ACCC releases issues paper for water planning and management charge rules

The Australian Competition and Consumer Commission today released its Issues Paper seeking submissions on the development of water charge rules for water planning and management.

The water charge rules are an important component of the Water Act 2007. The development of water charge rules will contribute to the sustainable and efficient management of water resources in the Murray-Darling Basin.

Water planning and management charge rules will apply to charges which recover the costs of, or relate to, water planning and management activities. The rules aim to facilitate pricing transparency.

The issues paper outlines three possible approaches to developing water charge rules in relation to water planning and management. The first approach focuses on improving pricing transparency through the publication of information about existing charges. The second establishes methodologies for calculating water planning and management charges. The third relies upon the development and (cooperative) implementation of model rules, which would provide a comprehensive approach to identifying and publishing information about the costs of water planning and management activities, increasing transparency of water planning and management charges and the extent of cost recovery from water users.

The issues paper also discusses when and how the ACCC may carry out its determination, monitoring and enforcement roles under the Act.

"Establishing a set of water charge rules that apply to all Basin jurisdictions' water planning and management charges will assist the development of water markets by sending clearer pricing signals to water users," ACCC Chairman, Mr Graeme Samuel, said today. "When users understand the costs of the activities associated with the planning and managing of water resources they can make better decisions about the water they use."

A copy of the issues paper, which includes details on how to make a submission, is available from the ACCC website, www.accc.gov.au.

Submissions are to be provided to the ACCC by Wednesday, 12 November 2008.

There will be further opportunity to inform the ACCC's development of the water planning and management charge rules prior to preparation of final advice to the Minister.  Specifically, the ACCC proposes to release a position paper in December 2008, for further consultation.

Background

The Water Act 2007, which came into effect on 3 March 2008, creates new functions for the ACCC. These functions include the development of water charge rules and water market rules for consideration by the Minister; and for the ACCC to monitor compliance with and enforcement of these rules. While not yet asked to provide advice, the Act also allows for the ACCC to advise the new Murray Darling Basin Authority on water trading rules.

The Minister for Climate Change and Water, Senator Penny Wong, has requested the ACCC to develop advice on water market rules and water charge rules.

This issues paper relates to rules applying to charges levied to recover the costs of water planning and water management activities. Water planning and management activities are activities which provide benefits to water users by defining rights to water and establishing a management framework for the resource. They are undertaken by or on behalf of governments to ensure the long-term sustainability of the water resource, and may also be carried out to manage the negative external impacts of the use of water on the environment and on other users.

Under the National Water Initiative (NWI), Basin jurisdictions committed to adopting consistent approaches to pricing and attributing the costs of water planning and management activities and to implementing a user pays approach to cost recovery for water planning and management. The Water Act 2007 incorporates these NWI commitments as the Basin water charging objectives and principles. The water charge rules must contribute to achieving the Basin water charging objectives and principles.