Section 86AI of the Water Act 2007 requires the secretary of the department to, as soon as practicable after 30 June each year, prepare and provide to the minister a report on the operation of the Water for the Environment Special Account (WESA).

The Water Act provides funding through the WESA to recover an additional 450 gigalitres of water for the environment and to ease or remove delivery constraints. The WESA allocates $1.775 billion in total—nominally split into $1.575 billion for additional water recovery and $200 million to ease or remove constraints.

Payments totalling $5.816 million were made from the WESA during 2018–19.

Constraints measures are rules and structures that influence the volume and timing of regulated water delivery through the Basin, including the delivery of environmental water. Constraints measures through the regulated system are a key element of the Sustainable Diversion Limit (SDL) Adjustment Mechanism set out in the Basin Plan 2012. Measures to address system constraints in 5 key reaches of the southern-connected Murray–Darling Basin contribute to the SDL adjustment of 605 gigalitres, which came into law in January 2018.

During 2018–19 Stage 1 funding agreements for constraints measure projects were signed with NSW ($64.49 million) and South Australia ($2.5 million). A payment of $815,138 was made to NSW under a Project Agreement for Stage 1 of constraints activities.

Efficiency measure projects are activities that change water use practices and recover additional water for the environment. Efficiency measure projects are required under the Basin Plan to have neutral or improved social and economic outcomes. Water saved through efficiency projects will form part of the Commonwealth environmental water holdings.

In September 2016 we launched the Commonwealth On-Farm Further Irrigation Efficiency (COFFIE) program pilot, an efficiency measures pilot program in the South Australian Murray–Darling Basin. Under this program, the department approved 66 on-farm projects for a total value of $12.3 million and water recovery of 1,939.68 megalitres long-term average annual yield (LTAAY) (contracted). To date payments of around $12 million have been made and 1,284.21 megalitres LTAAY of South Australia 3a High Reliability irrigation entitlement has been transferred to the Commonwealth. All water contracted under the SA COFFIE pilot program has involved works within the South Australian River Murray water resource plan area (SS11). The COFFIE pilot program closed to new applications on 5 October 2018.

In June 2018 Basin Water Ministers noted that the Commonwealth would shortly launch a new Basin-wide water infrastructure program. Ministers asked that Basin states and the Commonwealth government work to develop agreed additional program criteria to ensure neutral or beneficial socio‑economic outcomes. The work was to be completed and presented to the next Murray–Darling Basin Ministerial Council (Ministerial Council) meeting in December 2018.

On 13 July 2018 we launched the Basin-wide Murray–Darling Basin Water Infrastructure Program. The program included urban, industrial, off-farm, and water metering infrastructure across the Basin. For South Australia, Queensland and the ACT the program also included applications for on-farm infrastructure. Under the program, we tendered for delivery partners to help eligible water rights holders design and deliver projects. We contracted 2 delivery partners and approved 3 additional delivery partners, subject to further information on their ability to contract with the Commonwealth. No funds were spent on program delivery; however, costs incurred for program promotional activities are reported below.

In October 2018 we commissioned Sefton and Associates to assist the department in consulting community members, farmers, irrigators, peak bodies and businesses across the Basin on the development of additional criteria to ensure the socio-economic neutrality of projects. At the conclusion of the community consultation, Sefton’s delivered a consultation report that was noted by Basin Water Ministers in December 2018. Funds expended for this activity totalled $255,294.

On 14 December 2018 Basin Water Ministers agreed that additional socio economic criteria and associated assessment process be adopted as the basis of the neutrality test for assessing efficiency measure projects. Following this decision, we suspended the Murray–Darling Basin Water Infrastructure Program to incorporate the new requirements in consultation with the Basin States. As at 30 June 2019 the program had not re-opened for new applications. The revised program design includes the Ministerial Council’s additional socio-economic criteria and allows for Basin States to each establish a process to assess projects against the criteria. Provision has also been made for public comments on all proposals.

Other expenses from the account were $163,741 on promotional activities and $41,791 on legal advice (Table 50).

Table 50 Water for the Environment Special Account, 2015–16 to 2018–19