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The Water Act

TheWater Act 2007 (Cth) (the Water Act) provides the legislative framework for ensuring that the Murray–Darling Basin – Australia’s largest water resource – is managed in the national interest.

The Water Act aims to:

  • improve water security for all uses of water resources in the Basin

  • promote the use and management of the Basin’s water resources in a way that optimises economic, social and environmental outcomes

  • ensure the return to environmentally sustainable levels of extraction for water resources that are overallocated or overused

  • protect, restore and provide for the environment of the Basin

  • maximise the economic returns to the Australian community from the use and management of the Basin’s water resources 

  • implement relevant international agreements to address the threats to the Basin’s water resources 

  • ensure that the management of the Basin’s water resources takes into account the broader management of natural resources in the Basin 

  • achieve efficient and cost-effective water management and administrative practices in relation to the Basin’s water resources 

  • to provide for the collection, collation, analysis and dissemination of information about: 

    • Australia’s water resources 

    • the use and management of water in Australia. 

The Water Act includes a number of components to achieve these outcomes. 

The Murray–Darling Basin Authority 

The Murray–Darling Basin Authority (MDBA)  operates under the  Water Act. When the legislation was established in 2007, it transferred the powers and functions of the Murray–Darling Basin Commission to the MDBA creating a single body responsible for overseeing water resource planning in the Murray–Darling Basin as a whole, rather than state by state. 

Key functions of the MDBA include: 

  • preparing a Basin Plan for adoption by the Minister, including setting sustainable limits on water that can be taken from surface and groundwater systems across the Basin 

  • reviewing the Basin Plan in 2026 and proposing any potential amendments 

  • advising the Minister on the accreditation of state water resource plans 

  • developing a water rights information service which facilitates water trading across the Basin 

  • measuring and monitoring water resources in the Basin 

  • gathering information and undertaking research 

  • engaging the community in the management of the Basin's water resources.  

The Basin Plan 

In 2007, there was widespread agreement across government that a plan was needed to manage water carefully and protect the Murray–Darling Basin for future generations. The Water Act required the MDBA to prepare a strategic plan for the integrated and sustainable management of water resources. As a result the Basin Plan was developed to manage the Basin as a whole connected system. 

The Water Act establishes mandatory requirements for the Basin Plan, including: 

  • limits on the amount of water (both surface and ground water) that can be taken from the Basin’s water resources on a sustainable basis – known as sustainable diversion limits.  

  • identifying risks to the Basin’s water resources, such as climate change, and strategies to manage those risks 

  • requirements for state water resource plans 

  • an environmental watering plan to optimise environmental outcomes for the Basin 

  • a water quality and salinity management plan  

  • rules about trading of water rights in relation to the Basin’s water resources. 

The aim of the Basin Plan is to bring the Basin back to a healthier and sustainable level, while continuing to support farming and other industries for the benefit of the Australian community. 

Inspector-General of Water Compliance

The Water Act was amended in 2021 to establish an Inspector-General of Water Compliance (IGWC). The IGWC has the compliance and enforcement functions previously held by the MDBA.

The IGWC provides independent oversight and monitoring of Commonwealth and Basin state water compliance, and aims to: 

  • deliver greater consistency and harmonisation of water regulation across the Basin
  • strengthen Basin Plan compliance and enforcement.

Commonwealth Environmental Water Holder 

The Water Act established a Commonwealth Environmental Water Holder (CEWH).

The Commonwealth Environmental Water Holder manages the Australian Government’s portfolio of water for the environment to protect and restore the environmental assets of the Murray–Darling Basin, and outside the Basin where the Australian Government owns water. 

Australian Competition and Consumer Commission  

The Water Act provides the Australian Competition and Consumer Commission (ACCC) with a key role in developing and enforcing water charge and water market rules in line with the National Water Initiative. The aim of these functions is to ensure that water markets are able to operate freely across state boundaries and that perverse outcomes from inconsistent markets are avoided. 

Specifically, the ACCC provides advice to the Australian Government on water charge and market rules to apply within the Murray–Darling Basin and is responsible for monitoring these rules.  

Bureau of Meteorology 

The Water Act gives the Bureau of Meteorology water information functions in addition to its existing functions under the Meteorology Act 1955

The Bureau is authorised to collect and publish high-quality water information. The publication includes a National Water Account and periodic reports on water resource use and availability. 

A major outcome of the Bureau's work is to increase transparency, confidence and understanding of water information. 

Reviews of the Water Act

Independent review in 2014

The Water Act underwent its first statutory review in 2014, this was the first review of the Act since it commenced on 3 March 2008.  

The review assessed the operation of the Act, the extent to which its objectives have been achieved and considered opportunities to minimise regulatory burden imposed on irrigation infrastructure operators, water managers and irrigators. 

 See the Independent Review of the Water Act 2007 for the Review report and government response.

Future review

Under the Water Act s253, before the end of 2024, the Minister must cause to be conducted a review of:

(a) the operation of this Act, and

(b) the extent to which the objects of this Act have been achieved.

Updated: 05 Aug 2022