Australia: Will the new National Water Grid achieve its aims?

Last Updated: 6 June 2019
Article by Suzy Cairney and Anita Cukic
Most Read Contributor in Australia, September 2019

With the recent re-election of the federal Coalition government, many rural and regional communities are eager to see crucial infrastructure implemented in line with relevant election promises.

Amongst other things, Federal Minister for Infrastructure, Transport and Regional Development, Michael McCormack pledged that the Liberal National Government would invest "more than $3 billion to fast track water infrastructure projects that will deliver greater water security for rural communities, grow jobs, and underpin new and expanded agriculture and support regional economic growth."

As part of this, the Federal Government intends to make a $100 million investment to better understand and protect Australia's water resources by establishing a water policy and a new statutory authority called the National Water Grid. Presently, no timeline has been established as to when the investment will be made or when any related infrastructure projects will begin to be implemented.

What we do know is that the investment will be fully offset against the National Water Infrastructure Development Fund (NWIDF). The NWDIF is also being expanded to $1.3b and is "accelerating the detailed planning and construction of water infrastructure projects that will deliver new and affordable water, enhance water security and underpin regional economic growth, including irrigated agriculture and industry." The Federal Government has made "commitments" from the NWIDF for projects such as the Coldstream Recycled Water Pipeline in Victoria, the Southern Forest Irrigation Scheme in WA and various dam projects in Queensland. Funding from the NWIDF is only available to state and territory governments, but no doubt the water industry will have a role to play in encouraging the pursuit of funding for specific projects.

Additionally, the $2 billion National Water Infrastructure Loan Facility (loan facility) is available to provide state and territory governments with concessional loans (of at least $50m) to co-fund the construction of economically viable water infrastructure. Currently, funding through the loan facility and NWIDF is only available to state and territory governments for infrastructure projects that are ready to progress to construction and will not be available for pre-feasibility activities amongst other things. The pre-feasibility costs of water infrastructure projects are not insignificant, and this might hold states and territories from really making the most of this fund.

What is the National Water Grid?

The statutory authority is intended to plan and deliver reliable and cost effective water nationwide by:

  • investigating and establishing large-scale water diversion projects for farmers and regional communities by bringing together leading scientists to harvest and harness water in the most efficient and reliable way
  • developing a Water Grid that will provide the pipeline of all established, current and future water infrastructure projects and to identify any missing links.

Mr McCormack said the Australian Government acknowledged Infrastructure Australia's independent assessment and analysis, in providing strategic advice and guidance to both state and federal decision-makers about the nation's ongoing infrastructure needs.

However, the introduction of the National Water Grid might "muddy the waters" when it comes to who's advice the Government will adopt. For example, there are no dams in Infrastructure Australia's list of 29 high priority projects, but there are three water supply works and one flood mitigation project among its 75 secondary-priority projects. That contrasts sharply with the Coalition's election promises which in Queensland featured several dams and water storages. This leaves questions such as whether the new statutory authority will have to consider the advice of Infrastructure Australia or will it report its own independent advice and which criteria will it consider?

Will it work?

The Federal Government has already established the North Queensland Water Infrastructure Authority (NQWIA) on 12 March 2019 to provide strategic planning and coordination of Commonwealth resources to implement water projects in northern Queensland. The NQWIA is also funded by the NWIDF.

"The new North Queensland Water Infrastructure Authority will be an executive agency responsible for strategic planning and progressing the business cases. Ensuring information sharing among relevant regulatory authorities and keeping me and the Government closely informed of planning and construction works will be another key task," McCormack said.

A critical issue for all state and territory governments and related authorities will be which projects will be prioritised. Will a project by the National Water Grid for infrastructure in Northern Queensland to provide water nationally take precedence over a NQWIA or NWIDF funded Queensland Government project? It is not clear yet how all of the Federal Government authorities will interact and to what extent the states and territories will be involved in the decision making process.

Despite the uncertainty, it has been long recognised that a holistic approach to water planning across all states and territories is needed. A national strategy for water that works hand in hand with a national agriculture strategy may be the most effective approach to creating real resilience for primary production, so this initiative is to be welcomed.

"A long-term national, scientifically based, focus on maximising Australia's ability to sustainably produce irrigated crops should be welcomed by every Australian who likes to eat and wear clothes," says National Irrigators' Council CEO, Steve Whan. "We welcome an approach that looks carefully and scientifically about how we can make best use of water in areas where it might be available, and in a way which is sustainable. Irrigators grow more than 84 per cent of Australia's fruit, vegetables and nuts, along with dairy products, rice, cotton, sugar and wine. Without irrigators we would be a food importer rather than supporting our own population and generating export income."

To fulfil its potential, the National Water Grid must work with state and territory representatives and local contractors to understand the challenges to make water infrastructure viable and effective given the unique surface and groundwater systems in each relevant area, and the relevant cost recovery policies.

We anticipate that reports and strategies will be released in the upcoming months that detail how the National Water Grid will operate and will flesh out how collaboration with state and territory governments and other agencies such as the NQWIA can be achieved. Watch this space to keep informed as this policy develops.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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