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The Strong foundations for Victoria's water: compliance, markets, water entitlements and oversight of the Water Grid initiative delivers actions in Chapter 8 and Chapter 9 of Water for Victoria to ensure water is shared equitably and transparently across Victorian communities, the environment and the economy.

Chapter 8 contains actions to:

  • improve state-wide water resource planning
  • improve water resource information to support planning and decision-making
  • enhance public reporting of water availability and use.

Chapter 9 relates to:

  • managing and enhancing Victoria’s water markets and grid.

The initiative includes the development of a water grid oversight function and planning for future water grid augmentations.

Priorities include:

  • Embedding the Water Grid Partnership and oversight of the grid as part of the sector’s broader planning and decision-making framework.
  • Reviewing the effectiveness of water markets across Victoria and identifying opportunities for future improvement.
  • Further developing policy positions on the merits of water markets in south-central Victoria and further developing markets in unregulated systems.
  • Reviewing trade and operational rules for the Goulburn River in northern Victoria.
  • An integrated work plan to better understand, mitigate and manage water delivery risks in the connected water systems of northern Victoria and to work with other states to consider how the changing operation of the River Murray will affect these risks in the future.

Further developing more accessible water market information and consulting with the community on greater water market transparency options.

Environmental contribution 5 (EC5)

Program title 2020–21 expenditure ($'000) 2021–22
expenditure ($'000)
2022–23 expenditure ($'000)

Strong foundations for Victoria's water: compliance, markets, water entitlements and oversight of the water grid

6,749 6,913 6,899
Compliance and interceptions: protect the reliability of water entitlements and maximise water resources for regional business and communities N/A 739 832
Resilient Water Markets, Regional Communities, and Infrastructure N/A 3,5862,437

Retail entitlements and markets

This initiative is a holistic program of work that the Retail Entitlements team is delivering across 2021 to 2024 by solving key issues in 5 areas of work:

  1. Market monitoring and information
  2. Governance, licencing and legislation
  3. Declared systems reform
  4. Murray systems management
  5. Interstate sharing and intergovernmental commitments

Reliability of entitlements and access to water is enabled by a strong entitlement framework, the movement of water to the highest value use and the efficient and effective operation of competitive markets. This project enables water security through the equitable sharing of water between users and the flexibility provided by markets and trade networks.

The team ensures the regulation and instruments supporting water ownership and trading are responsive and fit for purpose to make sure the system is efficient and certain to underpin economic certainty.

A critical component of this project is acquitting the final water recovery savings as part of the $2 billion Connections Projects so that 75 gigalitres (GL) of water can be provided to irrigators in the Goulburn Murray Irrigation District. This water is essential for the continued productivity of the region and irrigated agriculture jobs.

Interim operating rules and trade rules

Implemented interim operating rules and trade rules for the 2021-22 water year, to prevent damage to the lower Goulburn River and ensure trade can be delivered within ecological tolerances, while final rules were under development.

Partnering with our stakeholders

Partnered with Traditional Owners, river operators, waterway managers, scientists and the community to undertake further analysis of the trade, operational, joint-venture, ecological, bio-cultural and recreational impact of the interim rules, which was publicly released.

Implementing enduring restrictions

Completed the regulatory steps to implement enduring restrictions on tagged water use to create a level playing field between different types of trade, ensuring continued regulatory coverage while long-term options were explored.

Goulburn to Murray trade and operating rules

Completed the regulatory steps to implement refined long-term Goulburn to Murray inter-valley trade and operating rules to ensure trade is only allowed up to what can sustainably be delivered within the ecological tolerances of the lower Goulburn River.

Joint operating plan for the lower Goulburn River

In consultation with Victorian and Murray-Darling Basin Authority river operators, developed a joint operating plan for the lower Goulburn River for the 2022-23 water year to give more certainty in river operations for the delivery of Goulburn inter-valley trade to meet traded demands.

Co-design project

Undertaking a project to review and co-design renewed governance arrangements and increase opportunities for two-way learning for the next implementation phase for the Goulburn to Murray trade review, focusing on improving opportunities for Traditional Owner voices in operational decision-making and knowledge sharing between Traditional Owners, scientists and government agencies.

