Compliance, markets, water entitlements and oversight of the Water Grid.
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The Strong foundations for Victoria's water: compliance, markets, water entitlements and oversight of the Water Grid initiative delivered actions in Chapter 8 and Chapter 9 of Water for Victoria to ensure water is shared equitably and transparently across Victorian communities, the environment and the economy.
Chapter 8 contains actions to:
improve state-wide water resource planning
improve water resource information to support planning and decision-making
enhance public reporting of water availability and use.
Chapter 9 relates to:
managing and enhancing Victoria’s water markets and grid.
The initiative included the development of a water grid oversight function and planning for future water grid augmentations.
Priorities include:
Embedding the Water Grid Partnership and oversight of the grid as part of the sector’s broader planning and decision-making framework.
Reviewing the effectiveness of water markets across Victoria and identifying opportunities for future improvement.
Further developing policy positions on the merits of water markets in south-central Victoria and further developing markets in unregulated systems.
Reviewing trade and operational rules for the Goulburn River in northern Victoria.
An integrated work plan to better understand, mitigate and manage water delivery risks in the connected water systems of northern Victoria and to work with other states to consider how the changing operation of the River Murray will affect these risks in the future.
Further developing more accessible water market information and consulting with the community on greater water market transparency options.
Environmental contribution 5 (EC5)
Strong foundations for Victoria's water: compliance, markets, water entitlements and oversight of the water grid
2020–21 expenditure: $6,749,000
2021–22 expenditure: $6,913,000
2022–23 expenditure: $6,899,000
2023–24 expenditure: $7,450,000
Compliance and interceptions: protect the reliability of water entitlements and maximise water resources for regional business and communities
2021–22 expenditure: $739,000
2022–23 expenditure: $832,000
2023–24 expenditure: $929,000
Resilient Water Markets, Regional Communities, and Infrastructure
2021–22 expenditure: $3,586,000
2022–23 expenditure: $2,437,000
2023–24 expenditure: $2,150,000
Retail entitlements and markets
This initiative was a holistic program of work that was delivered from 2021 to 2024 by progressing key issues in 5 areas of work:
Market monitoring and information
Governance, licencing and legislation
Declared systems reform
Murray systems management
Interstate sharing and intergovernmental commitments
Reliability of entitlements and access to water is enabled by a strong entitlement framework and the efficient and effective operation of competitive markets to provide water users flexibility in meeting their water needs. This project has supported the equitable sharing of water between users and the flexibility provided by markets and trade.
The project teams worked throughout this period to ensure the regulation and instruments supporting retail water entitlements and trading were responsive and adapted to changes in the environment – in line with evolving community expectations. This was done in a way that maintained a robust entitlement framework, giving water market participants certainty to make decisions about water and so that they can plan ahead and invest for the future.
Developed and implemented long-term trade and operating rules
Implemented long-term operating rules and trade rules to prevent damage to the lower Goulburn River and ensure trade can be delivered within ecological tolerances, incorporating additional information gathered during a final year of additional analysis and testing. These rules are supported by a joint operating plan for the Goulburn River with Victorian and Murray-Darling Basin Authority river operators.
Partnered with our stakeholders and facilitated 2-way learning
Partnered with Traditional Owners, river operators, waterway managers, scientists and the community to undertake further analysis of the trade, operational, joint-venture, ecological, bio-cultural and recreational impact of the interim rules, which was publicly released. Set up a program to facilitate 2-way learning between Traditional Owners and the Scientific Advisory Panel undertaking monitoring of a changed flow regime for the Goulburn River, building and strengthening relationships and our collective knowledge base along the way.
Implemented consistent trade restrictions for all water users
Completed the regulatory steps to implement enduring restrictions on tagged water use to create a level playing field between different types of trade, ensuring continued regulatory coverage while long-term options were explored.
Conducted targeted engagement
Conducted targeted engagement with stakeholders, alongside the Murray-Darling Basin Authority, water corporations and Agriculture Victoria on managing delivery risks and published supporting material, including fact sheets and reports with the latest information about risks.
