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Goal 2 Strengthen the culture of compliance in the Murray–Darling Basin

Role of the MDBA

Implement a strategic approach to compliance and enforcement of the Basin Plan and Basin governments’ water resource plans

Desired outcomes

  • The MDBA’s compliance and enforcement information is available and transparent.
  • The MDBA is identifying non-compliance.
  • The MDBA is identifying improvements in compliance and enforcement arrangements and systems.
  • The coverage and quality of water measurement in the Murray–Darling Basin is increased.
  • The Basin Plan compliant water market is advanced.
  • The MDBA has transitioned from Basin Plan implementer to regulator.

2019–20 key activities

  • Monitor and report on compliance and enforcement across Basin governments, including:
    • progress implementation of the Compliance Compact
    • conduct and publish compliance audits and reviews
    • assist Basin governments to improve metering and monitoring of water take
    • facilitate the implementation of the Basin Plan water trading rules
    • manage allegations and instances of non-compliance in accordance with the MDBA’s Compliance and Enforcement policy
    • enhance the MDBA’s regulatory culture and capability
    • progress investment in the northern Basin remote sensing capability and water information portal.

Source: MDBA Corporate Plan 2019-20 mdba-corporate-plan-2019-20.pdf

KPI 3 Monitor and enforce compliance with the Basin Plan

KPI: The MDBA monitors and enforces compliance with the Basin Plan and publishes results of compliance and regulatory activities

KPI result: Met

Six measures of success were assessed to inform performance against the KPI. Of these, five had targets for achievement during 2019–20. Four of these measures were met and one was partially met, with either clear progress against the identified activities or confirmation of information being published on the MDBA website. Work continued under the sixth measure towards the target set for 2020–21.

Source: MDBA Corporate Plan 2019-20 mdba-corporate-plan-2019-20.pdf

Compliance with the Basin Plan is paramount to achieving a healthy, working Basin. The MDBA takes a Basin-wide approach to compliance, with a focus on providing assurance that Basin state compliance arrangements and activities are effective.

The Compliance and Enforcement Policy 2018–21 and the SDL Reporting and Compliance Framework set out key elements of the MDBA’s compliance program and are among a number of compliance and enforcement documents that are available on the MDBA website.

Measure 1—Annual compliance priorities achieved

Percentage of MDBA’s annual compliance priorities achieved

Target: 100%

Result: Partially met—across the six priorities, 16 of 18 activities were undertaken with one actioned but deferred for further scoping and one being progressed

The MDBA prepares an annual statement of compliance priorities based on risks to the Basin Plan and Water Act compliance. The statement identifies high-risk areas and activities that will be undertaken by the MDBA to further understand, monitor or respond to the identified risks. In 2019–20 there were six priorities, with 18 activities planned to address these.

A report on the compliance priorities for 2019–20 can be found on the MDBA website (link).

Table 2.2 Annual compliance priority area activities undertaken in 2019–20

Activities

Result

Unmeasured water take — 2 activities undertaken and 1 deferred

  • Review and audit floodplain harvesting infrastructure and policy implementation in the northern Basin
  • Undertake Murray–Darling Basin Compliance Compact reporting and assurance
  • Monitor state governments' progress in developing and implementing floodplain harvesting reforms

  • Scoping work in 2020 identified that Basin state policies were either undeveloped or only recently in place and would be difficult to audit at that stage. This work may be revisited in a future audit program or incorporated into the WRP compliance program. Baseline information for the future audit is being collected through Basin Compliance Compact reporting.
  • The Murray–Darling Basin Compliance Compact Annual Assurance Report 2019 was published in December 2019. This report found that Qld has published their improvement program for the measurement of overland flow harvesting. At the time of the report, NSW had substantially completed their improvement program for the measurement of floodplain harvesting.
  • Since the 2019 Compact Assurance Report was published, both NSW and Qld have made further progress. NSW’s work is substantially complete and interim arrangements are in place for draft WRPs. Qld has arrangements in its accredited WRPs and a full policy is to be in place by 2022.

