Second Reading Debate

Debate resumed from 24 September 2024.

The Hon. AILEEN MacDONALD (16:50): I contribute to debate on the Water Legislation Amendment Bill 2024 and I confirm the Coalition's support for the legislation. This omnibus bill will clarify the regulation‑making powers of State agencies and corporations and, importantly, the authority of the Minister for Water in relation to water access licences or exemptions, and exemptions in times of emergencies. Importantly, the bill also validates a small number of licences previously made ambiguous during the transition from the Water Act 1912 to the Water Management Act 2000. During consultation with irrigators and water users across New South Wales, the need for clear and consistent regulatory powers was raised with the Coalition. Our view is that, for our primary industries, farms and communities to thrive, we need clear communications regarding water policy.

The bill amends the Water Management Act 2000, the Sydney Water Act 1994 and the Water NSW Act 2014 and repeals the Water Management Amendment Act 2010 and the Water Management Amendment Act 2014. The bill clarifies the regulation-making powers of the Minister and of State agencies and corporations and includes Henry VIII provisions enabling subordinate documents to empower the Minister in relation to water access licence conditions or exemptions, and exemptions in relation to emergencies and the operations of public authorities. It also validates a limited number of licences and approvals made ambiguous by the transition from the Water Act 1912 to the Water Management Act 2000. The bill is a piece of housekeeping that aims to provide legislative clarity where identified through operations under these Acts. It provides scope, including both powers and their limitations, in relation to the Government's management of New South Wales water resources. The Water Legislation Amendment Bill solidifies policy and practice developed over time under both Coalition and Labor governments.

Engaging with stakeholders at every level is critical for northern and southern basin users and water users across the State understanding their rights and responsibilities and the decision‑making powers that may impact their work. From water operators in Sydney's growing suburbs to irrigators on the Murray, cotton growers on the Namoi and national water‑use bodies, understanding the scope of the Government's management of New South Wales water resources can help us all make more informed choices about our most precious resource. Across the regions we have confirmed broad‑based support for the bill. I thank the Government for consulting with Sydney Water, Water NSW and Essential Water in the drafting of this legislation.

Scrutiny must be applied to the Government's application of the changes brought about by this bill during statutory reviews of regulations. The bill affects thousands of irrigators and water users across New South Wales, and the Opposition is pleased to support measures that encourage transparency and scrutiny. I remind the House that, even for administrative and housekeeping reform, we must remain accountable to our regional and rural communities in the highly contested and evolving water space. The House has heard about concerns presented by water users regarding proposed reforms in many areas across water management, most recently regarding the northern basin Connectivity Expert Panel, the draft Landholder Negotiation Scheme Regulation, the future of the National Water Grid Authority, and the next Murray‑Darling Basin Plan and associated buybacks.

Transparency and clarity have never been more crucial for our water policy. As opportunities to review the legislation are brought forward, we would encourage a fair and open interrogation of these Acts and their suitability, and how we could further improve our water policy for years to come. The Coalition will be keeping a close watch on the 2025 statutory reviews, with the potential impacts on urban, rural and regional communities front of mind. We will not hesitate to call the Government to account if we believe the people of New South Wales deserve better. I am pleased to support the bill and to ensure that there is true transparency and accountability for regulatory powers. I commend the bill to the House.

Ms CATE FAEHRMANN (16:55): As The Greens spokesperson for water, I oppose the Water Legislation Amendment Bill 2024. I respectfully suggest that the bill is a bit more than just housekeeping. In this place we seem to have forgotten the history of how legislation was made and the moves by previous Ministers, particularly on controversial subjects such as water—but, in fact, it seems to be a trend across much of the legislation. To explain why The Greens oppose the bill, firstly, it proposes to amend three Acts—the Water Management Act, the Sydney Water Act and the Water NSW Act—to provide regulation‑making powers related to the licensing, management and supply of water in New South Wales and other related administrative matters.

The Greens support the intent of some of those, such as access to special areas and the range of different issues regarding Sydney Water, but we have several concerns about the bill. Firstly, it allows ministerial discretion to remove some regulatory requirements for water access, use and metering during drought. It rightly describes them as Henry VIII clauses, which allow subordinate legislative instruments to override parent legislation. Secondly, it removes the Minister's ability to cancel the Lowbidgee supplementary water access licences. That is important, but it was not mentioned either by the Minister in her second reading speech or by the Hon. Aileen MacDonald.

