resources within their respective State boundaries. The explicit legislative powers of
the Federal Government were codified in section 51 of the Australian Constitution
(Australian Government 2018e) and consisted of only those issues that affected the
whole of the nation, including trade and commerce, taxation, defence, corporations
and external affairs (Parliament of Australia 2018a). Water resources were not
explicitly listed in section 51 of the Australian Constitution and hence lay outside
the direct legislative powers of the Federal Parliament. Nonetheless, the Federal
Government has, in conjunction with the State Governments of NSW, Victoria and
South Australia, carried out aspects of water resource management in the MurrayDarling Basin since the early 1900s through intergovernmental agreements and
interjurisdictional bodies like the River Murray Commission and subsequently the
Murray-Darling Basin Commission (MDBA 2015).
As water resources remained the remit of the respective State Government,
approaches to water management, administration and governance varied widely
between States, driven by the distinct characteristics of river basins and the administrative structures of State Governments (Bureau of Meteorology 2018), as well as
differences in definitional and regulatory approaches. From the beginning of the
1990s, significant water resource management reforms were initiated in response to
the Federal Government’s national competition policy reform (COAG National
Competition Council 2018a). As part of these broader reforms, a national strategic
framework for water was developed by the Council of Australian Government
(COAG National Competition Council 2018b). This framework and subsequent
intergovernmental agreements set high-level, long-term national visions for water
resource management and governance and provided the States with guidelines
around new market-based reforms that were aimed at achieving efficient and sustainable water use (COAG National Competition Council 2018b). Despite these
overarching principles and guides, State Governments retained discretion around
how to implement the broad-based water reforms, leading to diverse approaches to
water management, water governance and water administration (Holley and Sinclair
2016). The reforms that commenced in the 1990s eventually morphed into a hybrid
governance system that was based on ‘top-down’ regulation and ‘bottom-up’ catchment planning linked together through detailed stakeholder consultation. Additionally, a ‘decentralised’ cap-and-trade market-based regime developed following the
separation of land and water rights and the introduction of an interim cap on surface
water extraction in 1995 (Murray-Darling Basin Commission 2004). The latter two
initiatives (the cap on extraction and the separation of land and water rights) were of
particular importance to prevent further growth in water extraction in the MurrayDarling Basin and establish a functioning water market valued at approximately
AUD$612 million (entitlement trade, 2016–2017) or $AUD58 million (commercial
allocation trade, 2016–2017; AITHER 2017). However, the COAG water reforms of
the 1990s were frequently at risk through constitutional conflicts between the
Federal and State Governments whereby State Governments were unwilling to
support the national water reform agenda (Kelly 2007). As a result, the Federal
Government imposed ‘accountability measures’ on the States, including financial
incentives for the successful implementation of key reform goals (Holley and
7 Water Security: Challenges to the Irrigation Water-Energy Nexus in Australia
91
the Federal Government were codified in section 51 of the Australian Constitution
(Australian Government 2018e) and consisted of only those issues that affected the
whole of the nation, including trade and commerce, taxation, defence, corporations
and external affairs (Parliament of Australia 2018a). Water resources were not
explicitly listed in section 51 of the Australian Constitution and hence lay outside
the direct legislative powers of the Federal Parliament. Nonetheless, the Federal
Government has, in conjunction with the State Governments of NSW, Victoria and
South Australia, carried out aspects of water resource management in the MurrayDarling Basin since the early 1900s through intergovernmental agreements and
interjurisdictional bodies like the River Murray Commission and subsequently the
Murray-Darling Basin Commission (MDBA 2015).
As water resources remained the remit of the respective State Government,
approaches to water management, administration and governance varied widely
between States, driven by the distinct characteristics of river basins and the administrative structures of State Governments (Bureau of Meteorology 2018), as well as
differences in definitional and regulatory approaches. From the beginning of the
1990s, significant water resource management reforms were initiated in response to
the Federal Government’s national competition policy reform (COAG National
Competition Council 2018a). As part of these broader reforms, a national strategic
framework for water was developed by the Council of Australian Government
(COAG National Competition Council 2018b). This framework and subsequent
intergovernmental agreements set high-level, long-term national visions for water
resource management and governance and provided the States with guidelines
around new market-based reforms that were aimed at achieving efficient and sustainable water use (COAG National Competition Council 2018b). Despite these
overarching principles and guides, State Governments retained discretion around
how to implement the broad-based water reforms, leading to diverse approaches to
water management, water governance and water administration (Holley and Sinclair
2016). The reforms that commenced in the 1990s eventually morphed into a hybrid
governance system that was based on ‘top-down’ regulation and ‘bottom-up’ catchment planning linked together through detailed stakeholder consultation. Additionally, a ‘decentralised’ cap-and-trade market-based regime developed following the
separation of land and water rights and the introduction of an interim cap on surface
water extraction in 1995 (Murray-Darling Basin Commission 2004). The latter two
initiatives (the cap on extraction and the separation of land and water rights) were of
particular importance to prevent further growth in water extraction in the MurrayDarling Basin and establish a functioning water market valued at approximately
AUD$612 million (entitlement trade, 2016–2017) or $AUD58 million (commercial
allocation trade, 2016–2017; AITHER 2017). However, the COAG water reforms of
the 1990s were frequently at risk through constitutional conflicts between the
Federal and State Governments whereby State Governments were unwilling to
support the national water reform agenda (Kelly 2007). As a result, the Federal
Government imposed ‘accountability measures’ on the States, including financial
incentives for the successful implementation of key reform goals (Holley and
7 Water Security: Challenges to the Irrigation Water-Energy Nexus in Australia
91