Position paper: Water charge rules for termination fees

The Water Act 2007 (the Act) creates new institutional and governance arrangements to address the sustainability and management of water resources in the Murray-Darling Basin (the Basin). The Act builds on earlier reform initiatives, including the National Water Initiative (NWI) and the Murray-Darling Basin Agreement (MDB Agreement), and is supplemented by federal government funding commitments of around $10 billion.

A key element of this reform is the removal of barriers to water trade to facilitate the operation of efficient water markets and provide opportunities for water trading. Water trading will allow water to be traded to its highest value use.

Water charge rules that encourage full cost recovery  for water services will contribute to achieving an economically efficient and sustainable use of water resources and water infrastructure assets. Water charge rules applied consistently across the Basin will facilitate the efficient functioning of water markets  by removing distortions to trade and by sending signals to water users about efficient investment in water infrastructure assets.