Unit 1
Unit 2
Environmental Markets
The Government
The government plays a complicated role in the market for water in Australia. It is important that you understand that each of the three levels of government has a voice in the management of our water, but under current legislation the decision making process can be quite difficult to figure out.
Under the Australian constitution, the management of water is considered a residual power. This means that it is not specifically identified as a power of the federal government, and is therefore managed by the various states and territories. However, during the time that John Howard was the Australian Prime Minister, the federal government began to make some moves towards gaining greater control over areas that had traditionally been left to the states. For example, labour laws have always been managed at a state level, but by using the exclusive power in relation to creating laws for companies, the federal government was able to create legislation that changed the way in which workplaces all over Australia are managed. This trend has been maintained since the election of the Rudd government, with moves towards greater control in the health sector.
As a result, it is not surprising that in 2004 the Council of Australian Governments (COAG) agreed to a policy known as the National Water Initiative. This policy recognised that water is our most precious natural resource, and so it is important that we maintain a consistent approach to the way in which it is managed. Every two years the National Water Initiative reports on the progress that has been made in regards to water reform. With the deepening drought conditions, the need for progress is urgent.
In 2009, it was reported that some important reforms had occurred. Most importantly, all Australians are now aware of the importance of managing our water wisely. This attitude is now entrenched, which suggests that future decisions will benefit our water flows. The report was also strongly supportive of the existence of a market for water; this market has now become a model that is being investigated or followed in countries all over the world.
But considerable problems remain. While the market for water is a positive thing, some state governments are still making it difficult or costly to trade water. These barriers are creating inefficiencies in the market, which is leading to waste and higher costs. Most significantly, around 40% of water infrastructure initiatives that have been promised around Australia have either been stopped or stalled. While some of these issues are due to ongoing low rainfall levels, others are due to political obstacles and uncertainty over the decision making process.
To help overcome these problems, during 2009 the federal government announced a new package of water policies, worth a combined total of $12.9 billion. This money has been allocated over ten years to try and:
1. Tackle the problems created for our water supply by climate change
2. Help teach people to use our available water wisely
3. Secure existing water supplies
4. Provide the necessary funds to support our natural environment
The Victorian government has worked hard to create an efficient water market in this state, but there is no doubt that the existing structure is complicated. In total the state government “owns” nineteen separate businesses that manage Victoria’s water supplies. For example, if you live in the western suburbs of Melbourne, then you probably receive your water bill from City West Water. This is a government owned business. On the other hand, if you live in a different part of Victoria, your bill will come from a different company. However, this company will still ultimately be responsible to the state government.
In addition to the nineteen businesses that provide access to water, there are also ten Catchment Management Authorities. The CMAs are responsible for managing the catchment and storage of water throughout Victoria.
Each of these businesses has its own management structure, but in the end they all report to the Minister for Water. The entire process is regulated by the Water Act (1989). The Minister is supported in this role by the Department for Sustainability and Environment.
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