ORD IRRIGATION COOPERATIVE LTD and DEPARTMENT OF WATER
[2017] WASAT 85
•19 JUNE 2017
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: RIGHTS IN WATER AND IRRIGATION ACT 1914 (WA)
CITATION: ORD IRRIGATION COOPERATIVE LTD and DEPARTMENT OF WATER [2017] WASAT 85
MEMBER: JUSTICE J C CURTHOYS (PRESIDENT)
HEARD: 21, 22, 23 AND 24 NOVEMBER 2016
DELIVERED : 19 JUNE 2017
FILE NO/S: DR 340 of 2015
BETWEEN: ORD IRRIGATION COOPERATIVE LTD
Applicant
AND
DEPARTMENT OF WATER
Respondent
Catchwords:
Water licence Annual Water Entitlement Renewal of licence
Legislation:
Rights in Water and Irrigation Act 1914 (WA), s 4, s 5C, s 5C(1), s 5C(3), s 5D, s 26GG, s 26GG(1), s 28, s 28(1), Pt III, Sch 1 cl 1, cl 6(2), cl 7, cl 12, cl 15, cl 22, cl 23, cl 24, cl 26
State Administrative Tribunal Act 2004 (WA), s 9, s 28
Water Services Act 2012 (WA)Result:
Annual Water Entitlement for applicant set at 246.3 gigalitres
Summary of Tribunal's decision:
Between 2004 and 2014, the Ord Irrigation Cooperative Ltd (the OIC) held successive licences (Licence (1) and Licence (2)) from the Department of Water. The licences were for five years with an Annual Water Entitlement (AWE) of 335 gigalitres for each licence.
On 25 February 2014, the OIC applied to the Department for a further renewal of its water licence (Licence (3)) with an AWE of 335 gigalitres.
The Department renewed the licence but with a reduced AWE of225 gigalitres (subsequently increased to 246.3 gigalitres). The primary basis for reducing the OIC's AWE was that the OIC had consistently failed to utilise its AWE of 335 gigalitres.
On 10 September 2015, the OIC applied to the Tribunal pursuant to s 26GG(1)(c) of the Rights in Water and Irrigation Act 1914 (WA) for a review of the Department's decision.
In reaching the correct and preferable decision on the AWE, the Tribunal considered the requirements of the Rights in Water and Irrigation Act 1914 and the Department's policies.
The basis of the calculation of the AWE by the Department was the crop water use requirment. The parties disputed the proper calculation of the crop water use requirement. The Tribunal took into consideration the submissions and the evidence of a number of expert witnesses on behalf of the OIC and the Department as to the OIC's current and future crop water requirements. The Tribunal accepted the Department's calculation.
The OIC further submitted that it was entitled to a continuation of an AWE of 335 gigalitres because of its need for flexibility and security.
The fact that the OIC has had an AWE of 335 gigalitres since 30 September 2004 did not of itself confer any entitlement to a further AWE of 335 gigalitres. Both the legislation and the express terms of the licences made it clear that an AWE is not a permanent right.
The Tribunal determined that the AWE of 246.3 gigalitres granted by the Department for Licence (3) is appropriate and is consistent with the policies in the Allocation Plan. The Tribunal is satisfied that the policies contained in the Allocation Plan are lawful and do not produce an unjust decision in the circumstances of this case.
The correct and preferable decision was that the AWE for Licence (3) was 246.3 gigalitres.
Category: B
Representation:
Counsel:
Applicant: Ms F Ashworth
Respondent: Ms C Ide
Solicitors:
Applicant: Kingfisher Law
Respondent: State Solicitor's Office
Case(s) referred to in decision(s):
Kirwan and Department of Water [2011] WASAT 137
More and Water and Rivers Commission [2006] WASAT 112
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
1The matter concerns the correct and preferable allocation of water by the Department of Water (the Department) to the Ord Irrigation Cooperative Ltd (the OIC).
2On 30 September 2004, Licence SWL156287(1) (the Licence or Licence (1)) was granted to the OIC. The duration of the Licence was from 30 September 2004 to 31 August 2009 a period of five years. The OIC's Annual Water Entitlement (AWE) under the Licence was 335 gigalitres (GL). One gigalitre equals one million kilolitres.
3Licence (1) was renewed on 26 March 2010 (Licence (2)) from 1 April 2009 to 31 March 2014, again a period of five years, with the same AWE of 335GL.
4On 25 February 2014, the OIC applied for a further renewal of the Licence with the same AWE of 335GL.
5On 14 August 2014, the Department renewed the Licence for an extended period of 10 years (Licence (3)) but reduced the OIC's AWE from 335GL to 225GL.
6During the proceedings, the Department increased the AWE that it was prepared to licence to 246.3GL (Exhibit 20 letter State Solicitor's Office to Tribunal 18 November 2016).
7The OIC challenged the Department's calculation of the OIC's crop water requirements. It argued that on the basis of its calculation of the crop water requirements it was entitled to an AWE of at least 335GL.
8In addition, much of the OIC's evidence was directed to a submission that it was entitled to a fixed AWE of at least 335GL irrespective of its crop water requirements. In her opening (T:30; 21.11.16) counsel for the Department succinctly stated that latter issue as whether it was appropriate to fix the AWE in accordance with the OIC's crop water requirements, the Department's primary case, or to provide the OIC members with an entitlement which would enable them to develop any crop at any time, the OIC's case. The Tribunal has concluded that the correct and preferable decision is that the OIC should be allocated an AWE of 246.3GL for the period of Licence (3) on the basis of the OIC's crop water requirements as calculated by the Department.
Application to the Tribunal
9On 10 September 2015, the OIC applied to the Tribunal pursuant to s 26GG(1)(c) of the Rights in Water and Irrigation Act 1914 (WA) (RIWI Act) for a review of condition 2 included in Licence (3). Condition 2 provided the licensee must not, in any water year, take more water than the annual water entitlement specified in the licence. The AWE specified in the licence was 225GL (Department's amended SIFC paragraph 5(a)).
10The OIC's application stated:
… The purported decision of the Respondent to include the following terms, conditions and restrictions in licence SWL 156287(3) (Licence) granted to the Applicant (Licensee), notified under cover of a letter from the Respondent dated 14 August 2015 but received by the Licensee on 18 August 2015: 1. 'The licensee must not, in any water year, take more water than the annual water entitlement specified in this licence' (term, condition and restriction 2) and the specification of an Annual Water Entitlement of 225,000,000 kL. …
The correct or preferable decision is that the terms, conditions and restrictions the subject of the Decision should not be included in the Licence but rather terms, conditions and restrictions to the following effect should instead be included: 1.'The licensee must not, in any water year, take more than the annual water entitlement specified in this licence' and the specification of an Annual Water Entitlement of 335,000,000 kL[.]
11The Tribunal notes that the OIC and the Department resolved the balance of the issues raised in the OIC's application prior to the hearing. The Tribunal is grateful to the parties for resolving those issues.
Relevant procedural orders
12The OIC's application was lodged on 10 September 2015. On 22 April 2016, the Tribunal relevantly ordered that:
…
4.By 20 May 2016 the applicant must file and give to the respondent a statement either confirming that the reasons on account of which it contends that there should not be a reduction in the applicant's annual water entitlement of 335,000,000 kL under the licence are restricted to the reasons in paragraphs (a) to (i) inclusive of paragraph 1 of the contentions in its statement of issues, facts and contentions filed on 19 February 2016 or setting out any further reasons on which it relies in this proceeding.
5.If a party engages an expert to attend a mediation or compulsory conference or to give evidence in the proceedings the party must give the expert within seven days of this order or of the engagement (whichever is the later):
(a)the Tribunal's pamphlet entitled 'A guide for experts giving evidence in the State Administrative Tribunal', unless the party has already given the expert a copy of the pamphlet; and
(b)a copy of these orders.