Metering — 3 out of 3 activities undertaken

  • Undertake site inspections, reviews and audits of metering requirements, meter coverage, data collection and regulation in each Basin state
  • Work with states to develop and implement the Metrological Assurance Framework Modernisation Project
  • Review state progress in implementing their Basin Compliance Compact commitments

  • Metering reviews were completed and published for Vic. (Sunraysia region) and SA (Riverland region). This completes a metering review for each Basin state, with reviews already published for NSW and Qld in 2019. (More details under measure 2.)
  • Following a workshop in December 2019 and ongoing consultation with all 8 jurisdictions, a concept draft of the new framework was circulated and a teleworkshop held with all states in July 2020.
  • Significant challenges addressed in the framework include accuracy checking of in-service meters and using a risk-based approach when determining the compliance effort required.
  • The MDBA reviewed the progress made in each Basin state against the compact commitments in relation to improving metering. All states had made progress in revising their policies, although some of the metering improvements will not be fully achieved until 2025.

SDL accounting and the sustainable diversion limit adjustment mechanism (SDLAM) — 3 activities undertaken and 1 deferred

  • Complete and publish an SDL health check to determine if the SDL accounting frameworks trialled by the MDBA are conceptually sound and use best-practice water accounting methods
  • Report and implement recommendations in the SDL health check
  • Check and audit the integrity of SDL data, including the MDBA’s processes and methods for addressing growth in use and interstate trade accounting arrangements
  • Monitor and review the progress of SDLAM projects

  • The MDBA contracted an independent panel to review the SDL Water Accounting Framework. The review was published on the MDBA website in August 2019.
  • The MDBA has developed a work plan to address the issues raised by the panel. The SDL Accounting Improvement Strategy 2020–25 was published in June 2020.
  • An audit of the MDBA’s SDL accounting processes was deferred due to other priorities. It will be scoped and undertaken in 2020–21. State methods for addressing growth in use were assessed as WRPs were submitted for accreditation.
  • The review of SDL accounting arrangements for interstate trade in the northern Basin was commenced. A desktop walkthrough of NSW and Qld processes and fieldwork was completed in June 2020. The SDLAM progress report was released on 15 June and is available on the MDBA website.

Improving water trade markets — 4 out of 4 activities undertaken

  • Use the Water Trade Restriction Assessment Framework to review and assess trade restrictions
  • Review findings and management responses to the 2018–19 Trade Price Audit
  • Educate water market users about the water trading rules, including the need to provide information around accurate trade price reporting
  • Provide input to the review of water markets in the southern Basin led by the Australian Competition and Consumer Commission (ACCC).

  • The MDBA undertook some preliminary testing of the process to identify how well the policy works from an operational perspective to see if any issues need to be resolved prior to publishing. Resourcing issues slowed progress on this work.
  • The MDBA published its management response to the audit. During the year, the MDBA reviewed the Basin states’ responses to the audit findings. As part of the response, the MDBA engaged a consultant to review the secondary water products across the Basin. (See measure 5.)
  • This work is ongoing. In May 2020, the MDBA published the Marsden Jacobs & Associates (MJA) report on secondary water market products, which includes a plain English summary to help educate water market users. The MDBA is revising its guidance on compliance with price reporting. (See measure 5.)
  • The MDBA provided a submission to the ACCC to review and responded to all formal requests for information—which included a running account of the Barmah Choke trade balance, conveyance and evaporation losses for the River Murray system, trade-related working group documents and an estimated budget for the MDBA’s trade functions. The ACCC report is due to be finalised in November 2020.