I remind the House about the history and culture of the New South Wales water agencies, because they are important. In 2020 the Independent Commission Against Corruption found that the water department had undermined the governing legislation's priorities over the previous decade, with a repeated tendency to unduly focus on the interests of the irrigation industry. Certain decisions and approaches taken by the New South Wales government department with responsibility for water management over that decade were found to be inconsistent with the object, principles and duties of the Water Management Act 2000 and to have failed to give effect to legislated priorities for water sharing. The commission found that the irrigator focus of the water department:

… was entrenched in its approach towards stakeholder consultation, which focused on the irrigation industry, while restricting information available to other stakeholders, such as environmental agencies. As a result, the policy‑making process became vulnerable to improper favouritism as environmental perspectives were sidelined from policy discussions.

In 2023 the Chief Scientist found:

Explicit environmental protections in existing water management legislation are neither enforced nor reflected in current policy and operations. Water policy and operations focus largely on water volume, not water quality. This failure in policy implementation is the root cause of the decline in the river ecosystem and the consequent fish deaths.

Under normal circumstances, giving the executive arm of government power over parent legislation without parliamentary oversight should be troubling. Given that the New South Wales water department has repeatedly been found, through investigations, to have a culture of ignoring its own laws and favouring irrigators over other stakeholders and the environment, this proposal is concerning. On deeper inspection, the bill is the continuation of incremental changes to New South Wales legislation and regulations over at least the past decade. The changes improve the rights of irrigators, weaken ministerial powers and oversight, and weaken regulatory capacity. The increments are always to the benefit of irrigators and to the detriment of downstream users and the environment. I note that largely does not relate to the changes to the Sydney Water Act but the changes to the Water NSW Act and the Water Management Act.

The incremental changes create a threshold of rights that act as a benchmark of irrigator rights for subsequent amendments or policy. For example, the Water Legislation Amendment Bill 2024 seeks to remove the power of the Minister for Water to cancel Lowbidgee supplementary water access licences. That is to elevate the rights of holders of Lowbidgee supplementary water access licences to align with the rights of holders of supplementary regulated river water access licences. The latter licences were created in a water management bill in 2014. In his second reading speech to that bill, then water Minister Kevin Humphries said:

The second set of amendments relates to compensation rights for supplementary water licences in regulated rivers and flood plain harvesting licences. Currently, supplementary licences are an anomaly among major commercial licence categories. Unlike holders of most commercial licences, supplementary water licence holders have no compensation rights if their allocations are reduced because of a change in a water sharing plan. The bill eliminates this anomaly by extending the compensation rights available under the Act to holders of supplementary water licences in regulated rivers and making the tenure of the licences perpetual. Similarly, the bill also extends existing compensation rights to holders of flood plain harvesting licences.

In the previous Parliament, I chaired a committee on floodplain harvesting, which the now water Minister sat on, that heard many times that if floodplain harvesting licences were not issued, it would diminish the property rights of supplementary licences. In other words, an amendment to the Act in 2014 elevated the rights of supplementary licences to avoid cancellation by the Minister and be compensable. That elevated right is then used as a justification to issue more property rights, or floodplain harvesting licences. This amending bill now seeks to elevate the rights of Lowbidgee supplementary licences in line with all other supplementary licences. If that means that Lowbidgee supplementary licences will also be compensable, like other supplementary licences—and it appears that is the intent—the water Minister's explanatory material and second reading speech is silent on that point.

Parliament should note that that is being proposed while New South Wales is actively seeking to change the rules in water sharing plans to count towards the Commonwealth's water recovery targets under the Basin Plan. If implemented, it could result—indeed, it will result—in compensation to irrigators for those rule changes. In other words, it is possible that the amendment ensures that Lowbidgee supplementary water access licences have access to that gravy train. Instead of elevating Lowbidgee supplementary water access licences to other supplementary water access licences, the bill should restore the water Minister's powers to cancel all of the supplementary water access licences if they deem that they need to. If former water Minister Humphries' second reading speech is correct, it would appear that to do so may well evoke compensation in the event of the cancellation of supplementary water access licences. If so, the Minister for Water is not only proposing to dilute her powers but also potentially creating a future liability to the Government, should a future Minister seek to reclaim powers and cancel any unused Lowbidgee supplementary water access licences.