6.An expert witness must acknowledge in his or her evidence that he or she has read the Tribunal's pamphlet entitled 'A guide for experts giving evidence in the State Administrative Tribunal' and agrees to be bound by the expert's obligations stated in that document.
7.If any party proposes to give evidence or call any witness including any expert to give evidence at the hearing it must by 1 August 2016 file with the Tribunal a signed statement of the witness' evidence and give a copy of the statement to the other parties.
8.Any document referred to in a witness statement that is contained in a bundle of documents filed by any party must be identified by reference to the relevant bundle and page number in the bundle and must not be attached to the witness statement. Any document referred to in a witness statement that is not contained in a bundle of documents filed by any party must be attached to the witness statement.
9.If a party does not wish to ask any questions at the hearing of a witness whose witness statement has been given to the party, then it must advise the Tribunal and each other party in writing of that position at least 14 days prior to the hearing, and the witness does not then have to attend the hearing, unless required to do so by the Tribunal.
10.By 15 August 2016 the expert witnesses in each field of expertise must confer with one another in the absence of the parties and their representatives and must prepare a joint statement of:
(a)the issues arising in the proceeding which are within their expertise;
(b)the matters upon which they agree in relation to those issues;
(c)the matters upon which they disagree in relation to those issues; and
(d)the reasons for any disagreement.
11.The expert witnesses must each sign the joint statement at the conclusion of their conference. If the statement is in handwriting the expert witnesses must appoint one of them to generate a typed version of it and each must sign the typed document. The expert witnesses must file the joint statement with the Tribunal and gives copies of it to the parties by 16 August 2016.
13On 10 August 2016, the Tribunal relevantly ordered that:
1.Orders 7 and orders 1012 made by the Tribunal on 22 April 2016 be vacated.
…
3.If the Applicant proposes to give evidence or call any witness including any expert to give evidence at the hearing it must by 6 September 2016 file with the Tribunal a signed statement of the witness' evidence and give a copy of the statement to the Respondent.
4.By 20 September 2016 the parties must file with the Tribunal and give to the other party any responsive witness statements.
5.By 25 October 2016 the expert witnesses in each field of expertise must confer with one another in the absence of the parties and their representatives and must prepare a joint statement of:
(a)the issues arising in the proceeding which are within their expertise;
(b)the matters upon which they agree in relation to those issues;
(c)the matters upon which they disagree in relation to those issues; and
(d)the reasons for any disagreement.
6.The expert witnesses must each sign the joint statement at the conclusion of their conference. If the statement is in handwriting the expert witnesses must appoint one of them to generate a typed version of it and each must sign the typed document. The expert witnesses must file the joint statement with the Tribunal and give copies of it to the parties by 26 October 2016.
The matter is listed for a final hearing to commence at 10am on 21 November 2016 for a duration of 4 days at 565 Hay Street, Perth, Western Australia.
14On 29 September 2016, the Tribunal relevantly ordered that:
1.The date for compliance with Order 4 made by the Tribunal on 10 August 2016 be extended to 7 October 2016.
15The parties had more than adequate time to file any evidence from both experts and lay witnesses and for expert conferral to take place prior to the hearing.
16Both the filing of witness statements and expert conferral are important aspects of the Tribunal's procedures directed to meeting the Tribunal's objectives under s 9 of the State Administrative Tribunal Act2004 (WA) (SAT Act)
17Compliance with orders for the filing of witness statements ensures that adequate notice is given to the parties of the facts upon which each party relies and the evidence in support of those facts. A failure to comply with the Tribunal's orders leads to a risk of parties being unprepared, adjournments and the loss of hearing dates. It is in the interests of the parties and the community that hearing dates, once set, are met. Unless a cogent reason is advanced explaining and excusing the late filing of witness statements, parties before this Tribunal should generally expect that late witness statements will not be admitted into evidence.
The 20 pages order
18Prior to the hearing of this application, the Tribunal ordered that each party file a booklet comprising the 20 most relevant pages for the purposes of the hearing.
19The Tribunal's experience is that often vast quantities of documents are filed most of which prove to be irrelevant for the purposes of determining the actual matters in issue at the hearing.
20The aim of the 20 pages order is to focus the parties' minds on what documents are really relevant and to have those documents readily available to the parties and the Tribunal rather than wading through those vast quantities of largely irrelevant documents.
21The Department complied with the 20 pages order. The Department's booklet (Exhibit 19) was a useful document that was frequently referred to in the course of the hearing. It thus served its purpose.
22The OIC complied with the order in substance but not in form. The OIC's booklet (Exhibit 21) was barely referred to.
23This Tribunal makes its orders for a reason and expects all parties to comply with them in substance and not merely in form. A failure to comply with the Tribunal's orders may have costs consequences for the defaulting party.
Onus
24Since the OIC is the applicant, the onus is on the OIC to prove its case that the AWE should be 335GL. The standard of proof is on the balance of probabilities.
The relevant legislation
25Section 4 of the RIWI Act provides:
(1)The objects of this Part are
(a)to provide for the management of water resources, and in particular
(i)for their sustainable use and development to meet the needs of current and future users; and
(ii)for the protection of their ecosystems and the environment in which water resources are situated, including by the regulation of activities detrimental to them;
and
(b)to promote the orderly, equitable and efficient use of water resources; and
(c)to foster consultation with members of local communities in the local administration of this Part, and to enable them to participate in that administration; and
(d)to assist the integration of the management of water resources with the management of other natural resources.
(2)The reference to use and development in subsection (1)(a)(i) includes use and development for domestic, commercial, recreational, cultural and navigational purposes.
(3)The Minister is to seek to ensure that the objects stated in subsection (1) are achieved, and other persons are to do so to the extent that they have relevant functions under this Part.
26Section 5C(1) of the RIWI Act provides:
A person must not
(a)take water from any watercourse, wetland or underground water source to which this section applies; or
(b)cause or permit any of those things to be done,
except under and in accordance with
(c)a right conferred by
(i)section 9, 10, 20, 21, 22 or 25A; or
(ii)a local by law of the kind referred to in section 26L(3)(d); or
(iii)another written law;
or
(d)a licence under this section granted by the Minister in accordance with Schedule 1.
27Section 5C(3) of the RIWI Act provides:
Schedule 1 has effect to make provision for and in relation to the licences referred to in subsection (1)(d).
28Section 5D of the RIWI Act provides:
Rights cannot be acquired by length of use
A right
(a)to take and divert water; or
(b)to the diversion of water; or
(c)to the exclusive use of water,
cannot be acquired by any person, by length of time of use or otherwise, except under this Act or any other written law.
(Tribunal emphasis)
29Section 28(1) of the RIWI Act provides:
The Governor may, on the recommendation of the Minister by Order in Council
(a)constitute any defined part of the State an Irrigation District for the purposes of this Act;
(b)specify the boundaries of such District;
(c)assign a name to such District;
(d)state the particulars of the scheme of local works for the service of such District;
(e)state the estimated cost of such scheme.
30Schedule 1 of the RIWI Act provides:
1.Terms used
In this Schedule, unless the contrary intention appears
licence means a licence under section 5C;
public interest means public interest having regard to any economic, social or recreational benefits to the public, or to a section of the public.
…
7.Minister's discretion when deciding applications, exercise of
(1)The grant or refusal of an application for a licence and the terms, conditions and restrictions to be included in the licence are, subject to clause 8, at the discretion of the Minister.
