Potential water infrastructure projects identified by the Commonwealth Government

In brief

The Commonwealth Government this week released its Agricultural Competitiveness Green Paper outlining policy ideas for improving water management to meet the future water demands of the agriculture sector. The Green Paper sets out principles for Commonwealth involvement in water infrastructure projects and identifies 27 projects that could warrant possible Commonwealth investment. Partner Kate Axup, Senior Associate Michael Zissis and Lawyer Danielle Atkin report.

How does it affect you?

• The Commonwealth Government is considering investing in water infrastructure projects that are in the national interest, have State or Territory Government backing and capital contribution from the private sector.
• The Government is seeking stakeholder views on a number of issues, including:
  • the role the Commonwealth should have in accelerating investment in water infrastructure projects;
  • other opportunities to improve water-use efficiency or to increase the amount of water available to agriculture through infrastructure projects; and
  • how to create greater efficiency and flexibility in the water market.
• Submissions on the Green Paper can be made up until 12 December 2014.

Background

The Green Paper on Agricultural Competitiveness sets out the Government's view on the issues facing the agriculture sector and a range of policy options to address them. Submissions are being sought on the ideas outlined in the Green Paper, which will inform the development of a White Paper.  

In developing the Green Paper, the Government considered the options paper prepared by the Water Infrastructure Ministerial Working Group.¹ That options paper looked at how investment into water infrastructure projects could be accelerated and identified priority projects for investment.   

In addition, the Green Paper identifies other policy ideas aimed at improving water management to ensure the future needs of the agriculture sector can be met.² 

The Government also identifies the overlap between a number of matters considered in the Green Paper with other policy work currently being undertaken (eg the Harper Competition Review and the Taxation White Paper) and notes that these different policy workstreams will need to take account of each other. The Government also flags the work it is already doing in terms of infrastructure development under the Asset Recycling Initiative (see our previous Focus: National Partnership Agreement on Asset Recycling for more detail).

Policy ideas for improving water management

Priority water infrastructure projects

The Government has identified 27 priority water infrastructure projects that may warrant Commonwealth investment in the future. These projects have been divided into:

• projects that may receive Commonwealth Government investment within the next 12 months, including five Tasmanian irrigation projects, as well as further upgrades to the Macalister Irrigation District in Victoria;
• projects that may warrant Commonwealth Government investment but are less advanced in their stage of development, including two Queensland dam projects, a Western Australian dam project and a Victorian dam project; and
• projects that may be considered further for possible assistance by the Commonwealth Government in developing feasibility studies, including a mix of dam expansion and construction projects, irrigation projects and infrastructure projects throughout New South Wales, Queensland, Western Australia, South Australia and the Northern Territory.

A full list of the water infrastructure projects identified in the Green Paper is provided in the table at the bottom of this article.

The Government has also set out the following seven principles that it will use to determine whether a project warrants Commonwealth involvement:

• projects need to be nationally significant and in the national interest;
• there must be strong State or Territory government support with capital contribution and involvement of the private sector and, where appropriate, local government;
• the investment should provide the highest net benefit of all options available to increase access to water, taking into account economic, social and environmental impacts;
• projects should address a market failure that cannot be addressed by proponents, State and Territory governments or other stakeholders and which limits a project of national significance from being delivered;
• projects should align with the Government's broader infrastructure agenda to promote economic growth and productivity, or provide a demonstrable public benefit and address a community need;
• projects should align with the National Water Initiative principles, including appropriate cost recovery and, where full cost recovery is not deemed feasible, any subsidies must be fully transparent to the community; and
• if providing capital, consistent, robust analysis of costs and benefits must be used and assessment must be undertaken by Infrastructure Australia or similar experts.

The Green Paper does not detail the amount of investment that is being contemplated by the Commonwealth. Instead, the Government is seeking views from stakeholders on the role the Commonwealth should play in accelerating investment in water infrastructure. The Government also wishes to hear stakeholder views on other opportunities to improve water-use efficiency or to increase the amount of water available to agriculture through infrastructure projects. 

Improving efficiency of the water market

The Government is investigating improvements in the flexibility and efficiency of the water markets. In particular, it is seeking views on developing counter-cyclical temporary trades of environmental water. That is, purchasing and using environmental water in times of water surplus and selling that water in drier periods for use by irrigators. In addition, the Government is considering banning speculators from the water market, although it notes the administrative difficulties this may create. The Government is seeking views from stakeholders on both of these options.

Land use conflicts

The Green Paper notes that some stakeholders have expressed an interest in restricting certain land to agricultural use in order to reduce pressure from mining and help maintain agricultural production. The paper also refers to 'coexistence' principles for coal seam gas development and past recommendations of the Productivity Commission that land use regulation should be informed by sound evidence and science, as well as consideration of the benefits and risks to the community. These statements suggest the Commonwealth will look to develop policy to address the 'coexistence' of mining and agriculture, which has been the subject of recent policy debates in Queensland, New South Wales, South Australia and Western Australia, in its upcoming White Paper.

Next steps

The Commonwealth Government is holding a National Roundtable in Canberra on 29 October 2014 to discuss how to progress the priority projects identified in the Green Paper. Key financiers, constructors and industry leaders will be involved.

Submissions on the Green Paper are due before 5pm on 12 December 2014. Submissions can be made online at www.agriculturalcompetitiveness.dpmc.gov.au or by mail.

A White Paper is due to be released in 2015.

Full list of projects identified in Green Paper

The full list of projects as identified in the Green Paper are as follows:³