I mentioned the history of water management and corruption in this State. Members should know about the history of the Lowbidgee supplementary water access licences. The Lowbidgee is an interesting case study in incremental changes to create and improve rights of water holders. Prior to the Basin Plan being created in 2012, the water sharing plan area ended halfway down the Murrumbidgee, below the irrigation areas of Murrumbidgee Irrigation and Coleambally Irrigation. The farming in the Lowbidgee was annual cropping that received beneficial flooding on an ad hoc basis. There was little to no irrigation in the Lowbidgee. The Commonwealth was struggling to buy water to meet its water recovery targets. The then New South Wales Government amended the water sharing plan area to include the Lowbidgee and created 747,000 megalitres of Lowbidgee supplementary water access licences, half of which were immediately sold to the Commonwealth for its water recovery. Lowbidgee water access licences now make up nearly 43 per cent of the Commonwealth's total environmental water portfolio in the Murrumbidgee, based on long‑term average.

It is worth noting that the Basin Plan was supposed to reduce water from irrigation and redirect it to the environment, but nearly half of the water recovery in the Murrumbidgee is from licences that were never used for irrigation and were created solely to meet the Basin Plan water recovery targets. Those licences do not deserve the same rights as supplementary licences because they were never created for irrigation to start with. More importantly, the Minister for Water should not be diminishing her powers under any circumstances, particularly on the basis that a group of water holders deserve their water access licences to be enhanced because other water licence holders have achieved that in the past. When the Legislation Review Committee examined the bill, it said:

The Bill proposes to amend the Water Management Act 2000, the Sydney Water Act 1994 and Water NSW Act 2014 by inserting numerous regulation making powers. The regulation making powers are broadly defined and address a range of significant operational matters related to the management and supply of water in NSW. The proposed regulation making powers include prescribing conditions of exemptions to requirements under the Act to hold licences and approvals for certain activities like the taking of water. It also includes powers for regulations to authorise the Minister to impose those conditions.

The Bill creates significant and broadly worded regulation making powers under the Acts. The provisions therefore amount to Henry VIII clauses by allowing the Executive to amend the operation of the parent Act without reference to the Parliament. The Committee generally considers Henry VIII clauses in bills to be an inappropriate delegation of legislative power, as regulations are not subject to the same level of parliamentary scrutiny as primary legislation.

The Committee acknowledges that the regulation making powers may be required to ensure the effective administration and operation of the water regulatory framework. Further, the Committee acknowledges that regulations are required to be tabled in Parliament and are therefore subject to disallowance under section 41 of the Interpretation Act 1987. However, as the regulation making powers are broad and widely address significant operational matters, conditions and exemptions with Henry VIII clauses, the Committee refers this matter to Parliament for its consideration.

It has been referred to the Parliament for consideration. I urge the Opposition to delve more deeply than the briefing note and the second reading speech. We should not trust the department or any bill that comes before this place and the briefing note that the Government provides. Having said that, I have a lot of respect for the Minister for Water, but one must look a bit deeper and think about where the bill came from, who within the department said that it was needed, and how the Lowbidgee supplementary licences got included so that the Minister cannot cancel them—again, potentially making them compensable when those changes are made to the water sharing plan. That is all in the bill. It is far from "housekeeping".

The laws we make in this place are not just for this Government. We may think that the Minister for Water is better than National Party water Ministers, but we do not know what the next government will be and who the next water Minister will be. We need to be careful about what comes before this place. As I said, there are changes in the bill that The Greens support; however, the bill is too wide ranging. We are dealing with water management and water allocation, particularly during times of drought. We have seen what has happened in this State throughFour Corners and the ICAC. Putting this much power in the bill without oversight is the reason that The Greens cannot support the bill.

The Hon. ROSE JACKSON (Minister for Water, Minister for Housing, Minister for Homelessness, Minister for Mental Health, Minister for Youth, and Minister for the North Coast) (17:09): In reply: I keep my remarks specific to the issues raised because, based on the comments from the Opposition and the crossbench, I take that the amendments in the Water Legislation Amendment Bill 2024 in relation to the regulation-making powers of Sydney Water and WaterNSW are broadly accepted. I do not recall Ms Cate Faehrmann raising any issues with them, and the Hon. Aileen MacDonald indicated that the Opposition supports them. Therefore, I take those provisions as broadly accepted as housekeeping provisions that allow Sydney Water and WaterNSW to make regulatory provisions to manage the special catchment. I assume that is all understood and agreed, so I keep my comments to the concerns that were raised by Ms Cate Faehrmann.