(2)In exercising that discretion, the Minister is to have regard to all matters that the Minister considers relevant, including whether the proposed taking and use of water
(a)are in the public interest; or
(b)are ecologically sustainable; or
(c)are environmentally acceptable; or
(d)may prejudice other current and future needs for water; or
(e)would, in the opinion of the Minister, have a detrimental effect on another person; or
(f)could be provided for by another source; or
(g)are in keeping with
(i)local practices; or
(ii)a relevant local by law; or
(iii)a plan approved under Part III Division 3D Subdivision 2; or
(iv)relevant previous decisions of the Minister;
or
(h)are consistent with
(i)land use planning instruments; or
(ii)the requirements and policies of other government agencies; or
(iii)any intergovernmental agreement or arrangement.
(3)The Minister may refuse to grant a licence to a person on the ground that the person has been convicted of an offence against this Act.
(4)The Minister may refuse to grant a licence to a person if the Minister is not satisfied that the person has the resources, including the financial resources, to carry out the activities to which the licence relates.
(5)Without limiting subclause (1), terms, conditions and restrictions prescribed or imposed for the purposes of that subclause may relate to any matter provided for by the Appendix to this Schedule.
…
12.Duration of licence
(1)A licence may be granted or renewed for
(a)a fixed period; or
(b)an indefinite duration,
as stated in the licence or the renewal.
…
15.Terms etc. of licence
(1)The regulations may prescribe terms, conditions and restrictions that are to be taken to be included in
(a)all licences; or
(b)licences of a particular kind; or
(c)licences relating to a particular area; or
(d)licences of a particular kind relating to a particular area.
(2)The Minister may, at the Minister's discretion, include in a licence any term, condition or restriction additional to those referred to in subclause (1), but clause 7(2) applies to the exercise of that discretion.
(3)Without limiting subclause (1) or (2), terms, conditions and restrictions prescribed or imposed for the purposes of those subclauses may relate to any matter provided for by the Appendix to this Schedule.
…
22. Renewal
(1)An application for the renewal of a licence that is in force for a fixed period
(a)must be made in the form specified for the purpose by the Minister; and
(b)must be accompanied by the prescribed fee.
(2)On an application for renewal of a licence, the licence is to be renewed unless
(a)the renewal would be inconsistent with
(i)a relevant local bylaw; or
(ii)a plan approved under Part III Division 3D Subdivision 2;
or
(b)the Minister is of the opinion that, if the application for renewal was an application for the grant of a licence, the Minister would exercise the discretion under clause 7(2) to refuse to grant the licence; or
(c)it is a term of the licence that it is not renewable; or
(d)a term, condition or restriction included in the licence has not been complied with; or
(e)in the opinion of the Minister there are sufficient grounds for the exercise of the power to cancel the licence under clause 25.
(3)Clause 6(2), (3) and (4) apply where the Minister proposes
(a)to refuse an application for renewal of a licence; or
(b)to renew a licence subject to the inclusion of a term, restriction or condition that the Minister considers is inconsistent with the terms of the application for renewal,
in the same way as they apply to an application for a licence.
(4)Clauses 8 and 10(2) apply to an application for renewal in the same way as they apply to an application for a licence.
(5)A licence which would otherwise expire after application has been made for its renewal but before the Minister has made a decision as to that renewal remains in force until that decision is made.
23. Amendment, application by licensee for
(1)A licensee may apply to the Minister at any time for amendment of the licence.
(2)Clauses 4, 6, 7, 10 and 12 and Division 3 apply, with all necessary modifications, to an application under subclause (1) as if it were an application for the grant of a licence.
(3)Despite subclause (2), a fee may be prescribed for an application under subclause (1) that is different from that prescribed for the purposes of clause 4(1)(d).
24. Amending licence, Minister's powers as to
(1)The Minister may, subject to this clause and clause 26, by notice in writing given to the licensee
(a)vary the duration of a licence; or
(b)vary, add to or remove any term, condition or restriction included in the licence; or
(c)include any new term, condition or restriction in the licence.
(2)The Minister may only exercise a power described in subclause (1) in relation to a licence if
(a)the licensee consents to the Minister doing so; or
(b)in the opinion of the Minister, the exercise of the power is necessary or desirable
(i)due to the detrimental effect of actions authorised by the licence on another person; or
(ii)to protect the water resource to which the licence relates from unacceptable damage; or
(iii)to protect the associated environment from unacceptable damage;
or
(c)in the opinion of the Minister, the exercise of the power is necessary to prevent serious damage to life or property; or
(d)in the opinion of the Minister, the quantity of water that may be taken under the licence has consistently not been taken; or
(e)in the opinion of the Minister, the exercise of the power is necessary or desirable
(i)in the public interest; or
(ii)because the water resource to which the licence relates is insufficient to meet demand or expected demand; or
(iii)otherwise to more effectively regulate the use of that water resource;
or
(f)in the opinion of the Minister, the exercise of the power is necessary to prevent a serious inconsistency arising as a result of
(i)the approval of a plan, or the alteration, revocation or substitution of a plan, under Part III Division 3D Subdivision 2; or
(ii)the making, amendment or repeal of relevant local bylaws;
or
(g)the licensee, or a person whose name is endorsed on the licence as a person with whom the licensee has an agreement referred to in clause 30, is convicted of an offence against this Act; or
(h)in the opinion of the Minister, the exercise of the power is necessary to comply with another written law of the State or a law of the Commonwealth; or
(i)the licensee has applied under clause 32 for approval of the transfer of the licence or a water entitlement under the licence or of an agreement referred to in clause 30, and the exercise of the power is necessary or desirable to give effect to the transfer or agreement; or
(j)the licence confers authority for the Minister to do so.
26. Licensee may make submissions in some cases before licence amended, suspended or cancelled
(1)Except as provided by subclauses (2) and (3), this clause applies where the Minister proposes to exercise a power conferred by clause 24 or 25.
(2)This clause does not apply to the proposed exercise of a power conferred by clause 24 or 25
(a)if the Minister is of the opinion that the exercise of the power is necessary to prevent loss of life or property or serious injury to persons or property; or
(b)if the power is to be exercised in circumstances prescribed by the regulations.
(3)This clause does not apply to the proposed exercise of a power conferred by
(a)clause 24 in the circumstances mentioned in subclause (2)(a) of that clause; or
(b)clause 25 in the circumstances mentioned in subclause (2)(c)(i) of that clause.
(4)Where this clause applies, the Minister is to notify the licensee
(a)of the Minister's proposal; and
(b)that the licensee has a right to make written submissions to the Minister, or be heard by a person designated by the Minister for that purpose, before the Minister makes a decision to exercise the power.
(5)Written submissions may be made by the licensee, as mentioned in subclause (4)(b), within such period after the licensee is given notice under that subclause as is specified in the notice.
(6)The Minister is to have regard to any submissions made by the licensee under subclause (5) before the Minister makes a final decision.
The Tribunal's jurisdiction
31Section 26GG of the RIWI Act provides:
(1)A person referred to in subsection (2) may apply to the State Administrative Tribunal for a review of the decision if the person is aggrieved by a decision of the Minister under Schedule 1
(a)to refuse an application for the grant or renewal of a licence under section 5C (a licence); or
(b)as to the period for which a licence is granted or renewed; or
(c)as to any term, condition or restriction included in a licence; or
(d)to undertake to grant a licence, including as to any term, condition, or restriction undertaken to be included in the licence; or
(e)to amend, suspend or cancel a licence; or
(f)to refuse to approve the transfer of a licence or of a water entitlement under a licence, or an agreement referred to in clause 30 of Schedule 1.
(2)A person may apply under subsection (1) for a review only if the person is an applicant for the licence, the licensee or, if the application is made under subsection (1)(f), a person to whom the licence or water entitlement would be transferred or a person who is a party to the agreement.
Relevant authorities as to policy
32As Brennan J noted in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 (Re Drake) at 645:
When the [Administrative Appeals] Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application would produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.