River Murray Shortfall Response Plan
Developed a River Murray Shortfall Response Plan with other River Murray states and the Murray-Darling Basin Authority which sets out the procedures to follow in the event of a shortfall to ensure a coordinated response across states. Tested Victorian shortfall preparedness plans with a shortfall “drill” involving the Murray-Darling Basin Authority and other river Murray states.
Place of Take approvals framework
Amended the Victorian Water Act 1989 to strengthen and clarify water delivery rights in declared water systems with the introduction of a Place of Take approvals framework. This framework strengthens existing water users’ rights to take water during a river rationing event and provides flexibility for water users to manage their own delivery risks.
Developed and implemented a plan with water corporation partners for the Place of Take approvals framework by July 2024, including the necessary policy, legislative and system changes. This included working with a committee of irrigator representatives to refine advice on proposed rules, and converting existing water users’ rights to the new framework.
Water market reform
Provided input into and influenced the development of a roadmap for water market reform in response to the Australian Competition and Consumer Commission Murray-Darling Basin Water Markets inquiry.
Market Monitoring and Information
Delivered a series of essential reports and enhancements to information that has supported market participants. The annual trade report and market trends report provide the public with a holistic understanding of market dynamics, transparent price reporting, water movement trends – helping water traders, farmers, and policymakers make well-informed decisions.
Enhanced the user experience of the Broker Portal and MyWater with a user-friendly interface, real-time clock, and features make trading more accessible and more efficient.
Successful broker audits further bolstered market confidence by ensuring that brokerage firms operated with utmost transparency, adhering to Victorian requirements.
Water Grid Oversight
This project improved the oversight of future water supply augmentation decisions, and associated collaborations, contributing to maintaining water security across Victoria, and in particular urban supplies in the south-central region.
Work completed through the Water Grid Oversight project provides the policy direction for future decisions around major augmentations and how the water grid is used.
In addition, it ensures that Traditional Owner and environmental access to water is improved by considering the return of water in all future decisions made on urban water supply augmentations.
Water Grid plan
The Water Grid Plan (WGP) will outline the options, triggers/timing, and how water corporations and the government will collaborate on future major supply augmentations (such as desalination plants) for the Central and Gippsland region.
Quadruple Bottom Line (QBL)
Developed a two-tier Quadruple Bottom Line (QBL) assessment process and associated documentation, ensuring that all options included in the WGP are able to return water to Traditional Owners and the environment. The QBL assessment process has been embedded into each stage of the readiness framework outlined in the CGRSWS.
Traditional Owners and environment
Developed new systems to be implemented through the regional-scale water supply augmentation business case for the Melbourne system. This will allow government to make an informed decision in relation to returning water to Traditional Owners and the environment.
Supported Traditional Owners and environmental representatives through the Traditional Owners Working Group and Environmental Working Group in the development of recommendations, and supporting analysis, for inclusion in future regional-scale water supply augmentation business cases.
Executive Advisory Committee (EAC)
Established the Executive Advisory Committee (EAC) to act as a coordination body between the water industry and government. The EAC provides effective oversight and guidance on urban water security and regional-scale augmentation planning in the South-Central connected system.
Water Market Reform
Water markets provide an important mechanism for flexible water sharing across Victoria and management of the increased water scarcity that is emerging. An effective market allows for the sharing of water security benefits in ways that are equitable, responsive and transparent. Water for Victoria (2016) commits the department to undertake policy work to improve the effectiveness of water markets across Victoria.
Building on work already completed to deliver Action 9.5 and 9.7 of Water for Victoria, this work:
Developed water sharing arrangements in south-central Victoria to improve water security outcomes for the region.
Reviewed opportunities to improve water market effectiveness in western Victoria.
South-central reforms
Developed a set of reforms that will result in better management of water and cost sharing between water corporations connected to the Melbourne systems. This reforms were developed collaboratively with water corporations and other stakeholders, and will be implemented in 2024-25.
South-Central Pooled Resource
Delivered on Action 9-3 of the Central and Gippsland Region Sustainable Water Strategy (CGRSWS) by determining the design of a South-Central Pooled Resource, integrating desalinated water and surface water sources. This is an element of the broader South-Central Reforms program that will facilitate greater water security across the region and more sustainable pricing arrangements.
