National water reform

Productivity Commission inquiry report
Water conservation Environmental monitoring Water Australia

Australia’s water sector is viewed internationally as a world leader in water management. We live in one of the driest countries in the world with a highly variable climate. We, more than most countries, need to manage our water resources well because of the fundamental importance of water to our economy and the environment, and the significant challenges we face in managing a natural resource often impacted by periods of extreme scarcity.

Our reputation on the world stage is the result of forward thinking and, for the most part, co-operation by the Australian, State and Territory Governments in developing a national water reform agenda that has been pursued over the past 20 years. The cornerstone of Australia’s most recent phase of water reform efforts is the 2004 National Water Initiative (NWI). The NWI is a shared commitment by governments to increase the efficiency of Australia’s water use, provide investment confidence and supply security for rural and urban communities, and provide greater certainty for the environment. The NWI is backed by regular reporting and independent assessment of progress.

The efforts of the Australian, State and Territory Governments in water reform have delivered more sustainable water use and efficient provision of water services. Key foundations have been built in the areas of water entitlements and planning, water markets, water accounting and compliance, water quality, water pricing and institutional arrangements. As a result of the NWI and its predecessor policies, we have seen the value of water to the Australian economy first understood and then significantly increase over time. These reforms also enabled Australia to weather the effects of the Millennium Drought (1997 to 2009) — the longest and most severe drought on record — with economic, social and environmental impacts that were less severe than would otherwise have been the case.

However, perseverance and continuity in the process of water reform is required to ensure these gains can be maintained and built upon. The relatively benign climate conditions in most parts of Australia over the past few years are not expected to last — it is time to move into the next phase of water reform so that we are prepared for the challenges that lie ahead.

The Productivity Commission was tasked with the role of monitoring the progress of the NWI, formerly undertaken by the National Water Commission. This review is the first activity in an ongoing program of work for the Commission, which will include assessing progress against the objectives and outcomes of the NWI every three years. For this first review, the Australian Government broadened the terms of reference to consider future reform priorities and the scope for improving the NWI to enable necessary reform.

Editor's note

This report was sent to government on 19 December 2017 and publicly released on 31 May 2018.

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Productivity Commission inquiry report 87