33This approach was endorsed by the Tribunal in More and Water and Rivers Commission [2006] WASAT 112 and Kirwan and Department of Water [2011] WASAT 137.
34In considering whether to apply a government policy, the Tribunal must determine the correct and preferable decision balancing the desirability of consistency in the treatment of citizens pursuant to the law and the ideal of justice in the individual case: Re Drake at 636.
The witnesses
35The following witnesses gave evidence:
The OIC
•Elaine Gardiner, a former irrigator/farmer in the Ord River Irrigation Area (ORIA) and Chair of the Ord River Irrigation District Management Committee (the OIC's predecessor) from 1992 to 1994 and Chair of the OIC from 1996 until 2011. Ms Gardiner gave written evidence on behalf of the OIC (Exhibit 29).
•David Menzel, the Chair of the OIC. He filed a written statement on behalf of the OIC (Exhibit 31). He also filed a responsive statement (Exhibit 33). Although Mr Menzel was called as an expert witness, because he is a member of the OIC, he has a very direct interest in maintaining the OIC's AWE at a level similar to or higher than 335GL. He was leasing about 700 hectares for irrigation but proposed to reduce that to 170 hectares (T:66; 21.11.16). Understandably, his focus was on the OIC's requirements rather than the wider context of the ORIA.
•Robert Boshammer gave evidence on behalf of the OIC (Exhibit 28). He also filed a responsive statement (Exhibit 32). He has farmed in the Ord River since 1985. He is a member of the OIC. His experience and qualifications are set out at paragraphs 1 to 7 of Exhibit 28. As with Mr Menzel, although Mr Boshammer was called as an expert witness, because he is a member of the OIC, he has a very direct interest in maintaining the OIC's AWE at, or above, 335GL. He has 2000 hectares of agricultural land in the ORIA Stage 1 managed by his son (T:65; 21.11.16). Understandably, his focus was on the OIC's requirements, and the benefits to him, rather than the wider context of the ORIA.
•Matthew Dear, the general manager of the OIC filed a written statement (Exhibit 30). He also filed a responsive statement (Exhibit 34).
•Owen Peter Droop is a civil engineer and the director of OD Hydrology Pty Ltd, a water resource and hydrological consulting firm based in Brisbane. He filed a written statement on behalf of the OIC (Exhibit 27). He also filed a responsive witness statement (Exhibit 36). Mr Droop's expertise is set out at paragraphs 3 to 8 of Exhibit 27. His curriculum vitae also appears at pages 28 to 30 of Exhibit 27. Mr Droop carried out a review of the Department's Ord River hydrological modelling.
•Peter Jacob is an agricultural economist and financial and agricultural consultant. He is a director of Jacob Marsden Associates. He filed a written statement on behalf of the OIC (Exhibit 26). He also filed a responsive witness statement (Exhibit 35) and a supplementary witness statement (Exhibit 40). Mr Jacob's professional experience and expertise are set out at page 1 paragraphs 1 to 4 of Exhibit 26.
The Department
•Shaan Pawley is a senior engineer in the Department's Water Allocation Planning Branch. She filed a witness statement (Exhibit 4) and a responsive witness statement (Exhibit 12). Ms Pawley's qualifications and experience appear at paragraphs 1 to 9 of Exhibit 4. She holds a bachelor's degree in environmental engineering (UWA) and a Master's degree in water science policy and management (Oxon). She joined the Water Allocation Planning Branch of the Department in September 2013.
In crossexamination, the OIC challenged Ms Pawley's objectivity on the basis that as an employee of the Department she lacked objectivity (T:100101; 21.11.16). Ms Pawley is a professional and an employed civil servant. The Tribunal does not accept that she lacked objectivity in her evidence.
•Jacqueline Durrant is the supervising engineer in the surface water assessment section of the Department's water resource assessment branch. She filed a witness statement (Exhibit 5) and a responsive witness statement (Exhibit 10). Ms Durrant's qualifications and experience appear at paragraphs 1 to 8 of Exhibit 5. She holds bachelor's degrees in environmental engineering and commerce (UWA). She joined the Department in December 2002.
•Rohan Taylor Prince, an employee of the Department of Agriculture and Food, Western Australia (DAFWA). He filed a witness statement on behalf of the Department (Exhibit 7). He also filed a responsive statement (Exhibit 11). His experience and expertise appear at paragraphs 2 to 8 of Exhibit 7.
•Roy Stone is the Manager of the Department's Water Supply Planning Branch. He filed a statement on behalf of the Department (Exhibit 6). He also filed a responsive statement (Exhibit 14). His experience and expertise appears at paragraphs 1 to 3 of Exhibit 6.
•Karis Tingey is the Program Manager Kimberley Licensing for the Department. She filed a witness statement on behalf of the Department (Exhibit 8). She also filed a responsive statement (Exhibit 13). Her experience and expertise appear at paragraphs 1 to 3 of Exhibit 8.
•Peter Stubbs, is the Director of Major Projects employed by the Department of Regional Development. He filed a written statement on behalf of the Department (Exhibit 9). He also filed a responsive statement (Exhibit 15). His experience and expertise appear at paragraphs 1 to 9 of Exhibit 9.
36In general, the Tribunal preferred the evidence of the Department's witnesses because they considered the appropriate AWE in the broader context of all the users and potential users of water rather than in the narrow context of the OIC members.
Concurrent evidence
37Messrs Boshammer, Menzel and Prince held a joint experts' conferral (Exhibit 38) and gave their evidence concurrently.
38Mr Droop, Ms Pawley and Ms Durrant held a joint experts' conferral (Exhibit 37) and gave their evidence concurrently.
A brief explanation of the distribution of water in the Ord River Irrigation District (OID)
39In order to understand the context of the reasons that follow, a brief explanation of the distribution of water in the Ord River system is helpful.
40The OID was constituted pursuant to s 28 of the RIWI Act on 13 July 1962. The boundaries of the irrigation district include the Ord River and its tributaries in Western Australia.
41The Ord River and its tributaries provide water for irrigated agriculture, including the OIC, mining industry, hydroelectricity generation and the local environment.
42Water from the Upper Ord catchment is stored in Lake Argyle. The Water Corporation is licensed by the Department to store and release the water in Lake Argyle.
43Pursuant to an agreement between the Water Corporation and Pacific Hydro Limited, water is released from Lake Argyle through a hydropower station to generate electricity. Water is also occasionally released from Lake Argyle through irrigation valves which bypass the power station.
44Water released from Lake Argyle through the power station or irrigation valves flows down the Ord River and into Lake Kununurra.
45The Ord River system is further explained in the written evidence (Exhibit 4) of Ms Pawley:
…
25.The Ord River System, including the water stored in Lake Argyle (by the Ord River Dam) and Lake Kununurra (by the Kununurra Diversion Dam) and its tributaries … supports many important stakeholders. It provides water to a growing irrigation area, sustains a unique Kimberley environment, provides water for hydroelectricity generation and supports local indigenous, community, recreational and tourism values (Exhibit 2, Ord plan p.10; document 96, p 1059)
26.Water from the upper Ord River catchment (of which approximately one-fifth is located in the Northern Territory) is stored in Lake Argyle by the Ord River Dam.
27.Lake Argyle's current storage capacity (to full supply level) is 10,760 gigalitres, which is equivalent to about 2.5 times the mean annual flow. The water that is stored in Lake Argyle is a shared water resource that can be released to provide benefits for both irrigation and hydroelectric power generation (as well as to meet the downstream environmental, indigenous, community, recreational and tourism needs). The Ord River Dam is also used for flood protection of the downstream towns.
