemberton landowners who felt the new regulations were too costly, inequitable and being prematurely implemented ahead of proposed changes to legislation governing water resources management, which was expected to modernise laws originally put in place in 1914.

State opposition water spokesman Fran Logan said the continuing uncertainty was affecting some farmers and growers in that region specifically.

“The government must act to bring Western Australia’s water laws into step with national standards and give certainty to farmers and growers across Western Australia,” he said

While Mr Logan tries to paint a picture of progress under the former government the truth is that, in trying to install a similar regime to his predecessor, Mr Jacobs faces some of the same issues as Labor did when it was in power and Mr Kobelke was the responsible minister.

Vocal farmers in the catchment areas of the Warren and Donnelly rivers then, as now, reject any licensing of their operations, claiming the move was simply a tax grab on their productive and fertile region.

While there may be an argument that particular catchment is far removed from any threat to water supplies, further north, near urban centres and around proposed resources developments, there are emerging conflicts between users over water rights. Miners for instance, want some certainty.

The WA Department of Water is trying to deliver that certainty, releasing a discussion paper on water resources management options in an effort to bring what it claims is an up-to-date approach to overseeing water usage. It wants to radically overhaul current legislation, some of it a century old, to bring WA in line with the rest of the nation and avoid the water allocation issues that have been at the heart of the collapse of the Murray-Darling River system.

But those who want to change the laws governing water management also have a deeper issue to deal with. Just as the farmers don’t want licensing to start until they are comfortable with the regime to be imposed, so too do some lay elements of the Liberal Party want the new legislation to wait until property rights are defined.

National approach

A drier climate, industrial development and population growth are the key reasons cited for dealing with the issue but, in reality, it has surfaced here as a result of WA becoming a signatory to the NWI, a significant policy driven by former prime minister, John Howard, in his efforts to resolve the massive issues facing the Murray-Darling water system.

Some believe the incentive of access to Commonwealth funds was a big carrot in the process.

In summary, the NWI agreement aims to: expand water markets for greater permanent trade in water; promote more flexible and profitable water use; increase confidence for those investing in the water industry; improve water planning and accounting; improve the way water is allocated, used and managed for environmental outcomes; and improve the efficient management of water in urban environments.

It is understood that an underpinning principle of the NWI it is that water users be licensed, and that the licence enshrines the right to an allocation of the resource.

As such, that right, and the water attached to it, would become tradeable. In addition, the costs of licensing and managing the water resource will be borne by users on a cost recovery basis.

Department of Water director-general Kim Taylor believes reform water management is necessary in WA to head off issues such as those that occurred in the eastern states, which ultimately led to the NWI.

Mr Taylor points out that industry and mining use 600 gigalitres of water a year in WA, while agriculture uses 900GL.

“That is billions of dollars a year for the state in production. Water management is underpinning a vital component of business in this state,” Mr Taylor said.

“One of the key benefits in modernising is it will assist development by providing certainty for business.”

He said the Department of Water was proposing three key things from the legislative process: to increase security for industry by providing licences in perpetuity rather than five to 10 years as it currently does; to separate water entitlement from land ownership so those rights may be traded and water driven to most productive uses; and to protect the environment.

Mr Taylor said that, as WA grew and climate changed, more water catchments, or systems, would reach a point where they could no longer sustainably provide for new users or expanded use by existing users.

Water management reform was intended to provide for that inevitability before conflict occurred.

“We are really just transitioning into that phase,” he said, pointing out that the department is refusing new licences above the Gnangara aquifier.

Mr Taylor acknowledges there have been negative perceptions around changes, with fears raised about implications for Wheatbelt dams or land being stripped of water rights.

But he doesn’t believe any of the proposed reforms will be detrimental to current users.

“Nobody is going to force them to sell their water entitlements or take it off them,” Mr Taylor said.

However, he predicts conflict will occur in the future between different users if laws governing water usage are not brought up to date.