Water for the environment — 2 out of 2 activities undertaken

  • Conduct on-ground and satellite monitoring to review or audit compliance with state arrangements for protecting recovered water, delivering water for the environment and regulating water take during environmental watering events

  • The MDBA continues to undertake Geographical Information Systems (GIS) monitoring of flows and, due to the volume of requests, has set up processes for Basin state and Australian Government agencies to request that the MDBA conduct this monitoring. In 2019–20, the MDBA received requests from the Commonwealth Environmental Water Holder, the NSW Natural Resources Access Regulator and the Qld Government.

State compliance and enforcement arrangements — 2 out of 2 activities undertaken

  • Publicly report on Basin state and Australian Government progress on implementing the Basin Compliance Compact commitments to improving compliance
  • Monitor and review Basin state compliance arrangements, including the transparency and effectiveness of their systems for responding to allegations of illegal conduct

  • The MDBA published the 2019 Compact Assurance Report in December 2019. It is available on the MDBA website.
  • The MDBA monitored and reported on this point via the 2019 Compact Assurance Report, which found that most jurisdictions had good quality reporting of compliance actions taken and that these systems were being continually improved.

Measure 2—Compliance audit and review reports undertaken and published

Percentage of MDBA’s compliance audit and review reports undertaken and published

Target: 100%

Result: Met—three of three completed audits published

Section 13.10 of the Basin Plan requires that all audits be published. Measuring the percentage of compliance audit and review reports that are published demonstrates whether there is compliance with the Basin Plan and also demonstrates the MDBA’s commitment to increasing transparency about water compliance.

Performance is assessed by measuring the number of reports finalised during the water year against the number of reports published.

The Audit Work Program for 2019–20 proposed six audits, addressing a range of compliance priorities. The Audit Work Program can be found on the MDBA website.

Two of the audits proposed in the 2019–20 work program are still in progress and two were deferred to the 2020–21 work program. The combination of the drought, extensive bushfires and the social distancing requirements under COVID-19 affected audit travel and fieldwork as well as placing strain upon Basin state resources and priorities over the period.

Annual assurance of Basin state and Australian Government progress in implementing their Murray–Darling Basin Compliance Compact commitments was also completed. The Murray–Darling Basin Compliance Compact Annual Assurance Report 2019 was published in December 2019 (see Measure 1—Percentage of WRPs assessed by MDBA for accreditation) and is available on the MDBA website (link).

Table 2.3 The MDBA’s Audit Work Program for 2019–20

Audit

Compliance priorities addressed

Status

Meter reading and water take reporting processes—Vic.

  • Metering
  • SDL compliance
  • Compliance enforcement arrangements

  • Completed and published February 2020

Meter reading and water take reporting processes—SA

  • Metering
  • SDL compliance
  • Compliance enforcement arrangements

  • Completed and published April 2020

Water resource plan compliance in the Warrego–Paroo–Nebine Water Resource Plan area—Qld

  • Metering
  • Unmeasured take
  • SDL accounting compliance
  • Compliance enforcement arrangements

  • In progress—fieldwork and operations of Basin state affected by bushfires and COVID-19

Interstate trade between Qld and NSW

  • SDL accounting compliance
  • Trade market efficiency

  • In progress—fieldwork and operations of Basin states affected by bushfires and COVID-19

Protection of environmental water in the southern connected Basin

  • Environmental water

  • Moved to 2020–21 audit program

NSW non-urban metering framework rollout review

  • Metering

  • Deferred to 2020–21 due to drought

The MDBA also published its response to the Water Trade Price Audit (link published in May 2019). More details on the work flowing from the Water Trade Price Audit are addressed in Measure 5—Engagement to implement the water trading rules.

The MDBA Audit Work Program for 2020–21 and beyond reflects a planned increase in the MDBA’s audit capacity and compliance activity. The first audits into compliance with accredited water resource plans will commence. The program will also include following up on selected audits and reviews to check the progress made by the MDBA and Basin states in implementing the recommendations.