Conducted targeted engagement

Conducted targeted engagement with stakeholders, alongside the Murray-Darling Basin Authority, water corporations and Agriculture Victoria on managing delivery risks and published supporting material, including fact sheets and reports with the latest information about risks.

River Murray Shortfall Response Plan

Developed a River Murray Shortfall Response Plan with other River Murray states and the Murray-Darling Basin Authority which sets out the procedures to follow in the event of a shortfall to ensure a coordinated response across states. Tested Victorian shortfall preparedness plans with a shortfall “drill” involving the Murray-Darling Basin Authority and other river Murray states.

Place of Take approvals framework

Passed amendments to the Victorian Water Act 1989 to strengthen and clarify water delivery rights with the introduction of a Place of Take approvals framework. This framework strengthens existing water users’ rights to take water during a river rationing event and provides flexibility for water users to manage their own delivery risks

Developed a plan with water corporation partners for the Place of Take approvals framework by July 2024, including the necessary policy, legislative and system changes.

Work underway to progress this includes:

  • developing the approvals rules and updating the Victorian Water Register to record and manage approvals
  • working with a committee of irrigator representatives to refine advice on proposed rules and communicate effectively with water users
  • communicating with water users to prepare them for the changes
  • converting existing water users’ rights to the new framework

Water market reform

Provided input into and influenced the development of a roadmap for water market reform in response to the Australian Competition and Consumer Commission Murray-Darling Basin Water Markets inquiry.

Market Monitoring and Information

Delivered a series of essential reports and enhancements to information that has supported market participants. The annual trade report and market trends report provide the public with a holistic understanding of market dynamics, transparent price reporting, water movement trends – helping water traders, farmers, and policymakers make well-informed decisions.

Enhanced the user experience of the Broker Portal and MyWater with a user-friendly interface, real-time clock, and features make trading more accessible and more efficient.

Successful broker audits further bolstered market confidence by ensuring that brokerage firms operated with utmost transparency, adhering to Victorian requirements.

Water Grid Oversight

The Water Grid Partnership was formed in November 2018 to deliver actions in Chapter 9 Water for Victoria and it is playing a pivotal role in helping to inform and provide advice on future augmentation decisions.

This project is needed to:

  • Inform policy directions that impact decisions around major augmentations and how the water grid is used.
  • Identify augmentation options across the water grid that enable better water security through improved selection and delivery processes.
  • Ensure that barriers do not continue to emerge that impede the way water is transferred physically and legally. This will prevent water users managing their own risks and result in uneconomical infrastructure investments.

Water Grid plan

Work continues developing the Water Grid Plan (previously known as the Water Supply Readiness Roadmap), due for release in late 2023. The Water Grid Plan will outline the options, triggers/timing, and how water corporations and the government will collaborate on future major supply augmentations (such as desalination plants) for the Central and Gippsland region.

Urban water security working group

This work was progressed through the (Central and Gippsland Region Sustainable Water Strategy) Urban water security working group, which concluded in the first half of 2022. New concepts and proposals from the development of the Water Grid Plan have been embedded in the Central and Gippsland Region Sustainable Water Strategy document (chapter 9) released in 2022 – and were already having an impact on the sector.

This work has laid the foundations for new governance structures to help government make key urban water supply augmentation decisions on regionally significant augmentations, with the Executive Advisory Committee having met three times by June 2023.

Water Market Reform

Water markets provide an important mechanism for flexible water sharing across Victoria and management of the increased water scarcity that is emerging. An effective market allows for the sharing of water security benefits in ways that are equitable, responsive and transparent. Water for Victoria (2016) commits the department to undertake policy work to improve the effectiveness of water markets across Victoria.

  • Building on work already completed to deliver Action 9.5 and 9.7 of Water for Victoria, this work is needed to:
  • Develop and implement water sharing arrangements in south central Victoria to improve water security outcomes for the region.
  • Implement changes to policy and rules around trading in groundwater and unregulated systems to enable water to flow to its highest value while protecting the environment and third parties in the face of changing water resource conditions.
  • Monitor opportunities to improve water market effectiveness in western Victoria.