Warragul Drouin system
Improved water security for customers serviced by Gippsland Water through supporting the acquisition of Greater Yarra System - Thomson River Pool entitlement.
Water market research for western Victoria
Market research has been conducted in the Southwest Limestone Coast region, designed to provide information on barriers preventing existing (or potential) water market participants accessing and using the market.
Water market transparency
As the market price of allocation has increased, particularly in the northern Victorian regulated systems, communities have raised concerns about the transparency of water markets and how markets are operating for irrigators.
The Government sought feedback on ways to improve market transparency during 2019-20 and committed to a range of actions based on community input, including:
Publish the names of companies that own 2% or more of water in a system on the Victorian Water Register. The government was also to pursue legal changes to report the same information for individuals with greater than 2%.
Report on non-water users in the market by tracking how they use their accounts and pursue legal changes to allow publication of information about allocation accounts with more than 20 trades per year.
Introduce new requirements to provide more clarity on different types of trade, so it’s clear what kind of purchase or transfer has occurred and at what price.
List the names of water brokers who meet Government standards and auditing requirements associated with the use of Victoria’s water broker portal on the Victorian Water Register website.
Further actions were published on the Water Register website:
Explore options and pilot a central trading platform to improve transparency for irrigators about the price and availability of water in real time.
Provide clearer and easier to find information, including agricultural demand
Improving information sharing via the Victorian Water Register Website and enhancing the Water Market Watch app
Annual water broker audits
Undertook the annual water broker audits for the 2019-20 and 2020-21 water years and listed the names of the water brokers who meet Government standards and auditing requirements on the Victorian Water Register website.
Water trade report
Published the annual water trade report for the 2020-21 water year.
Water market transparency
Improved water market transparency by:
Updating the price ‘widgets’ on the VWR website to split the River Murray price reporting into Zone 6 and Zone 7.
Publishing the names of companies who own 2% or more of water in the largest water systems on the Victorian Water Register website, and made regulatory amendments to allow for the same information for individuals to be published when applicable.
Introducing new requirements to provide more clarity on different types of allocation trade, and made this information available to the public.
Supporting the process to amend the Water Act 1989 (Vic) to make more information available to the public.
Introducing regulations enabling the Water Act amendments that ensure individual and commercial privacy is protected while increasing water market transparency.
Assessed barriers to trade
Supported Southern Rural Water’s assessment of current barriers to trade in the Macalister Irrigation District to see if the barriers could be reduced to promote more water utilisation and trade in the district. This enabled a pilot water market exchange platform for the Macalister Irrigation District.
DEECA also supported Southern Rural Water’s work to explore potential barriers to trade in the Southwest Limestone groundwater management area to better understand and improve groundwater trade.
Increased transparency advocacy
Advocated for increased transparency of foreign owners of water entitlements, including through 2 submissions to the Productivity Commission’s review of the Register of Foreign-owned Water Entitlements.
Cost-effective water market reform roadmap
Supported Murray-Darling Basin governments to produce a practical, cost-effective water market reform roadmap for future water market reform, supporting its alignment with Victoria’s work program and advocating for reforms in the public’s interest.
Managing Victoria’s water sharing framework
Water entitlements – including bulk and environmental entitlements – provide a transparent rule-based mechanism to apportion water between economic, community, cultural, and environmental uses and minimise adverse impacts on the environment.
The Minister for Water has extensive obligations and requirements to manage water entitlements and compliance under the Water Act and other acts. This investment allows the Minister for Water to fulfil these functions in relation to bulk entitlements (Division 1), environmental entitlements (Division 1A) and storage manager functions (section 122ZK &122ZL).
This project delivers an adaptive and contemporary bulk entitlement and environmental entitlement framework to ensure the long-term security and reliability of the State’s water resources in the face of multiple changes including climate change, changing water ownership and use, and increasing urban population growth.
This project reviews and enhances the bulk entitlement and environmental entitlement framework to improve certainty of rights and obligations and increase flexibility for entitlement holders to better manage their water risks.