“We’ll see more of that as systems become fully allocated; that is why we need this system, so we have transparency and we can trade for the highest value use.”

Farmers revolting

It would seem logical that enshrining rights and then allowing property owners to trade those rights would be favoured by landowners, but many in the self-described southern food bowl disagree with the way the government is going about things.

Former high ranking public servant Neil Bartholomaeus, a spokesman for a very active Manjimup and Pemberton farmers lobby group that represents $100 million a year in production, said the moves to start managing water by licensing was putting the cart before the horse.

That is especially the case when it is being applied to only some areas, such as where Mr Bartholomaeus lives, while other parts of the state are untouched – notably 150,000 garden bores in the Perth metropolitan area.

While not opposed to the principle of licensing, he said farmers of the area used only 5 per cent of the water in the catchment, which meant managing the resource in that part of the state was hardly a pressing matter.

Key among the farmers’ concerns regarding licensing is that productive areas like the Warren and Donnelly systems are being asked to fund a bloated bureaucracy that doesn’t actually supply any water to them.

Furthermore, they are concerned that – without clear legislation – there is the potential that regulations proposed now for certain uses of water could be widened in the future.

Mr Bartholomaeus describes the prospect of separating water rights from land ownership as illogical and a threat to the security of farmers.

He is also concerned that there is little explanation for licensing certain types of dams, such as those capturing spring water, and not others, such as run-off dams. Furthermore, would it be retrospective?

The landowners of the area have labelled the state’s move as a tax grab.

“We are not inclined to stand by the gate and hand out $100 bills to every vehicle with a government licence plate that passes by,” Mr Bartholomaeus said.

“We are not going to be paying fees and charges to government that are not justified.

“You have a Department of Water Resources that is suffering from bloating.

“They don’t deliver a drop of water to anyone. It is amazing to see how some of those government agencies grow but never seem to have a services provision or major regulatory role.”

But Mr Bartholomaeus’ group’s criticism of the process goes further, questioning whether the state has been honest with the Commonwealth with regard to meeting NWI obligations to have completed its consultation and policy position signed off.

“It appears to us that we are being told the scope of potential regulation and associated fees and charges is open to discussion to appease agriculture and plantation forestry, yet on the same regulatory matters the state government is advising the Commonwealth government it is in compliance with the NWI to qualify for related Commonwealth grants including $195 million associated with the Ord River irrigation district announced last week, $35 million for the Harvey irrigation district in June 2009, and $2.46 million for groundwater studies in April 2009,” the farmers wrote in their submission to the ERA in late August.

The Department of Water dismisses that allegation. Mr Taylor said the National Water Commission regularly assessed compliance of the states.

He acknowledges that WA is not progressing adequately in water legislation and cost recovery but believes that is only part of the whole picture.

“Generally we are doing ok,” Mr Taylor said.

Mr Jacobs feels similarly; that things are progressing suitably.

WA Farmers Federation water resources spokesman Steve Dilley believes the previous government pushed its agenda too hard and a lot of distrust developed.

However, Mr Dilley believes there are some strengths in the reforms, which is why WA Farmers supported WA signing up to the NWI in the first place.

The prospect of perpetual licences is one of the appealing elements of the proposals, because where licences currently exist they are generally limited to five or 10 years.

“That doesn’t give people a lot of confidence to go to their banks for funding to develop their businesses,” Mr Dilley said.

“This (reform) does give long-term security.”

He is also keen on the possibility of self-management, where collectively farmers within a recognised water catchment or system would be able to manage their own usage. A further advantage is modernising a regime governed by the 1914 Rights in Water and Irrigation Act and six other water-related pieces of legislation.

However, WA Farmers is not totally supportive of what the government has in mind.

Mr Dilley describes the potential for water trading as simply a ‘beat up’ in most areas of rural WA where there is little ability to economically redistribute water from one farm to another.