South central reforms program

Work is continuing on the South Central reforms program, which aims to optimise how water and associated costs are shared between water corporations in the Melbourne grid and physically connected systems. This has involved working collaboratively with water corporations and other stakeholders to identify objectives, problems, options and how they will be assessed. The program is expected to deliver a recommended solution in 2023 for implementation in 2024-2025.

South central pooled resource

Action 9-3 was developed for the Central and Gippsland Region Sustainable Water Strategy (CGRSWS) is to create a South Central Pooled Resource – an element of the broader South Central Reforms program. This action aims to facilitate a more sustainable pricing arrangement that integrates desalinated water and surface water sources.

Warragul Drouin system

The program also supported short-term priorities arising from the CGRSWS process, such as increasing the security of water supplies for Gippsland Water’s Warragul Drouin system. This has now been delivered through the acquisition of a Greater Yarra System – Thomson River Pool entitlement.

Water market transparency

As the market price of allocation has increased, particularly in the northern Victorian regulated systems, communities have raised concerns about the transparency of water markets and how markets are operating for irrigators.

The Government sought feedback on ways to improve market transparency during 2019/2020 and committed to a range of actions based on community input, including:

  • Publish the names of companies that own 2% or more of water in a system on the Victorian Water Register. The government will also pursue legal changes to report the same information for individuals with greater than 2%.
  • Report on non-water users in the market by tracking how they use their accounts and pursue legal changes to allow publication of information about allocation accounts with more than 20 trades per year.
  • Introduce new requirements to provide more clarity on different types of trade, so it’s clear what kind of purchase or transfer has occurred and at what price.
  • List the names of water brokers who meet Government standards and auditing requirements associated with the use of Victoria’s water broker portal on the Victorian Water Register website.

Further actions were published on the Water Register website:

  • Explore options and pilot a central trading platform to improve transparency for irrigators about the price and availability of water in real time.
  • Provide clearer and easier to find information, including agricultural demand
  • Improving information sharing via the Victorian Water Register Website and enhancing the Water Market Watch app

Annual water broker audits

Undertook the annual water broker audits for the 2019-20 and 2020-21 water years and listed the names of the water brokers who meet Government standards and auditing requirements on the Victorian Water Register website.

Water trade report

Published the annual water trade report for the 2020-21 water year.

Water market transparency

Improved water market transparency by:

  • Updating the price ‘widgets’ on the VWR website to split the River Murray price reporting into Zone 6 and Zone 7.
  • Publishing the names of companies who own 2% or more of water in the largest water systems on the Victorian Water Register website.
  • Introducing new requirements to provide more clarity on different types of allocation trade, and made this information available to the public.
  • Supporting the process to amend the Water Act 1989 (Vic) to make more information available to the public.
  • Introducing regulations enabling the Water Act amendments that ensure individual and commercial privacy is protected while increasing water market transparency.

Macalister Irrigation District

Supported Southern Rural Water’s assessment of current barriers to trade in the Macalister Irrigation District to see if the barriers could be reduced to promote more water utilisation and trade in the district. This enabled a pilot water market exchange platform for the Macalister Irrigation District.

Increased transparency advocacy

Advocated for increased transparency of foreign owners of water entitlements, including through 2 submissions to the Productivity Commission’s review of the Register of Foreign-owned Water Entitlements.

Cost-effective water market reform roadmap

Supported Murray-Darling Basin governments to produce a practical, cost-effective water market reform roadmap for future water market reform, supporting its alignment with Victoria’s work program and advocating for reforms in the public’s interest.

Managing Victoria’s water sharing framework

Water entitlements – including bulk and environmental entitlements – provide a transparent rule-based mechanism to apportion water between economic, community, and environmental uses and minimise adverse impacts on the environment.

The Minister for Water has extensive obligations and requirements to manage water entitlements and compliance under the Water Act and other acts. This investment allows the Minister for Water to fulfil these functions in relation to bulk entitlements (Division 1), environmental entitlements (Division 1A) and storage manager functions (section 122ZK &122ZL).

This project delivers an adaptive and contemporary bulk entitlement and environmental entitlement framework to ensure the long-term security and reliability of the State’s water resources in the face of multiple changes including climate change, changing water ownership and use, and increasing urban population growth.

This project reviews and enhances the bulk entitlement and environmental entitlement framework to improve certainty of rights and obligations and increase flexibility for entitlement holders to better manage their water risks.