This work is fundamental to the implementation of most policies relating to entitlements and water sharing arrangements and recovery of water for the environment, irrigators, cities and towns, and Traditional Owners. It is also fundamental in ensuring that water corporations can successfully continue to carry out their primary function of supplying water to their customers.
Bulk entitlements
Between 1 July 2020 and 30 June 2024, made 96 changes to bulk and environmental entitlements to ensure these instruments remained fit-for-purpose. Thirty-six of these changes were made to enable water recovery projects in northern Victoria, including new bulk entitlements to boost Melbourne’s urban water security, more water for the environment and irrigators, and reserving bulk entitlement for Traditional Owners in northern Victoria.
All minor and major amendments, revocations, and granting of new entitlements were undertaken in such a way that they were 100% compliant with the requirements of the Water Act.
As part of this project, oversaw water corporations’ compliance with their bulk entitlements, including through review of annual reports and annual operating plans.
GMW connections project
Realised new bulk entitlements for Greater Western Water, South East Water and Yarra Valley Water from a combined 75 GL long-term average annual yield (LTAAY) share of water recovered through the Goulburn-Murray Water (GMW) Connections Project.
Set aside 1.36 GL (LTAAY) of additional water recovered through the GMW connections project for Traditional Owners and issued a further 681.6 ML (LTAAY) of entitlement to be distributed as part of the irrigators’ share.
Latrobe drought reserve
Completed review of the past performance and management arrangements for the Latrobe drought reserve in collaboration with Southern Rural Water, and commenced implementation of the recommendations to improve management outcomes for entitlement holders.
Storage and resource manager re-appointments
The Minister made several storage and resource manager re-appointments in late 2021,and associated bulk entitlement amendments. This progressed key commitments in Water for Victoria to ensure a strong and responsive water entitlement system. Redundant resource manager appointments were identified and allowed to expire, while remaining appointments are expected to be remade (or revoked) by the end of 2024.
Bulk entitlement metering programs
Reviewed the guidelines for bulk entitlement metering programs, with a revised guideline approved by the Minster for Water. The guideline was updated to reflect contemporary water management policy, practices and standards and to address specific issues identified by bulk and environmental entitlement holders during the review process. Victoria’s water corporations have now updated their metering programs in line with the revised guidelines.
Broken review system review
Supported the Broken review project steering group to develop and undertake public consultation on draft proposals for future water management in the Broken River system.
Licensing framework, groundwater and unregulated systems
The groundwater and unregulated surface water management and licensing framework requires continuous maintenance and improvement. This ensures a prosperous economy, thriving communities and support for Traditional Owner cultural values –while minimising the risk to third parties and the environment.
A robust water management and entitlement framework establishes rules that govern how water is held, used, and transferred between economic, social, cultural and environmental uses. It also minimises adverse impacts on the environment.
This initiative supported thousands of water licences held by Victorians that enable access to water, and manages the risks associated with the take of that water. It also supported the localised water management planning tools addressing cumulative risk to our precious water resources and systems.
For example, groundwater supplies about 15 per cent of Victoria’s water needs, including 70 towns, and is vital for a healthy environment and healthy Country for Traditional Owners. With an increasing reliance on groundwater as conditions become hotter and drier, a strong groundwater management framework – supported by a strong evidence base – is more important than ever.
Appropriate maintenance and clear oversight of the groundwater and unregulated surface water management and licensing framework mitigates substantial risks to the reliability of entitlements, access to water and to the environment. It also ensures the framework remains robust and contemporary, supporting government and community priorities.
Maintaining the framework for groundwater and unregulated systems
Provided oversight, information and advice to rural water corporations and other stakeholders on licensing of groundwater and unregulated water use across Victoria. When licensing issues arise, this support helps the parties involved to understand and resolve the issues, maintain consistency and transparency in decision making and support the provision of accurate licensing information.
Supported the management framework and provided advice to rural water corporations, internal stakeholders and the Minister on planning tools such as statutory management plans, permissible consumptive volumes (PCV), water supply protection areas (WSPA) and other instruments used to manage surface and ground water resources. In 2021-22 advice was provided to stakeholders and the Minister on the revocation of the Glenelg WSPA and associated PCVs.