I address the two that I thought she specifically raised and make some general comments. In relation to the Henry VIII clauses, I make clear that the very limited operation of what I would argue are indirect Henry VIII clauses are basically the power to use regulation to grant exemptions from mandatory conditions in the bill. The bill puts mandatory conditions on water licence holders, as it should. It is accepted that a water access licence should be subject to conditions. The question is what happens in circumstances where those mandatory conditions may need to be varied. We want to put them in the bill because, like the member has said, we want as much of that information to be in the law as possible. We need a way to vary those mandatory licence conditions without having to come to Parliament every time there is a drought, flood or event that impacts the ability of water access holders to use their licences. That happens; it is a dynamic market. We are subject to nature. For mandatory conditions under the bill, like the conditions of metering equipment, we need the flexibility to vary them based on circumstances. That is all the provision is.

I agree that it is generally not preferable to have a regulation-making power that can vary conditions in a bill, but the bill is only saying that mandatory conditions on a water access licence, which are legislated, could be varied by regulation in the necessary circumstances. Of course, as we all know, regulations are disallowable. Therefore, if there were any concerns about amendments to mandatory conditions through regulation, the Parliament would have oversight. But we cannot have a situation where we have to come to the Parliament every single time a drought, flood or event has impacted the operation of our water market and we need to temporarily turn off or vary a mandatory provision to manage that. I understand the member's concerns. I hope my answer provides her with some reassurance. I understand that she will perhaps not be satisfied but, for the purposes of members understanding the very limited operation of those indirect Henry VIII clauses, I provide members some reassurance about them.

The other issue that Ms Cate Faehrmann raised specifically concerned the supplementary water access licences in the Lowbidgee. The bill only ensures that the particular subset of supplementary water access licences in the Lowbidgee is the same as all other supplementary water access licences, given there is presently an inconsistency. That inconsistency is not deliberate; it was an administrative oversight. It was a conversion error. My view is that it is unfair for the subset of supplementary water access licence holders in the Lowbidgee to be subject to a different regulatory regime to everyone else. All we are doing is standardising that. Of course, I do not support some of the decisions made in the past, but we have to look forward. Those decisions, where conversion errors occurred and certain licence regimes became misaligned, were not in the interest of the State. The member may have a view about how the entire regime of supplementary water access licences should work. The bill is not intending to deal with those fundamental policy questions. It is just intending to align them. We can perhaps have that debate another time, and I am sure we will, but I reassure the member that the bill is only trying to create a consistent system.

I appreciate the member's comments about having perhaps slightly more trust in my administration, but ministerial discretion is generally not a good idea, as it depends on who the Minister is. There is an element of removing ministerial discretion in the bill. I think that is positive because ministerial discretion in provisions is poor public policy. I appreciate the member's concerns about the administration of water management in the past. I know those concerns are very genuine and come from a good place. I again reassure the member that, in my experience as the Minister, the people in the department are honest, hardworking, have integrity and want what is in the best interests of water management. I of course do not speak for the past, but that is my experience. I do not necessarily appreciate aspersions being cast in a very general way about the motivations of public servants when, in my experience, they are genuine, honest people who are not trying to push agendas, and just want our water to be managed in an efficient, consistent and clear way.

As I have said before, I welcome anyone who wants to raise specific concerns with me. I take it very seriously if anyone has a suggestion that anyone in the public service is acting in accordance with special interests rather than in the interests of the public. Members are absolutely welcome to bring that to my attention. But to suggest in a very broad sweep that relatively straightforward administrative realignments are motivated by public servants who are trying to push particular agendas is unfair, in my personal view. I have never seen any evidence of that. I am quite clear in what my priorities are and I find the public service to be very responsive to that. I am sure that will not satisfy the member, but I hope she is slightly reassured by some of the commitments that I have made on record about the concerns that she has raised.

I reiterate that water management is complex, complicated and convoluted, and there comes a time when legislation must be drafted to provide more clarity and consistency to the operation of the system. That is all we intend to do: enable clear regulation-making power, provide a clear understanding of how the Act and licensing exemptions would work, make supplementary water access licences consistent and fix the conversion errors of the past. The option was presented to me to ignore the conversion as no-one had raised it before. I chose not to do that because it is good public administration to fix it if the department says, "There was a conversion error—a stuff-up—and now there is an inconsistency. It's been going on for a while and no-one has raised it, so you could ignore it too." I choose not to. Let's get it fixed. That is all that element of the bill intends to do. I thank the member for raising genuine concerns and engaging in water management. I hope I have provided some reassurance to the House as to Government's intentions for the bill. I commend the bill the House.

The ASSISTANT PRESIDENT (The Hon. Peter Primrose): The question is that this bill be now read a second time.

Motion agreed to.

Third Reading

The Hon. ROSE JACKSON: I move:

That this bill be now read a third time.

Motion agreed to.