28.Argyle Diamond Mine is licensed to divert a small volume of surface water upstream of and directly from Lake Argyle for camp and processing purposes. This water is taken from a separate subarea to the OIC.
29.Water Corporation, which owns, operates and maintains the Ord River Dam, is licensed by the Department to store and release (but not divert) the water in Lake Argyle (and Lake Kununurra) under Surface Water Licence 55655(8) (document 100).
30.Pacific Hydro Limited, which owns and operates a 30 megawatt hydroelectric power station at the Ord River Dam, releases water through the power station to generate hydroelectricity power. Pacific Hydro Limited is not licensed by the Department, instead they operate under a 1994 Water Supply Agreement with Water Corporation.
31.The Water Corporation can also release water from Lake Argyle through the irrigation valves that bypass the power station. Water is released through the power station whenever possible. Currently releases via the irrigation valves usually only occur when the power station is shut down for maintenance (Exhibit 2 Ord plan, p. 12; document 96, p 1061). The Department's Kimberley Licensing Program Manager, Ms Karis Tingey, through her discussions with Water Corporation has informed me that in 2015 this happened three times for a total of ten days. Releases via the irrigation valves will likely increase in the future when there are greater water demands from irrigators than what there currently is.
32.The water that is released through the power station and/or irrigation valves at the Ord River Dam flows down the Ord River and into Lake Kununurra. Lake Kununurra also collects any overflow above the spillway (spills) from Lake Argyle via Spillway Creek and surface water runoff from the local catchment between the two dams.
33.Above the Kununurra Diversion Dam, water is diverted to Stage 1 of the Ord River Irrigation Area (ORIA) (to Packsaddle Plain and Ivanhoe Plain by OIC under Surface Water Licence 156287(2), that is, its licence it operates presently) and Stage 2 of the ORIA (presently the new M2 supply area). Self-supply water licensees in Stage 1 of the ORIA (colloquially referred to as riverside pumpers) take water directly from the Ord River above and below the Kununurra Diversion Dam.
34.Water Corporation releases any surplus water from Kununurra Diversion Dam, and when (necessary, any additional water required to meet the environmental water provisions for the lower Ord River at Tarrara Bar, under Surface Water Licence 55655(8) (document 100). This surplus water from Kununurra Diversion Dam is made up of spills from Lake Argyle, hydropower releases and local catchment inflows that are surplus to what irrigators divert from the river.
35.The Dunham River joins the Ord River just downstream of Kununurra Diversion Dam. This water, as well as surface water runoff from the local catchment, contributes to meeting the environmental water provisions for the lower Ord River at Tarrara Bar. There are a number of licensed diverters along the Dunham River upstream of the confluence with the Ord River[.]
Terminology used in the evidence
46The more important terms used in the evidence of the various witnesses is explained below.
'Distribution efficiency' the off take point to the farm gate
47Ms Pawley explained the term 'distribution efficiency' at paragraphs 70 to 74 (Exhibit 4):
Distribution efficiency is the percentage of water diverted from the Ord River offtake (Ml offtake and Packsaddle pump station) that is delivered to the farm gate (the metered point at the farm). The water volume diverted from the Ord River will be greater than the volume delivered to the farms due to losses in the distribution network (main channels and smaller supply channels). These losses include evaporation, seepage from channels to groundwater, and supply water going directly to drains due to channel operational conditions. The greater the distribution efficiency, the greater the percentage of water diverted from the Ord River that is [actually] delivered to farms.
Efficiency of the distribution system is provided by OIC within its annual reports. OIC meters the volume of water diverted at its two extraction points (Ml offtake and Packsaddle pump station) and the volume of water delivered to farmers. OIC provides an account for the water that was not delivered to the farms, with estimates of its use or loss.
'Onfarm efficiency'
48Ms Pawley explained the term 'onfarm efficiency' at paragraphs 75 to 76 (Exhibit 4):
On-farm efficiency is the percentage of water delivered to the farm that [actually] reaches the root zone of the crop. Due to the flood irrigation method utilised in the ORIA, more water needs to be supplied to the paddock than what the plant requires. Most of the water that is in excess of plant requirements is discharged to the irrigation area drainage network.
On-farm water use efficiencies are not monitored by the Department or OIC, however, OIC does monitor the majority of drainage channels in the ORIA as part of its licence conditions and compares the volume of water diverted from the Ord to the volume of water returned back to the Ord via the drainage channels. As the drainage channel captures rainfall runoff, it may not be a direct measure of on-farm water use efficiency.
95% reliability
49Ms Pawley explained the concept of 95% reliability at paragraph 56 (Exhibit 4):
The Department has set the annual reliability of the allocation limit in the Main Ord subarea at 95 per cent (DoW, 2012b, pp.77-79; document 99, Exhibit 2, p.1311-1313; Ord plan, Table 3, p.25; document 96, Exhibit 2). Reliability refers to the frequency with which a water licence holder can access their full annual licensed entitlement (Ord plan, p.78; document 96, Exhibit Licence holders can therefore expect irrigation supply to be restricted on average in five out of every 100 years, when water levels in Lake Argyle are low. This highly reliable (95 per cent) allocation limit is maintained through water release rules (which include restrictions on releases) for irrigation, hydroelectricity and environmental releases at the Ord River and Kununurra Diversion dams.
Water is a public resource
50Water is a public resource. The management of the Ord River system requires a balancing of competing interests.
51Those competing interests are explained in the evidence of Ms Pawley:
…
15.The Ord Irrigation Cooperative (OIC) is not the only user of water in the Ord. The 3 current irrigation industry consists of the OIC and about 80 separate individual self-supply licensees (riverside pumpers) in Stage 1 of the ORIA; and Kimberley Agricultural Investments (KAI) in Stage 2 of the ORIA. The future irrigation industry will include developers of new agricultural lands in Western Australia (Stages 1 and 2 in the ORIA) and the Northern Territory (Stage 3 in the ORIA). The Ord River also sustains a unique Kimberley environment and provides Pacific Hydro Limited with water for hydroelectricity generation and supports local indigenous, community, recreational and tourism values.
16.While secure and reliable water supplies for a strong and expanding irrigation industry is crucial, it is not the only outcome that the Department is trying to achieve with the Ord plan. The other outcomes are: a healthy lower Ord River environment; as much hydroelectricity production as possible, within the limits of the water needed by irrigators and the downstream environment; and traditional Indigenous access, water- based tourism and recreational opportunities that complement the irrigation, environmental and power outcomes (Ord plan, p.8; document 96, Exhibit 2, p.1057). These other outcomes predominantly reflect the Western Australia government's existing commitments to hydroelectricity generation and to maintaining the downstream environment as discussed at paragraph 41 in my witness statement (Exhibit 4 dated 2 August 2016)[.]
(Exhibit 12)
52In assessing the correct and preferable decision as to the AWE it is important to bear in mind that the decision has to be made from the broader perspective of the users and potential users of water from the Ord River system, rather than simply that of the OIC. Understandably, the OIC's submissions were directed to the interests of the OIC. However, in focusing solely on the interests of the OIC (rather than placing the OIC interests in a broader context), its submissions were of limited value in assessing a decision in the broader context.
53Further, although some of the ownership of the irrigation infrastructure of the Ord River system is vested in the OIC, it remains substantially in public ownership. Further, the OIC has not been the only party to contribute to the infrastructure Pacific Power has also contributed, particularly to the increase in the spillway.
The priority of the RIWI Act over policy
54The terms of an Act must always takes priority over any policies made under that Act.
55In reaching the correct and preferable decision on the AWE, the first question is, what does the RIWI Act require? Policy is applied in the context of the RIWI Act.
56Section 4 of the RIWI Act sets out the objects of Pt III of the RIWI Act. Section 4 underpins both the purpose of the RIWI Act and the considerations this Tribunal must take into account in reaching the correct and preferable decision.
