Announcement date
6 September 2023
Link to announcement
Water Amendment (Restoring Our Rivers) Bill 2023 – Parliament of Australia (aph.gov.au)
Problem being addressed
The independent Water Market Reform: Final Roadmap Report (the Roadmap) was a response to the findings of the Australian Competition and Consumer Commission’s (ACCC) Murray-Darling Basin water markets inquiry, which was published in March 2021. The inquiry identified a range of problems, including:
- There is a lack of quality, timely and accessible information for water market participants, and this impairs commercial and regulatory decision making.
- There are inadequate rules governing the conduct of market participants, and no specific body to oversee trading activities.
- Trading behaviours that can undermine the integrity of markets (such as market manipulation) are not prohibited, prohibitions on insider trading are insufficient and information gaps make these types of detrimental conduct difficult to detect.
- Differences in trade processes and water registries between the Basin states prevent participants from getting a full, timely and accurate picture of the price and supply of, and demand for, water.
- Irrigators and traders would benefit from better government information about key policies and river operations.
- The complex nature of the Basin’s water markets settings means that trading systems and opportunities favour professional traders and large agribusinesses who have greater capacity to understand and participate in water markets.
Proposal
On 19 August 2022 Lyn O’Connell, Deputy Secretary, Department of Climate Change, Energy, the Environment and Water (DCCEEW), certified that the Roadmap had undertaken a process and analysis equivalent to a Regulation Impact Statement (RIS, now Impact Analysis).
The Water Amendment (Restoring Our Rivers) Bill 2023 amends the Water Act 2007, the Basin Plan 2012 and the Competition and Consumer Act 2010 to implement the Roadmap recommendations to improve transparency, integrity and confidence in Basin water markets.
The water markets reforms include:
- An enabling framework for a mandatory code to be made to regulate water markets intermediaries covering a range of obligations including relating to statutory trust accounts;
- Basin-wide water markets integrity rules, comprising prohibitions on market manipulation and insider trading;
- stronger requirements for water markets decisions that impact on water prices and more consistency in the way these decisions must be publicly announced;
- the development of national water markets data standards and reporting of all relevant water trade data collected by water markets intermediaries to the national water information agency (the Bureau of Meteorology); and
- removal of the Basin Plan exemption for grandfathered tags to ensure that all water entitlement holders are subject to the same rules.
Assessed Impact Analysis outcome
Certified Independent Review
Assessment comments
Consistent with the Government’s Impact Analysis (IA) requirements, the Roadmap has been certified by DCCEEW as meeting the requirements of an IA for the recommendations specified above, which have largely been implemented through the Water Amendment (Restoring our Rivers) Bill 2023. The Office of Impact Analysis (OIA) does not assess the quality of independent reviews and IA-like documents used in lieu of an IA, but does assess whether the options analysed in the independent review are relevant to the regulatory proposal. The OIA assessed that the options analysed in the Roadmap were sufficiently relevant to the regulatory proposal.
Regulatory burden
The increase in regulatory burden associated with the proposal is estimated at $0.49M per annum, based on the requirement for businesses to collect and report on water trades.
Addendum (September 2023, updated December 2023)
DCCEEW has advised that the initial regulatory burden associated with the requirement that businesses comply with the new water market data standards is estimated to be an additional $9.3M (or $0.93M per annum over 10 years, as per the regulatory burden measurement framework). This estimate includes the initial digital systems uplift costs to private data providers which would involve procurement of external IT services for systems development and upgrades.
DCCEEW has advised that it is working with regulators on the best way to assess the impacts of the regulations that will be drafted following the passage of the Bill. This is to address concerns raised by stakeholders during the consultation processes to date, which will best be addressed at the time the detailed requirements are developed. DCCEEW will prepare this impact information in consultation with OIA, which will then published as an addendum to this webpost following the making of the regulations.