Issued improved guidance on water use from dams and waterways. This included releasing the amended Waterway Identification Guidelines (approved by the Minister in January 2022) and technical guidelines (Meeting flow requirements for licensable farm dams, 2020), as well as reviewing policies and guidance for managing works licences (in consultation with rural water corporations and other stakeholders).
Provided advice in development of the CGRSWS on licensing of groundwater and unregulated surface water. Key input included water for agriculture, Traditional Owner access to water from unregulated sources, domestic and stock rights to water (section 8 of the Water Act), unallocated water, and licensing in unregulated surface water and groundwater systems.
Groundwater Management 2030 (GM2030)
Developed of a document that outlines DEECA and rural water corporation priority areas of work to enable better management and licensing of groundwater to 2030. Released in August 2022, GM2030 includes 13 priorities for the next 6 years, outlining the water sector’s commitment to improved groundwater management in a way that is flexible and responsive to future opportunities and challenges.
Delivery is underway, with a number of foundational projects expected to be completed in this funding cycle.
Licensing review and reform
A review of the licensing framework is underway in line with GM2030 key deliverables for delivering ‘Licensing that manages risk to groundwater (unregulated and surface water)’.
The review is scoped in 3 phases (with phase one delivered through EC5, and phase 2 and 3 to be considered in future funding cycles).
Phase 1 is underway, which includes a stocktake of the Ministerial Policies for Managing Take and Use Licences and a focus on streamlining current licensing instruments to support a clearer licensing framework.
Traditional Owner access to water and increased involvement in water management
This initiative supported Traditional Owner access to water through licensing, including:
The establishment of a pathway to identifying parcels of land to support Traditional Owner applications for water, through consultation with Parks Victoria.
Worked across the division to provide advice to licensing authorities, Traditional Owner groups and internal stakeholders to support Traditional Owners in holding licences for the take and use of water.
Began exploring the barriers for Traditional Owner access to water and self-determined use under the current water management and licensing framework, which will be addressed through GM2030 and licensing review and reform in this and future funding cycles.
Water compliance reform (retail)
The water entitlement framework is the foundation for ensuring scarce water resources are shared equitably and transparently and enables lessons from the past to be applied as we prepare for the future. Government must maintain the rules and oversee the markets that determine how water is traded, ensuring they are fair, providing oversight of how water is transferred across the water grid, and driving compliance and enforcement to ensure confidence that water is fairly used across Victoria.
This project aimed to improve compliance and enforcement practices and governance across the State. This ensures confidence in the water entitlement system and drives compliance and enforcement reform across the state through Murray Darling Basin Plan commitments. This was achieved through:
Water compliance reform, coordination and oversight activities to deliver a modern compliance and enforcement system.
Provision of a robust contemporary compliance and enforcement framework.
Monitoring of water corporation implementation and capability.
Regular performance reporting to the Minister and the public.
Zero-tolerance escalation policy
Finalised and implemented a zero-tolerance escalation policy consistent with the recommendations from the independent Compliance and Enforcement Review (2020).
Murray-Darling Basin Compliance Compact
Delivered all Victoria’s actions required under the Murray-Darling Basin Compliance Compact, including annual reporting requirements for 2020–21, 2021–22, 2022–23 and 2023–24 which are publicly available.
Performance reporting on unauthorised take compliance
Implemented annual performance reporting on unauthorised take compliance for the 6 rural water corporations. The rural water corporations now report in their annual reports their performance against the targets for unauthorised take that have been set by the Minister.
Continued weekly performance reporting on unauthorised take to the Minister.
Weekly unauthorised take reports are now distributed to the rural water corporations and are now considered business-as-usual.
Collaboratively deliver key priorities
Co-ordinated 3 working groups and a compliance Community of Practice, with membership across 6 water corporations to share best practice and collaboratively deliver key priorities.
Penalty Infringement Notices (PINs)
Facilitated the implementation of Penalty Infringement Notices (PINs) through Fines Victoria, for all 6 rural water corporations to use as a tool for managing low volumes of unauthorised take. Rural water corporations now regularly issue fines for up to 10 ML unauthorised take. The establishment of PINs with Fines Victoria has paved the way for introducing PINS to improve other water resource management activities (e.g. recreational services and assets).