Measure 3—Information on regulatory activities is published quarterly

Information regarding the MDBA’s regulatory activities is published quarterly

Target: Regulatory information is published quarterly

Result: Met—seven of eight reports published

The MDBA committed to increased public reporting about its regulatory activities under the Compliance Compact.

The MDBA maintains a water compliance reporting webpage where it publishes information about its regulatory activities.

Register of non-compliance allegations

During 2019–20, the MDBA maintained a register of allegations of non-compliance it had received and published updates in August 2019, January 2020 and June 2020 noting whether allegations had been received, referred or closed. The report for the second quarter was deferred while improvements were made to the reporting process, resulting in three rather than four reports being published in 2019–20.

Audit reviews to check water metering in the Basin Since 2018, the MDBA has undertaken annual audit programs to review areas pivotal to compliance with the Basin Plan to ensure Basin Plan outcomes are being enabled through a robust regulatory framework and to increase transparency for water users. Water meters provide the clearest measure of how much water is being used across the Basin. Robust metering arrangements are essential for ensuring compliance with licence conditions and they underpin SDL accounting. Accurate water usage data also informs annual water planning, including water allocation decisions, river operations and they infrastructure investment decisions. Various reviews and investigations into compliance in 2017 and 2018 identified issues with the accuracy and coverage of metered water take, which diminished community confidence in water regulation by Basin governments. The MDBA has undertaken reviews across the Basin states to help assess the quality of the systems and procedures that states have in place to ensure the accuracy of water metering and measurement, and to ensure integrity of the data provided to the MDBA through annual water take reporting. The MDBA completed metering reviews in New South Wales and Queensland in early 2019, and in 2019–20 undertook metering reviews in Victoria (Sunraysia area) and South Australia (Riverland region). The Victorian metering review report noted the high coverage of telemetry as a key control in ensuring accurate water take data is provided to the MDBA. The South Australia metering review report was published in May 2020. The review concluded that, in this region, the SA Department of Environment and Water’s systems were adequate but identified some areas for improvement. Going forward, the MDBA will conduct assurance reviews of the implementation of state metering policies, particularly around large meters, to ensure there is confidence in the management of the Basin water resources.

Independent Assurance Committee

The Independent Assurance Committee (IAC) provides expert advice on the design, implementation and adequacy of the MDBA’s Basin Plan compliance program. The IAC consists of four independent experts with knowledge across a range of relevant fields, including water and natural resources policy and management, and regulation and compliance.

The committee generally meets four times a year and provides written reports about the MDBA’s regulatory framework and activities to the Authority. The committee met in September and November 2019, and March and June 2020. Copies of the four published IAC reports can be found on the MDBA website (link).

Measure 4—Engagement to improve metering and monitoring of water take

The MDBA engages with states to support the improvement of metering and monitoring of water take

Target: Qualitatively assessed

Result: Met, with progress towards a number of improvements made as reported in the Compliance Compact Annual Report and with a concept draft of the Metrological Assurance Framework project prepared

The MDBA engages with the states to support the improvement of metering and monitoring of water take. Accurate measurement and increased transparency of water take is fundamental to monitoring compliance with the Basin Plan. Water metering is one of the five themes to be addressed under the Compliance Compact. The MDBA works with the states through interjurisdictional working groups and active engagement in collaborative projects.

In December 2019, the Basin governments agreed to work together to make it easier to:

  • select compliant meters
  • maintain a meter throughout its life.

The MDBA is leading this program and is working closely with all Basin governments to improve metering, including the development of better tools for measuring water take as well as alignment of standards where possible.

A key collaborative project is the work with all Australian states to develop and implement the Metrological Assurance Framework Modernisation Project. A concept draft was prepared during the year.

The MDBA is also working with industry to bring more compliant meters to the market, improve communication on maintenance requirements and support the use of accurate meters.

Basin states require, or are moving to ensure, that new and replacement non-urban water meters comply with the Australian Standard for non-urban water meters (AS4747). Each Basin state has its own policy for nonurban water meters and, in time, most meters will be renewed and will meet the Australian Standard.

