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Royal Commission finds Murray-Darling Basin Plan partly unlawful

05 February 2019

#Royal Commissions & Commissions of Inquiry, #Planning, Environment & Sustainability

Dr Joseph Monaghan

Published by Dr Joseph Monaghan

Royal Commission finds Murray-Darling Basin Plan partly unlawful

On 29 January 2019 the South Australian Murray-Darling Basin Royal Commission (Royal Commission), constituted by Bret Walker SC as Commissioner, delivered its almost 800 page report to the South Australian Government. 

The Murray-Darling Basin Royal Commission Report (Report) was promptly released to the public. 

Climate change

The Commissioner’s findings in relation to climate change were that climate change had not been considered by the Murray-Darling Basin Authority (MDBA) in relation to the setting of the Sustainable Diversion Limits (SDLs) under the Basin Plan. This was a fundamental problem from a legal perspective and from the perspective of ensuring the Basin Plan achieved the environmental objectives of the Water Act 2007 (Cth) (Water Act). In the course of investigating the climate change issue the Commissioner also came to form a view that the MDBA had ignored advice from the CSIRO in relation to climate change. Some of the Commissioner’s key findings were:

  • ‘The best available scientific knowledge developed worldwide continues to point toward significant warming in the Southern Basin to 2030 and beyond, and a significant if not catastrophic reduction in run-off depending on global greenhouse gas emission scenarios.’[i]
  • ‘In 2009, the CSIRO advised the MDBA that … the MDBA should consider the recent climate of the past 10–20 years, and its climate change projections. This advice was ignored by the MDBA. This amounts to negligence, and maladministration.’[ii]
  • ‘The MDBA’s failure to heed the advice of the CSIRO, and to follow the requirements of the law, imposed by the Water Act, has not been explained and cannot be justified.’[iii] 

Environmentally Sustainable Level of Take (ESLT) interpretation

One of the debates that arose when the Basin Plan was prepared centred upon whether the Basin Plan was lawful and in accordance with Water Act requirements. The MDBA’s 2010 Guide to the proposed Basin Plan (Guide) had been prepared on the basis that in setting the SDLs, the environment was prioritised, as required by the Water Act. By contrast, the SDLs under the 2012 Basin Plan were set on the basis of a ‘triple bottom line approach’. This, it was said by some at the time,[iv] contravened the requirements of the Water Act and made the Basin Plan unlawful. These questions of statutory interpretation were considered by the Royal Commission which found that parts of the Basin Plan were in fact unlawful on the basis it was prepared in accordance with the triple bottom line approach. Some of the Commissioner’s key findings were as follows:

  • ‘The Water Act requires environmental priorities to be given primacy when determining an ESLT and a SDL.’[v]
  • ‘There is no ‘triple bottom line’ legislated in the Water Act concerning the setting of a SDL that must reflect an ESLT, or in the scientific judgement to be made as to what are key environmental assets, ecosystem functions and environmental outcomes. That phrase is an inappropriate figure of speech or political slogan that the MDBA has unwisely adopted. Any optimisation of environmental, social and economic outcomes must come later.’[vi]
  • ‘The process for determining the Basin-wide ESLT was undermined by an incorrect construction of the Water Act, in particular the term ESLT. The MDBA has impermissibly adopted a so-called triple bottom line approach.’[vii]

Buybacks and efficiency upgrades

With respect to buybacks and efficiency upgrades, which are means by which the SDLs are achieved, the Royal Commission compared the cost of buybacks and structural adjustment programs versus the cost of infrastructure projects, finding that from a cost perspective, buybacks and structural adjustment programs were significantly better. The Royal Commission also stated that there was little evidence to support claims in relation to mass exodus of people from farming where buybacks have been implemented:

  • ‘Buyback was the subject of considerable criticism by some persons and representative bodies during the Commission’s consultations. That criticism is misplaced on the basis of the evidence.’[viii]
  • ‘The asserted negative impacts of buyback either do not exist, or have been greatly overstated. Buyback did not cause a mass exodus of people from farming or irrigation — most buyback agreements related to partial sales of entitlements only. The vast majority of those who sold entitlements retained water delivery rights. The so-called ‘Swiss cheese’ effect has been frequently cited, but appears to be more myth than fact.’[ix]

Governance

The Royal Commission was highly critical in relation to what it saw as a disconnect between claimed openness and accountability on the part of MDBA, and actual openness and accountability in the conduct of MDBA.