Updated Victoria’s Compliance Communications Plan, including establishing the PINs Communications Action Plan and related messaging and resources regarding the introduction of PINs to customers.
Updated communications and visual materials
Water corporations have delivered updated communications to customers on the zero-tolerance unauthorised take policy, and to inform them of their obligations not to use water outside of their entitlement. The communication strategy was informed by social and behavioural research, and new visual materials (e.g. photos, drone footage and interview content) commissioned for this initiative.
Compliance and enforcement training framework
Finalised the development of a compliance and enforcement capability, training and appointment framework to ensure consistent training and authorisation of authorised water officers to meet best practice standards expected from a modern regulator.
Finalised 2 online training modules on an introduction to water compliance and issuing PINs and provided it to Authorised Water Officers (AWOs).
Non-urban metering working group
Oversaw implementation of Victoria’s non-urban water metering policy, including establishing a non-urban metering working group with the rural water corporations.
Telemetering meters
Developed a tool to support the water corporations in undertaking a cost-benefit analysis of telemetering meters consistently, to support targeting of compliance risks.
Independent review of compliance and enforcement framework
Former Victorian Auditor-General, Mr Des Pearson AO, reviewed Victoria’s progress to implementing a modern risk-based compliance and enforcement framework to managing unauthorised take. Mr Pearson reported very good progress and significant reductions in unauthorised take.
Victorian Water Register supporting compliance
The Victorian Water Register (VWR) is routinely used by the water corporations and DEECA as the point of truth for unauthorised take. The VWR automatically generates reports that alerts the water corporations and DEECA of unauthorised take. VWR data underpins the weekly report to the Minister on the extent and change to unauthorised take, as well as compliance reporting in water corporations’ annual reports.
Accounting for water recovery
The Victorian and Australian Governments, irrigators, and the Melbourne retail water corporations have invested more than $2.5 billion dollars to modernise the public irrigation systems to recover water being lost by these systems. The water recovered is to provide additional water for the environment, irrigation, urban water supplies and recently to return water to Traditional Owners.
The department must ensure that the rural water corporations’ estimates of water recovered from their irrigation modernisation are independently audited. Independent verification and audit of the water recovery ensures the Minister can meet their obligations under the Water Act and ensure that the issuing of water entitlements for the water recovery does not have third party impacts, such as impacts to the environment or existing entitlement holders.
The Water Recovery team facilitates the independent water recovery verification and audits. The team translates the water recovery into water entitlement volumes and reliabilities and supports the necessary amendments to the bulk entitlements for the issuing of the water entitlements.
The team also tracks water recovery against the Murray-Darling Basin Plan, provides support for Basin Plan policy and develops policies related to water recovery across Victoria.
Completed independent audits of water recovery for the GMW Connections Project and Water Efficiency Project, Lower Murray Water (LMW) Water Efficiency Project, and a final audit of the Macalister Irrigation District 2030 Phase 1A irrigation modernisation program.
Completed independent reviews of water recovery for the modernisation of the Southern Rural Water Maffra Weir and Willang Yarn balancing storage and Lower Murray Water Water Efficiency Project.
Amended respective loss bulk entitlements to reflect the water recovery.
Translated the water recovery into water entitlement volumes and reliabilities.
Coordinated and led the timely distribution of water shares and allocation to irrigators for their share of water recovery achieved by the Connections Project, and identified additional water recovery (returned to Traditional Owners).
Completed the close-out of the Connections Project for the distribution of water recovery to the Australian and Victorian environmental water entitlement holders, Melbourne retail water corporations, irrigators and to Traditional Owners.
Coordinated the timely distribution of water shares to the Australian Government from the GMW Water Efficiency Project and tranche 1 of the LMW Water Efficiency Project.
Verified water recovery estimates for the LMW business case for further modernisation of their irrigation district (Water Efficiency Project).
Revised water recovery version factors to estimate long-term water recovery for Southern Victoria which is more representative of the drying climate.