He is also critical of the proposed cost impositions that have so incensed farmers in the south.

“We are just being squeezed big time by rising costs,” Mr Dilley said.

“Farmers are the only price takers in the food chain. The last thing we need is more fees and charges on top of that if there is no extra benefit. If you want to charge us, give us something in return.”

Vegetables WA executive officer Jim Turley backs this thinking.

His organisation is also cynical about the prospect of water rights being traded away in certain areas, ending the agricultural viability of the land.

“We believe it is a bad thing,” Mr Turley said.

“Principally you can end up with vast areas without water. If someone gobbles up the water there is land that is no use.”

While there are few areas where this may occur, there are emerging conflicts over water. In northern Perth above the Gnangara aquifier and areas such Jindong, near Busselton, sustainable horticultural water usage has peaked and there are also growing residential populations. Near Jurien, several farmers are engaged in a long-running dispute over access to underground water reserved for drinking.

Around Collie, energy production is thirsty work, as is proposed fertiliser manufacturing, which has the potential to rival agriculture in the area.

There are also emerging tussles involving miners, both at the southern end of the Darling Scarp and in the Mid West, which could one day result in farmers being outbid for water.

Chamber of Minerals and Energy director Paul Frewer said the mining industry generally supported the thrust of the reforms though it, like the rural community, was concerned about the potential cost of administration.

Mr Frewer, a former director-general of the Department of Water, said that the biggest issue was the lack of progress in developing the legislation, with only the piecemeal release of information.

“We want to see a complete package,” he said.

Mr Frewer thinks it will be difficult under the state government’s legislative agenda for WA to meet its obligations to fully implement the NWI by 2014.

One issue miners have in common with some of the most outspoken farmers is the concerns about the potential for moving goalposts. While the CME backs the need for water trading, there are issues about how well the underlying resources are understood and therefore the certainty provided by licensed allocations. This is especially the case with regard to underground aquifers, which are notoriously difficult to measure.

Mr Frewer said a lot of other practical information was missing.

“How this is going to work should be where the debate is,” he said.

“People want the detail and that is what is missing at the moment.”

Water rights

While the farmers of the south might be fighting the same fight with a new government, they may be surprised to find an unexpected ally in the Liberal Party itself.

At the party’s state conference in March it may have gone unnoticed by many that a policy on water rights was carried that would challenge the bureaucracy and the legislature to enact any rules or regulations with regard to water management.

The state conference water resources motion, moved by real estate player Paul Clune, urged the state government to amend The Rights in Water and Irrigation Act 1914 such that water is recognised as a chattel property in three differing types, namely rain, run-off and ground, with proprietorship of these types then identified and defined.

Mr Clune, whose views are shared by Liberals such as former parliamentarian Murray Nixon, told WA Business News the state and its bureaucracy were misguided in believing that water was essentially owned by the crown and that it could make rules on its usage.

He said the rules proposed were unenforceable until it was spelt out in legislation who owned what.

A dedicated student of property ownership, Mr Clune is adamant that, under land titles in WA, the crown makes no claim of ownership of water, which means that rain that falls on a property or is accessible underground within the depth stipulated by that title is a chattel of the property owner.

This contradicts the view of the state’s Economics and Industry Standing Committee, which stated in its Water Licensing and Services report last year that: “There is general understanding that water does not belong to individuals or corporations, but to the state.”

This is an enormous chasm in terms of understanding, which has big implications.

Mr Jacobs said that this argument was short sighted and could lead to poor outcomes.

“I understand the property rights issue but it is about managing resources for everybody,” he said.

Mr Jacobs said he contested the property rights issue with three counterarguments.

“That (property rights) is ok, except if you are a neighbour; that it is ok but what if you want to diversify and expand; that it is ok but what about your kids, you have to think about the future.”

“Someone has to manage that resource, there is a cost to doing that; obviously we try to make that as least bureaucratic as possible.”