In particular, the areas of limited or no disclosure highlighted by the Commission were: 

  • legal advices and construction of the Water Act
  • the modelling for the Guide to the proposed Basin Plan/ESLT 
  • the modelling to justify the 70 GL per year reduction in recovery of water for the Northern Basin
  • the SDL adjustment mechanism, which the Commissioner found ‘has been made with a wholly inflated air of secrecy’. [x]

The Commissioner’s criticisms in turn extended to the MDBA’s reliance upon Australian Government Solicitor (AGS) Legal Advice, which purported to support the critical ‘triple bottom line’ approach to the setting of SDLs, and implicit criticism by the AGS itself:

  • 'The AGS Opinion contains a number of dubious propositions about the meaning and effect of particular provisions in the Water Act and relevant international conventions, and an unlikely and incorrect conclusion about the role of economic and social considerations in determining the ESLT…’ [xi]

The Commissioner was critical of the loss of the National Water Commission (NWC)’s monitoring function from a governance perspective, relevantly finding:

  • ‘The [NWC] formed an important part of the governance structure in the Basin’s legislative scheme, and since its abolition in 2014, there has been an erosion of the national oversight of water reform in the Basin.’ [xii]
  • 'The NWC played an important role in the governance of the Murray Darling Basin which worked well, and was abolished without justification. It warrants renewed consideration in the context of achieving the best and most effective governance arrangements.’[xiii] 

One area focused upon by the Royal Commission was the Northern Basin Review (NBR), a project which resulted in a 70 GL reduction in the amount of water to be recovered for the environment in the Northern Basin. The Royal Commission was interested in how the NBR came to pass and the basis for its conclusion to reduce environmental water. The Royal Commission relevantly found:

  • 'The [NBR] is an example of gross maladministration by the MDBA. It is an example of how the current management of the MDBA has shown itself unwilling and incapable of fulfilling their statutory functions and obligations.’ [xiv]

Where to next?

The Report constitutes the most comprehensive analysis to date in relation to the Murray-Darling Basin Plan. The question now is what weight will law and policy makers, and the MDBA, give to the recommendations and findings? Some have already suggested the Royal Commission’s findings have fallen on deaf ears.[xv]

The MDBA’s response to the Royal Commission, which broadly rejects its criticisms, can be found here.

In the writer’s opinion it may take a Federal Royal Commission for the recommendations and findings of the Royal Commission to drive change; not because the South Australian Royal Commission was inadequate - to the contrary, the Royal Commission seems to have conducted itself with rigour and integrity. Rather, it may be that a Federal Royal Commission is needed to ensure meaningful engagement by each of the Basin States and the Commonwealth in the Royal Commission process and its outcomes.

Author: Joseph Monaghan

The author
Dr Joseph Monaghan is a planning and environmental law partner at Holding Redlich. In 2017 he was awarded his doctoral degree in law for his thesis titled ‘Law and policy of the Murray-Darling Basin’. 

[i] South Australia, Murray-Darling Basin Royal Commission, Report (2019) 56
[ii] Murray-Darling Basin Royal Commission above n 1, 55
[iii] Murray-Darling Basin Royal Commission above n 1, 267
[iv] See for example G Williams and P Kildea, ‘The Water Act and the Murray-Darling Basin Plan’ (2011) 22 Public Law Review 9, 13. See also Australian Network of Environment Defenders Offices, Submission to Senate Standing Committee on Legal and Constitutional Affairs, Inquiry into Provisions of the Water Act 2007, March 2011
[v] Murray-Darling Basin Royal Commission above n 1, 52
[vi] Murray-Darling Basin Royal Commission above n 1, 53
[vii] Murray-Darling Basin Royal Commission above n 1, 54
[viii] Murray-Darling Basin Royal Commission above n 1, 61
[ix] Murray-Darling Basin Royal Commission above n 1, 61
[x] South Australia, Murray-Darling Basin Royal Commission, Report (2019) 716.
[xi] Murray-Darling Basin Royal Commission above n 1, 153.
[xii] Murray-Darling Basin Royal Commission above n 1, 68.
[xiii] Murray-Darling Basin Royal Commission above n 1, 683.
[xiv] Murray-Darling Basin Royal Commission above n 1, 62.
[xv] Tingle, L, ‘The fury of the Murray-Darling royal commission findings has fallen on deaf ears’, ABC Newsonline.

Contacts
Melbourne

Joseph Monaghan, Partner 
T: +61 3 9321 9857 
Ejoseph.monaghan@holdingredlich.com

Sydney 
Breellen Warry, Partner 
T: +61 2 8083 0420 
E: breellen.warry@holdingredlich.com

Peter Holt, Special Counsel
T: +61 2 8083 0421
E: peter.holt@holdingredlich.com

Brisbane
Gerard Timbs, Partner
T: +61 7 3135 0644
E: gerard.timbs@holdingredlich.com

Jenny Humphris, Partner
T: +61 7 3135 0690
E: jenny.humphris@holdingredlich.com

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Dr Joseph Monaghan

Published by Dr Joseph Monaghan

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