This work is fundamental to the implementation of most policies relating to entitlements and water sharing arrangements and recovery of water for the environment, irrigators, and Traditional Owners. It is also fundamental in ensuring that water corporations can successfully continue to carry out their primary function of supplying water to their customers and ensuring that environmental water managers can deliver water for the environment.

Bulk entitlements

Between 1 July 2020 and 1 July 2023, made 75 changes to bulk and environmental entitlements to ensure these instruments remained fit-for-purpose. Thirty of these changes made to enable water recovery projects in northern Victoria, including new bulk entitlements to boost Melbourne’s urban water security, more water for the environment and irrigators, and reserving bulk entitlement for Traditional Owners in northern Victoria.

All minor and major amendments, revocations, and granting of new entitlements were undertaken in such a way that they were 100% compliant with the requirements of the Water Act.

As part of this project, oversaw water corporations’ compliance with their bulk entitlements, including review of annual reports and annual operating plans.

GMW connections project

Realised new bulk entitlements for Greater Western Water, South East Water and Yarra Valley Water from a combined 75 GL long-term average annual yield (LTAAY) share of water recovered through the Goulburn-Murray Water (GMW) Connections Project.

Set aside 1.36 GL (LTAAY) of additional water recovered through the GMW connections project for Traditional Owners and issued a further 681.6 ML (LTAAY) of entitlement to be distributed as part of the irrigators’ share.

Latrobe drought reserve

Completed review of the past performance and management arrangements for the Latrobe drought reserve in collaboration with Southern Rural Water, and commenced implementation of the recommendations to improve management outcomes for entitlement holders.

Storage and resource manager re-appointments

The Minister made several storage and resource manager re-appointments in late 2021,and associated bulk entitlement amendments. This progressed key commitments in Water for Victoria to ensure a strong and responsive water entitlement system. Redundant resource manager appointments were identified and allowed to expire, while remaining appointments are expected to be remade (or revoked) by the end of 2023.

Bulk entitlement metering programs

Reviewed the guidelines for bulk entitlement metering programs, with a revised guideline approved by the Minster for Water. The guideline was updated to reflect contemporary water management policy, practices and standards and to address specific issues identified by bulk and environmental holders during the review process. Victoria’s water corporations are now updating their metering programs in line with the revised guidelines.

Broken review system review

Supported the Broken review project steering group to develop and undertake public consultation on draft proposals for future water management in the Broken River system.

Victorian Annual Water Outlook 2022–23

Coordinated the development of the urban and rural water corporations’ water outlooks for 2022–23 and prepared the state-wide outlook – ensuring that the state’s water position and forward outlook is clearly accessible to the community.

Licensing framework, groundwater and unregulated systems

The groundwater and unregulated surface water management and licensing framework requires continuous maintenance and improvement. This ensures a prosperous economy, thriving communities and support for Traditional Owner cultural values –while minimising the risk to third parties and the environment.

A robust water management and entitlement framework establishes rules that govern how water is held, used, and transferred between economic, social, cultural and environmental uses. It also minimises adverse impacts on the environment.

This initiative supports thousands of water licences held by Victorians that enable access to water, and manages the risks associated with the take of that water. It also supports the localised water management planning tools addressing cumulative risk to our precious water resources and systems.

For example, groundwater supplies about 15 per cent of Victoria’s water needs, including 70 towns, and is vital for a healthy environment and healthy Country for Traditional Owners. With an increasing reliance on groundwater as conditions become hotter and drier, a strong groundwater management framework – supported by a strong evidence base – is more important than ever.

Appropriate maintenance and clear oversight of the groundwater and unregulated surface water management and licensing framework mitigates substantial risks to the reliability of entitlements, access to water and to the environment. It also ensures the framework remains robust and contemporary, supporting government and community priorities.

Maintaining the framework for groundwater and unregulated systems

Provided oversight, information and advice to rural water corporations and other stakeholders on licensing of groundwater and unregulated water use across Victoria. When licensing issues arise, this support helps the parties involved to understand and resolve the issues, maintain consistency and transparency in decision making and support the provision of accurate licensing information.