57It is important to note that the implication of s 5D of the RIWI Act and cl 24(2)(d) of Sch 1 to the RIWI Act is that utilisation of the AWE is a primary consideration in determining the AWE. The significance of this is that a licensee is not entitled to a permanent fixed AWE. Accordingly, a licensee cannot order its affairs on the basis that it has a permanent, fixed AWE.
58In the context of the OIC's application, it is important to bear in mind that a licensee's historical utilisation of its AWE is a significant factor in determining an appropriate AWE. The importance of a licensee's utilisation of water is reflected in cl 24(2)(d) of Sch 1 to the RIWI Act which makes a failure to consistently take the quantity of water that may be taken under the licence, a ground for amending the licence.
59It follows that the fact that the OIC has had an AWE of 335GL since 30 September 2004, does not of itself confer any entitlement to a further AWE of 335GL.
The RIWI Act and eastern states legislation
60A very useful analysis of water law in Australia is found in Gardner, Bartlett & Gray's Water Resources Law (Lexis Nexis Butterworths Australia, 2009) (Water Resources Law). Although published in 2009, there have been no relevant changes to the RIWI Act since then and it continues to provide a very useful guide to water law in Australia.
61The Council of Australian Governments, Intergovernmental Agreement on a National Water Initiative 2004 (NWI) at paragraph 37 provided:
Broadly, water planning by States and Territories will provide for:
(i)secure ecological outcomes by describing the environmental and other public benefit outcomes for water systems and defining the appropriate water management arrangements to achieve those outcomes; and
(ii)resource security outcomes by determining the shares in the consumptive pool and the rules to allocate water during the life of the plan.
(Water Resources Law at chapter 1.37)
62However, in assessing what guidance, if any can be obtained from policies developed under legislation in the eastern states, it is important to be aware that Western Australia has a different legislative regime. Western Australia has largely not implemented the NWI (Water Resources Law at chapter 12.16).
63As Water Resources Law notes at chapter 22.21, 'there is a notable variety between the different jurisdictions in the statutory expression and scope of the governmental powers to vary access entitlements by direction or by amendment of conditions'.
64As Water Resources Law further explains at chapter 12.12:
The NWI requires that water access entitlements will 'only be able to be cancelled at Ministerial and agency discretion where the responsibilities and obligations of the entitlement holder have clearly been breached' and only 'be able to be varied, for example to change extraction conditions, where mutually agreed between the government and the entitlement holder'. The exercise of unilateral discretion to cancel a water entitlement or change conditions denies or discounts the possibility of any proprietary right arising.
Queensland affords an illustration of the application of these requirements. The traditional water licence in the state is the subject of discretionary cancellation and changes to terms and conditions. By contrast, water allocations, which are of course replacing the water licence, may only be forfeited in the event of a breach of conditions or of the Act. In the event of such forfeiture, any balance of proceeds arising from the sale of the water allocation is payable to the former allocation holder. There is no provision for unilateral discretionary changes in terms and conditions.
New South Wales has similar arrangements with respect to the cancellation of a water access license. Cancellation other than for breach of condition requires compulsory acquisition and the payment of compensation, as with any other proprietary right.
None of the jurisdictions allow for the discretionary cancellation of access entitlements, that is, for other than breach of condition, without the payment of compensation.
Nor do the jurisdictions generally allow discretionary changes after the grant of a water entitlement, except to ensure consistency with a water management plan. The exceptions are New South Wales, the Northern Territory and the Australian Capital Territory which have retained a unilateral discretion to bring about changes in terms and conditions after the grant of the water entitlement.
Not unexpectedly the Water Commission in Western Australia retains a discretionary power to suspend or cancel a water licence and vary terms and conditions under its unreformed legislation.
(Tribunal emphasis)
65Given that Western Australia has largely not implemented the NWI in its legislation, policies and practices based on the relevant Acts in other states do not necessarily provide a useful guide to the application of policy under the RIWI Act. In particular, in so far as those policies are based on resource security/proprietary rights they are not of assistance in determining this application. Similarly in so far as the OIC's evidence and submissions rely on 'best practice' in the eastern states they are of limited value.
The OIC's misconception about its entitlement to a permanent AWE right
66When the case presented by the OIC case is stripped back to its essentials, it is apparent that much of that case was directed to preserving the OIC's AWE under Licence (1) and Licence (2). The basis of this aspect of the OIC's case is that the OIC should have a fixed entitlement to water from the Ord River, that is, 335GL, because this provides the OIC irrigators with certainty and sufficient flexibility to respond to changing market conditions. In short, that the OIC should have resource security, effectively a 'right' to an AWE of not less than 335GL.
67A letter from the OIC to the Department dated 1 July 2009 (Exhibit 2 page 30) stated:
It is important however to stress that, in relation to the duration of the licence, we are of the view that the licence is capable of being construed as one that is now of a permanent nature.
68Mr Dear gave evidence that:
Allocation of the annual water entitlement under the licence is based is the minimum 17 ML of water per hectare of land owned by members, which figure was established in conjunction with the Water Authority at the commencement of OIC in 1996, plus conveyance losses. This is the basis on which people originally invested and continue to invest here.
(Exhibit 30 paragraph 28, see also Exhibit 34 paragraph 7)
69Mr Menzel stated that 'during the period of privatisation of the irrigation scheme it was envisaged by OIC members that the water reform at that time would deliver the secure water titles necessary to underpin the financial security of the ORIA businesses' (Exhibit 31 paragraph 38).
70Ms Gardiner gave evidence as to the negotiations between the OIC and the Department. She described the 335GL AWE as a 'mutual understanding' (Exhibit 29 paragraph 40). Her evidence, both in her written statement, paragraphs 37 and 38, and in her oral evidence (T:354358; 23.11.16) and the documents attached to Exhibit 29, for example EG7 page 10, do not establish that there was any commitment to a permanent allocation of 335GL to the OIC by the Department.
71It is important to note that, contrary to the statements above, the AWEs under Licence (1) and Licence (2) were not based on a permanent right. As Ms Pawley stated:
Contrary to common belief amongst OIC members that OIC was issued its first licensed water entitlement of 335 gigalitres per year based on 17 megalitres per hectare at the farm gate, it was in fact issued based on its projected crop types and areas for the licence period, average irrigation water required by the crop, an average onfarm water use efficiency of 70 per cent and a distribution efficiency of 80 per cent. … OIC in turn administratively distributed its 335 gigalitres per year entitlement it to its members at an average rate of 17 megalitres per hectare at the farm gate.
(Exhibit 12 paragraph 74)
72More importantly, both the legislation and the express terms of the licences make clear that the AWE is not a permanent right.
73The OIC's case is heavily influenced by an approach that is appropriate under the eastern states' legislation an approach that, as explained above, is not necessarily appropriate under the RIWI Act. Accordingly, much of the OIC's case was misguided.
The Department's policies
74At this point, it is useful to set out the relevant Departmental policies. The Department uses strategic and operational policies that apply across the State, as well as local licensing policies.
75The Department states that local licensing policies are adopted either because state wide policies do not address specific local issues, or because an alternative policy approach is needed to manage a particular local issue.
76The Ord Surface Water Allocation Plan Report No 48 was published in September 2013 (the Ord Allocation Plan) (Exhibit 2 pages 1037 to 1130).
77The Ord Allocation Plan applies to the OID and sets out how the Department allocates and licenses surface water from existing infrastructure in the Ord River area, in order to manage the demands of irrigation, hydroelectricity generation and the downstream environment of the Ord River.
78The inflow of water to Lake Argyle is variable. Using recorded and estimated dam inflow for the period from 1906 to 2004, the Department modelled a variety of water allocation and restriction scenarios in order to maximise water for irrigation and hydroelectricity and meet ecological needs.