Under the Compliance Compact Annual Report, the MDBA reviewed the progress made in each Basin state against the compact commitments in relation to improving metering. All states had made progress in revising their policies. Some of the metering improvements will not be fully achieved until 2025.

The MDBA continues to work with the Queensland and NSW governments towards improving the monitoring and reporting of floodplain harvesting, with a number of reviews progressed.

Measure 5—Engagement to implement the water trading rules

The MDBA engages with states to support the improvement of metering and monitoring of water take

Target: Qualitatively assessed

Result: Met due to engagement and progress against strategic priorities

Engaging with regulated agencies is an essential element of the MDBA’s compliance and enforcement role. Regulated entities need to understand and know their obligations in order to foster compliance.

The Basin Plan water trading rules contribute to achieving the Basin water market and trading objectives set out in Schedule 3 of the Water Act.

The rules apply to the Australian Government, the Basin states, irrigation infrastructure operators and individual market participants. The rules only apply to water access rights that can be traded under state water management law and are outlined in the guidelines to the water trade rules on the MDBA website (Basin state water trading rules | Murray-Darling Basin Authority (mdba.gov.au).

The MDBA prioritises its regulatory and compliance activities in accordance with the Strategic Priorities— Basin Plan water trading rules. The priorities are published on the MDBA website (link).

In addition to the ongoing engagement work, during the year the key activities were:

  • The MDBA worked with the states on addressing the issues raised in the 2018–19 Audit into Water Trade Prices in relation to price reporting and publishing. The MDBA response to the audit can be found on the MDBA website.
  • In response to the Water Trade Prices Audit, the MDBA also engaged Marsden Jacob Associates to conduct a review of secondary water market products across the Basin. The review is published on the MDBA’s website. The review engaged with stakeholders to identify and clarify the use of these products to better inform how they are addressed in relation to pricing and reporting. The report includes a plain English summary of the findings to support improving the transparency of information.
  • The MDBA audit and assurance program included several follow-up reviews to establish progress in implementing recommendations from previous audits.
  • The MDBA provided a submission to the ACCC Inquiry into Basin water and responded to all formal requests for information from the ACCC. The ACCC final report is due November 2020.
  • As required under the Basin Plan, the MDBA reviewed s. 12.02 exemptions to the non-discriminatory trading rules in relation to shepherding environmental water. This work is expected to be completed in 2020–21.

Measure 6—Maturity on the Modern Regulator Improvement Tool is assessed

MDBA’s biennial maturity assessment on the Modern Regulator Improvement Tool

Target: No target for 2019–20

The Modern Regulator Improvement Tool is a best-practice tool developed by the Australasian Law Enforcement and Regulators network (AELERT), an international group aimed at sharing best-practice expertise and learnings in environmental regulation. The tool sets out key criteria for regulators to assess their agency maturity and identify areas for improvement.

Assessments are undertaken biennially. The MDBA completed the assessment in 2018–19, with a score of 41.6% with 5 out 12 maturing attributes. The future targets are scores of 70% in 2020–21 and 100% in 2022–23.

The MDBA works continuously to improve its maturity as a modern regulator and engages with other regulators with a focus on capability building.

Under the Compliance Compact, the MDBA committed to establishing the Water Compliance Community of Practice to enable water compliance officers across Australia to develop networks, collaborate on water compliance policies and frameworks, and share information. The MDBA coordinates the Water Compliance Community of Practice through AELERT.

In March 2020, the MDBA Office of Compliance focused on promoting water compliance and enhancing its relationships with other regulators. This included chairing and presenting on a panel of state and Commonwealth water regulatory agencies at the AELERT conference in Adelaide.

Visit

https://www.transparency.gov.au/annual-reports/murray-darling-basin-authority/reporting-year/2019-20-7