Supported the management framework and provides advice to rural water corporations, internal stakeholders and the Minister on planning tools such as statutory management plans, permissible consumptive volumes (PCV), water supply protection areas (WSPA) and other instruments used to manage surface and ground water resources.

In 2021-22 advice was provided to stakeholders and the Minister on the revocation of the Glenelg WSPA and associated PCVs.
Issued improved guidance on water use from dams and waterways. This included releasing the amended Waterway Identification Guidelines (approved by the Minister in January 2022) and technical guidelines (Meeting flow requirements for licensable farm dams, 2020), as well as reviewing policies and guidance for managing works licences (in consultation with rural water corporations and other stakeholders).

Provided advice in development of the CGRSWS on licensing of groundwater and unregulated surface water. Key input included water for agriculture, Traditional Owner access to water from unregulated sources, domestic and stock rights to water (section 8 of the Water Act), unallocated water, and licensing in unregulated surface water and groundwater systems.

Groundwater Management 2030 (GM2030)

Developed of a document that outlines DEECA and rural water corporation priority areas of work to enable better management and licensing of groundwater to 2030. Released in August 2022, GM2030 includes 13 priorities for the next 7 years, outlining the water sector’s commitment to improved groundwater management in a way that is flexible and responsive to future opportunities and challenges.

Delivery is underway, with a number of foundational projects expected to be completed in this funding cycle.

Licensing review and reform

A review of the licensing framework is underway in line with GM2030 key deliverables for delivering ‘Licensing that manages risk to groundwater (unregulated and surface water)’.

The review  is scoped in three phases (with phase one delivered through EC5, and phase two and three to be considered in future funding cycles).

Phase 1 is underway, which includes a review of the Ministerial Policies for managing take and use licences and focuses on streamlining current licensing instruments to support a clearer licensing framework. Groundwater and unregulated surface water management.

Traditional Owner access to water and increased involvement in water management

This initiative supported Traditional Owner access to water through licensing, including:

  • The establishment of a pathway to identifying parcels of land to support Traditional Owner applications for water, through consultation with Parks Victoria.
  • Worked across the division to provide advice to licensing authorities, Traditional Owner groups and internal stakeholders about  how licensing can support Traditional Owners in holding licences for the take and use of water.
  • Began exploring the barriers for Traditional Owner access to water and self-determined use under the current water management and licensing framework, which will be addressed through GM2030 and licensing review and reform in this and future funding cycles.

Water compliance reform (retail)

The water entitlement framework is the foundation for ensuring scarce water resources are shared equitably and transparently and enables lessons from the past to be applied as we prepare for the future. Government must maintain the rules and oversee the markets that determine how water is traded, ensuring they are fair, providing oversight of how water is transferred across the water grid, and driving compliance and enforcement to ensure confidence that water is fairly used across Victoria.

This project aims to improve compliance and enforcement practices and governance across the State. This will ensure confidence in the water entitlement system and drives compliance and enforcement reform across the state through Murray Darling Basin Plan commitments. This is achieved through the following:

  • Water compliance reform, coordination and oversight activities to deliver a modern compliance and enforcement system.
  • Provision of a robust contemporary compliance and enforcement framework.
  • Monitoring of water corporation implementation and capability.
  • Regular performance reporting to the Minister and the public.

Zero-tolerance escalation policy

Finalised and implemented a zero-tolerance escalation policy consistent with the recommendations from the independent Compliance and Enforcement Review (2020).

Murray-Darling Basin Compliance Compact

Delivered all Victoria’s actions required under the Murray-Darling Basin Compliance Compact, including annual reporting requirements for 2020–21 and 2021–22, which are publicly available.

Performance reporting on unauthorised take compliance

Implemented annual performance reporting on unauthorised take compliance for the 6 rural water corporations. The rural water corporations now report in their annual reports their performance against the targets for unauthorised take that have been set by the Minister.

  • Continued quarterly performance reporting on unauthorised take to the Minister.
  • Weekly and quarterly unauthorised take reports are now distributed to the rural water corporations and are now considered business-as-usual.

Collaboratively deliver key priorities

Co-ordinated 3 working groups and a compliance Community of Practice, with membership across 6 water corporations to share best practice and collaboratively deliver key priorities.