79The Department's objectives under the Ord Allocation Plan are to ensure that water can be supplied to meet the needs of irrigators in 95% of years, while maintaining a healthy environment downstream of the Ord River dam and Kununurra Diversion dam.
80Under the Ord Allocation Plan, the total volume of water that can be taken for consumptive use (including irrigation) from the Main Ord subarea, whilst meeting the objectives identified above, is 750GL per year.
81The Ord Allocation Plan relevantly provides:
Changes to licensing as irrigation developments proceed
New irrigation developments around the current Stage 1 area and in the new M2 area will be drawing on the 750 GL/yr allocation limit for the Main Ord subarea. The department will assess and grant new licence entitlements in stages, as each new irrigation area proceeds. This will maximise access to water for further irrigation expansion within the allocation limit, and ensure power generation is not unnecessarily restricted before water is fully utilised for irrigation expansion.
For each new licence entitlement we will:
•grant annual water entitlements to match justified crop needs and efficient water use for the area under irrigation
•recoup unused water from existing licensees at times of their licence renewal, or if necessary when we grant new licences for new developments
•adjust water release rules and restrictions to maintain reliability.
Unused water entitlements will be recouped because maintaining reliability for unused entitlements would mean the storage level that triggers restrictions on electricity generation would be higher than it needs to be. We will make provision for reasonable changes in crop types from year to year, such as a move to higher-water- use crops. Also, savings made from efficiency gains above expected efficiency targets will not be recouped and can either be used to expand production or be traded.
…
Table 8
Local licensing policy specific to the Ord plan area
Policy group
Policy detail
2.1 Setting water entitlements and distribution efficiency targets for water service providers
The department grants water entitlements to irrigation water service providers on the basis that overall water use will be efficient. The current water service provider has an 80 per cent distribution efficiency target. For new areas, an 85 per cent distribution efficiency target is appropriate given that Total Channel Control systems are being used in new areas. This will increase to 90 per cent once a balancing storage connected to the M2 channel is built.
307Mr Droop identified a number of elements that are relevant to the modelling outcome including 'the hydrology, the storage characteristics, the behaviours etc'. Mr Droop's concern with the Department's modelling was that it was 'plugged in without that real understanding of how it all fits together' (T:11; 22.11.16, see also T:21; 22.11.16).
308Mr Droop went on to explain that his approach is 'to really understand the system and to understand the tradeoffs and impacts of certain decisions on all users and on all parties in the catchment. One of the concerns - and so my conclusions were based on that understanding of the behaviour and the impacts in the system' (T:2223; 22.11.16). There was little or no evidence that Mr Droop had carried out the inquiries necessary to understand the tradeoffs and impacts of certain decisions on all users and on all parties in the catchment area.
309In assessing the understanding of the behaviour and impacts of the systems the officers of the Department have a far better understanding of the behaviour and impacts of the system and how it all fits together because they regularly work with the system and the model.
310Mr Droop concluded in his expert report that:
There are inconsistencies between stated modelling outcomes within the Allocation Plan and outcomes obtained through independent modelling of identical conditions undertaken by me (paragraph 2(a), 29).
311At paragraph 10 (Exhibit 36), Mr Droop states:
a.I note that Ms Durrant's statement is a purely descriptive overview of how the Ord water supply system model should run and should be applied in the ORIA, based on a review of certain relevant documents.
b.In my opinion, there is a substantial disconnect between the modelling and how its results are applied to planning decisions and the setting of operational rules, such as power restrictions. Specifically, my conclusions are summarised as follows:
i.Allocation Plan development and operational rules for the power station and irrigators rely heavily on modelling and model results.
ii.It is therefore imperative that any modelling approach, set-up, understanding and communication of results is specifically applicable to these purposes.
iii.Review of modelling reporting and independent modelling assessment indicates significant errors and/or deficiencies when considered as being directly relied upon to define real-world operating rules, including AWEs.
iv.While the model is useful as a guide to the high-level, long-term average hydrological, water supply and power generation outcomes of the scheme, it is not sufficiently accurate or precise, to appropriately support the definition of very specific power rules, or the conclusions reached regarding the impact of OIC AWE reduction on real-world power generation outcomes.
312Ms Durrant was critical of Mr Droop's evidence. She sets out her criticisms of paragraphs 18 to 28 of Exhibit 10; since the modelling is not directly in issue it is not necessary to set out passages from her evidence. The Tribunal notes Ms Durrant's criticisms of Mr Droop's evidence and accepts them.
313Mr Droop's evidence was that the modelling showed a reliability of only 90% (T;5; 22.11.16). MrDroop accepted that the change in reliability calculations occurred as a result of changing the water year to April to March. His evidence was that the modelling depended on subjective assumptions. Although he was not saying that any assumption was more or less appropriate (T:510; 22.11.16).
314In crossexamination Mr Droop conceded that if the April to March accounting water year was adopted then the model did meet the 95% reliability criteria (T:81; 22.11.16).
315Mr Droop accepted that his modelling did not extend to 2014 and that he failed to calibrate the model against the actual data for 2014 (T:101103; 22.11.16). Mr Droop explained that he did not use actual data because it was not necessary to understand the behaviours (T:105; 22.11.16).
316Ms Pawley's evidence was that since the peak demand for water would not be needed till year 10 of the licence the 10 per cent allowance suggested by Mr Droop only presents itself in the final year of the licence. The full amount of the AWE is available 95% per cent of the time, that is, 9.5 years out of 10 (T:128129; 22.11.16).
317Ms Durrant maintained her position that the Department model was correct because of Mr Droop's incorrect assumptions as identified by her (T:10; 22.11.16).
318The Tribunal accepts Ms Durrant's analysis.
Power generation and environmental water provision
319Mr Droop's conclusion was that keeping 335GL would not impact power generation (T:2526; 22.11.16).
320Mr Droop submitted that a decrease in the OIC's AWE from 335GL per annum to 225GL per annum would not lead to any material improvement in the water available for power generation or environmental water provision (EWP) (Exhibit 27 paragraphs 2(e), (f) and 48(a), (b)).
321Mr Droop's evidence was that there was no change to EWP and hydropower if OIC's AWE was reduced and that 'if there's not a great deal of benefit to it then we're best to maintain that flexibility rather than constrain too much' (T:41; 22.11.16).
322Mr Droop's approach would lock water away from other users irrespective of whether it was being used. That is not a proper approach.
323Mr Droop accepted that demand might outstrip supply even on the terms of the Ord Allocation Plan as drafted. Mr Droop agreed with the proposition that licensing authorities need to make decisions as to what kind of developments might proceed in the future (T:89; 22.11.16).
324Ultimately Mr Droop accepted that although the impact of the reduction over 99 years was 2% the impact in a particular year on hydropower levels would be much higher if the 335GL figure was retained.
325Even if Mr Droop were correct in his conclusion that OIC's retention of an AWE of 335GL would have no impact on hydroelectricity power generation, that is, of itself, no reason for the OIC to retain an AWE at that level.
The economic value of water for irrigation
326Mr Jacob's executive summary from his expert report (Exhibit 26) stated:
12.The economic value derived from irrigation use per ML of water is substantially higher than the value derived from the generation of hydroelectricity. This conclusion holds even under very conservative assumptions regarding the valuation of water used for irrigation.
13.The current annual value of water in the Ord is estimated to be consistent with prices observed in active water markets in the major irrigation areas in the eastern states i.e., annual values being in the range of $50 to $150/ML. However, results from analyses undertaken in the preparation of this Report suggest that the average value of water in the Ord could be substantially higher given the unique circumstances surrounding sandalwood production and its dominant position in Ord Stage 1 in terms of the area irrigated and volume of water entitlements held or leased in connection therewith.
