Council of Australian Governments (COAG)

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Council of Australian Governments' Communiqué
29 August 2003

The Council of Australian Governments (COAG) agreed that there is a pressing need to refresh its 1994 water reform agenda to increase the productivity and efficiency of water use, sustain rural and urban communities, and to ensure the health of river and groundwater systems.

Investment in new, more efficient, production systems is being hampered by uncertainty over the long-term access to water in some areas. Fully functioning water markets can help to ensure that investment is properly targeted and water is put to higher value and more efficient uses. However, current arrangements are preventing those markets from delivering their full potential. Furthermore, there are significant concerns over the pace of securing adequate environmental flows and adaptive management arrangements to ensure ecosystem health in our river systems.

COAG has therefore agreed to develop a National Water Initiative to:

• improve the security of water access entitlements, including by clear assignment of risks of reductions in future water availability and by returning overallocated systems to sustainable allocation levels;
• ensure ecosystem health by implementing regimes to protect environmental assets at a whole-of-basin, aquifer or catchment scale;
• ensure water is put to best use by encouraging the expansion of water markets and trading across and between districts and States (where water systems are physically shared), involving clear rules for trading, robust water accounting arrangements and pricing based on full cost recovery principles; and
• encourage water conservation in our cities, including better use of stormwater and recycled water.

The National Water Initiative will build on the achievements of the 1994 COAG strategic framework for the reform of the Australian water industry, the Natural Heritage Trust and the National Action Plan for Salinity and Water Quality. Details of the Initiative are to be settled over the next six months, for consideration at the first COAG meeting in 2004. Further details are provided in Attachment A.

Recognising the declining health of the River Murray system in particular, COAG noted that member jurisdictions of the Murray-Darling Basin have agreed to provide new funding of $500 million over five years to address water overallocation in the Basin. Forty per cent of this $500 million would be contributed by the Australian Government and 60 per cent by New South Wales, Victoria, South Australia and the Australian Capital Territory. Contributions are: Australian Government ($200 million), New South Wales ($115 million), Victoria ($115 million), South Australia ($65 million) and the Australian Capital Territory ($5 million). This funding would be subject to finalisation of details.

COAG reaffirmed its commitment to the 1995 National Competition Policy agreement.