Penalty Infringement Notices (PINs)

Facilitated the implementation of Penalty Infringement Notices (PINs) through Fines Victoria, for Goulburn-Murray Water and Lower Murray Water to use as a tool for managing low volumes of unauthorised take. Also facilitated significant progress being made by the other 4 rural water corporations in being set up to implement PINs.

Updated Victoria’s Compliance Communications Plan, including establishing the PINs Communications Action Plan and related messaging and resources regarding the introduction of PINs to customers.

Updated communications and visual materials

Water corporations have delivered updated communications to customers on the zero-tolerance unauthorised take policy, and to inform them of their obligations not to use water outside of their entitlement. The communication strategy was informed by social and behavioural research, and new visual materials (e.g. photos, drone footage and interview content) commissioned for this initiative.

Compliance and enforcement training framework

Commenced the development of a compliance and enforcement training framework to ensure consistent training and authorisation of authorised water officers to meet best practice standards expected from a modern regulator.

Finalised an online training module on issuing PINS and provided it to Authorised Water Officers (AWOs). Introductory compliance and enforcement training material was developed and included in an online training module in 2022–23.

Non-urban metering working group

Oversaw implementation of Victoria’s non-urban water metering policy, including establishing a non-urban metering working group with the rural water corporations.

Telemetering meters

Developed a tool to support the water corporations in undertaking a cost-benefit analysis of telemetering meters consistently, to support targeting of compliance risks.

Independent review of compliance and enforcement framework

Former Victorian Auditor-General, Mr Des Pearson AO, reviewed Victoria’s progress to implementing a modern risk-based compliance and enforcement framework to managing unauthorised take. Mr Pearson reported very good progress and significant reductions in unauthorised take.

Victorian Water Register supporting compliance

The Victorian Water Register (VWR) is routinely used by the water corporations and DEECA as the point of truth for unauthorised take. The VWR automatically generates reports that alerts the water corporations and DECA of unauthorised take. VWR data underpins the weekly report to the Minister on the extent and change to unauthorised take, as well as compliance reporting in water corporations’ annual reports.

Accounting for water recovery

The Victorian and Australian Governments, irrigators, and the Melbourne retail water corporations have invested more than $2.5 billion dollars to modernise the public irrigation systems to recover water being lost by these systems. The water recovered is to provide additional water for the environment, irrigation, urban water supplies and recently to return water to Traditional Owners

The department must ensure that the rural water corporations’ estimates of water recovered from their irrigation modernisation are independently audited in accordance with the Minister’s Water Savings Protocol (the Protocol), and independently verified where the Protocol does not apply. Independent verification and audit of the water recovery ensures the Minister can meet their obligations under the Water Act and  to ensure that the issuing of water shares for the water recovery does not have third party impacts.

The Water Recovery team facilitates the independent water recovery verification and audits. The team also translates the water recovery into water entitlement volumes and reliabilities and supports the necessary amendments to the bulk entitlements for the issuing of the water entitlements.

The team also tracks water recovery against the Murray-Darling Basin Plan, provides support for Basin Plan policy and develops policies related to water recovery across Victoria.

Recovery to-date includes:

  • Independent audit and reviews of water recovery for the Goulburn-Murray Water Connections Project and Water Efficiency Project, for the modernisation of the Southern Rural Water Maffra Weir and Willang Yarn balancing storage and a final audit of water recovery achieved by Phase 1A of the Macalister Irrigation District 2030 irrigation modernisation program.
  • Amendments to respective loss bulk entitlements to account for the water recovery.
  • Translating the water recovery into water entitlement volumes and reliabilities.
  • Coordinating and leading in the timely distribution of water shares and allocation to irrigators for their share of water recovery achieved by the Connections Project and identifying additional water recovery (returned to traditional owners).
  • Close-out of the Connections Project for the distribution of water recovery to the Australian and Victorian environmental water entitlement holders, Melbourne retail water corporations, irrigators and to Traditional Owners.
  • Coordinating and leading in the timely distribution of water shares to the Australian Government for stage 1 of the GMW water efficiency project.
  • Verifying water recovery estimates for the LMW business case for further modernisation of their irrigation district (water efficiency project).
  • Revised water recovery version factors to estimate long-term water recovery for Southern Victoria which is more representative of the drying climate.

Page last updated: 12/12/23