14.The economic value of water used for hydro-generation is estimated to be equivalent to around $28/ML.
327Mr Jacob's opinion as to the value of irrigation water is set out at part 6, paragraphs 45 to 76 and 111 to 115 of his report (Exhibit 26). His conclusion at paragraph 76 is that 'the value derived from the assessments is that the value derived from irrigation use is substantially higher that the value derived from the generation of hydroelectricity even under very conservative assumptions regarding the valuation of water used from irrigation'.
328Ms Pawley's evidence was:
63.Mr Jacob (para 12, p.2 and para 115, p.24) has stated that the economic value derived from using Ord River water for irrigation is higher that the economic value derived from using Ord River water to generate hydroelectricity. I assume OIC has asked Mr Jacob to quantify and compare the economic value of using Ord River water for irrigation to that to generate hydroelectricity in an attempt show that hydropower is a lower beneficial use than irrigation. I am of the opinion that this assessment is irrelevant to the case at hand for the following reasons:
a)The recouped 100 gigalitres per year of unused (and unneeded) entitlement from OIC will return to the allocation limit for the Main Ord subarea. This water will then be made available to other consumptive users in the irrigation industry. As such the water will be re-allocated to a high beneficial use. I note though that OIC is deriving no benefit from a recouped 100 gigalitres because it is not using it.
b)The recouped 100 gigalitres per year of unused (and unneeded) entitlement from OIC is not being re-allocated to hydropower. The benefit of recouping unused water entitlements to hydropower is that hydropower is not being unnecessarily restricted to maintain the high reliability of the unused (and unneeded) licensed entitlement.
c)Water held up in unused licensed entitlement does not represent any benefit to the irrigation industry.
d)The economic value for hydropower cannot be compared to the economic value of irrigation as though it was a choice between supply hydropower only or irrigation only. The reality is that releasing water for hydropower has a dual benefit for both hydropower and the downstream irrigators and environment.
e)The greatest economic value is obtained when water is used for both irrigation and hydropower. The combined economic benefit of irrigation and hydropower is greater than the economic benefit of either use alone.
f)Mr Jacob has not attempted to quantify the benefit of releases for the environment, which for the most part arise when a release is made for hydropower (and the 100 gigalitres is not being re-allocated to hydropower).
329Further, in Ms Pawley's responsive statement she stated:
11.Mr Jacob's economic valuation of using Ord River water for irrigation relative to hydropower is irrelevant in this matter. OIC derives no economic benefit from unused water entitlements. Recouped unused water entitlements are returned to the allocation limit where they are made available to other irrigators for high beneficial use. Recouped unused water entitlements are not reallocated to hydropower, rather the benefit to hydropower is that hydropower is not being unnecessarily restricted to maintain the high reliability of the unused licensed entitlement. Releasing water for hydropower also has a dual benefit for both hydropower and the downstream irrigators and environment.
330The Tribunal rejects Mr Jacob's evidence for the reasons stated by Ms Pawley. Mr Jacob's focus is too narrow and he has failed to take relevant considerations into account.
Potential development
331A significant amount of time was taken in the hearing in determining whether particular extensions of irrigated areas are likely to proceed.
332The OIC's position was typified by Mr Boshammer's evidence that 'Stage 1 should not be sacrificed for the benefit of proposed future development, and particularly given that there is no clear proximate timeframe for this development, and particularly given that reducing OIC's entitlement by 100 GL/year would substantially hinder continued development and irrigation success in stage 1' (Exhibit 32 paragraph 34).
333Mr Dear gave evidence that, in his opinion, a number of proposed developments are unlikely to proceed during the term of Licence (3) (Exhibit 30 paragraphs 9 to 12).
334The evidence of Mr Stubbs, Director of Major Projects for the Department of Regional Development, was that he expects significant development over the next 10 to 12 years (Exhibit 9 paragraphs 52 to 71). Mr Stone (Exhibit 6) also gave evidence as to the needs of potential developments. The Tribunal prefers the evidence of Mr Stubbs and Mr Stone who are far better placed to be aware of potential developments.
335The evidence does not support Mr Boshammer's proposition that Stage 1 would be 'sacrificed'. To the contrary, the clear evidence is that the OIC is not utilising its AWE and to allow it to continue with an AWE of 335GL would artificially restrict planning for other potential developments (Mr Stubbs Exhibit 9 paragraphs 86 to 87, Mr Stone Exhibit 6 paragraphs 6 to 7). It was common ground that land in the area requires a water allocation in order to be released. The water is from the Ord River and Lake Argyle is the ultimate source of water for all potential developments be they within the Ord Stage 1 or not.
Jurisdiction
336On 15 November 2016, the Tribunal heard the OIC's application for orders that the Tribunal had no jurisdiction to hear the original application. A somewhat strange application given that the original application had been brought by the OIC. The Tribunal reserved its decision to the substantive hearing.
337The Minister's powers under Sch 1 of the RIWI Act have been delegated to the Department. No issue arises as to the Department's authority to exercise those powers.
338Clause 22(2) of the RIWI Act relevantly provides that an application for renewal of a licence is to be renewed. Clause 22 does not specify that the licence must be renewed on the same terms. Indeed, it is implicit in cl 22(3)(b) that the Minister may renew a licence subject to the inclusion of a term, restriction or condition that the Minister considers is inconsistent with the terms of the application for renewal. The Minister plainly had power to renew the licence on different terms, restrictions or conditions.
339The proposed renewal of the licence by the Department plainly included a term, restriction or condition that was inconsistent with the terms of the application for renewal in that the application for renewal did not seek an extension of the term or a reduction in the AWE.
340Under Sch 1 cl 24(1) of the RIWI Act the Minister has power to:
(a)vary the duration of a licence; or
(b)vary, add to or remove any term, condition or restriction included in the licence[.]
341The OIC argued that the power under cl 22(3)(b) 'to renew a licence subject to the inclusion of a term, restriction or condition that the Minister considers is inconsistent with the terms of the application for renewal', does not include a power to amend or remove any term condition or restriction. The OIC argued that the words of cl 24(1)(b) 'vary, add to or remove', are to be contrasted with the words of cl 22(3)(b) 'the inclusion of'.
342Obviously, the words used in the two clauses are different. However, the Tribunal does not accept that the there is any difference in substance. If the words used in cl 22(3)(b) were to 'vary' but not to 'add or remove', the OIC's argument might have some substance. However, the term 'inclusion' in cl 22(3)(b) is to be read with the word 'inconsistent' in the same subclause. It is an inconsistency that gives the Minister the power to include different terms, conditions and restrictions.
343The Tribunal finds that cl 22(3)(b) permits the Minister to renew a licence and to include a term that is inconsistent with the terms of the application for renewal.
344The terms proposed by the renewal are plainly inconsistent with the OIC's application, as is evidenced by the terms of the OIC's application to this Tribunal. The Minister had jurisdiction to include the proposed terms altering the AWE in the grant of Licence (3).
Conclusion
345The Ord Allocation Plan is a very detailed policy that takes into account a wider range of relevant factors.
346The AWE of 246.3GL granted by the Department for Licence (3) is appropriate and is consistent with the policies in the Allocation Plan. The Tribunal is satisfied that the policies contained in the Allocation Plan are lawful and do not produce an unjust decision in the circumstances of this case.
347The correct and preferable decision is that the AWE for Licence (3) is 246.3GL.
Orders
1.The application is dismissed.
2.The Annual Water Entitlement for SWL156287(3) for the Ord River Cooperative Ltd is fixed at 246.3 gigalitres.
I certify that this and the preceding [347] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J C CURTHOYS, PRESIDENT
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