EXPLANATORY STATEMENT
Issued by the Authority of the Murray-Darling Basin Authority
Water Act 2007
Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010
The Murray-Darling Basin Agreement (Agreement) is Schedule 1 to the Water Act 2007 (Act). The Agreement allows for the Murray-Darling Basin Authority (Authority) to make protocols in respect of certain matters.
The instrument to which this explanatory statement relates, the Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010 (Protocol), is made under section 18E of the Act and paragraph 6(1)(d) of Schedule D to the Agreement. The Protocol is a legislative instrument: see section 18D of the Act.
The purposes of the Protocol are:
(a) to specify conversion factors and exchange rates;
(b) to prescribe how conversion factors are to be applied to convert entitlements within a valley; and
(c) to prescribe how exchange rates are to be applied to interstate transfers of entitlements.
Paragraph 3(1)(a) of Schedule D to the Agreement relevantly provides that:
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“convert”, in relation to an entitlement, means to convert an entitlement of one type, with lower reliability into an entitlement of another type, with higher reliability, or vice versa;
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“entitlement” means:
(i) an entitlement to a particular share of water within the upper River Murray, the River Murray in South Australia or regulated reaches of the Goulburn, Campaspe, Loddon and Murrumbidgee river systems or a source referred to in paragraph 2(c) [of Schedule D to the Agreement] pursuant to the law of a State; or
(ii) any other entitlement to divert water or to receive water diverted by another from those sources,
but does not include a State entitlement;
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“interstate transfer” means a transfer of an entitlement or allocation made between States in accordance with [Schedule D to the Agreement];
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“valley” means a river valley defined in a protocol made under paragraph 6(1)(b) [of Schedule D to the Agreement];
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a reference to “exchange rate trade” is to an arrangement under which an entitlement in a State of origin is cancelled, extinguished or suspended and an equivalent entitlement is created in a State of destination, either permanently or for a fixed term;
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Details of the Protocol are set out in the Attachment.
The Protocol commences on the day after it is registered on the Federal Register of Legislative Instruments.
The Protocol is not subject to disallowance by Parliament nor the sunsetting rules in Part 6 of the Legislative Instruments Act 2003: see section 18D of the Act.
Consultation
The Contracting Governments to the Agreement have been consulted in the development of this Protocol.
The Office of Best Practice Regulation has also been consulted on this Protocol and has determined that regulatory impact statements will not be required for this Protocol.
ATTACHMENT
Details of the Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010
Section 1 – Name of Protocol
Section 1 provides that the name of the Protocol is the Murray-Darling Basin Agreement (Schedule D - Conversion Factors and Exchange Rates) Protocol 2010.
Section 2 – Commencement
Section 2 provides that the Protocol commences on the day after it is registered.
Section 3 – Revocation
Section 3 provides that all previous protocols made under paragraph 6(1)(d) of Schedule D to the Agreement, or provisions of a protocol, that apply to exchange rate trade are revoked.
Section 4 – Application
Section 4 provides that the Protocol applies to conversion of entitlements and exchange rate trade.
Section 5 – Definitions
Section 5 defines certain terms used in the Protocol. Some terms used in the Protocol will take the meanings they have in the Act (including the Agreement): see section 13 of the Legislative Instruments Act 2003.
Section 6 – Conversion factors
Section 6 contains a table setting out conversion factors to be applied when converting a particular type of entitlement to another type of entitlement in a particular valley.
The Authority intends to amend Table 1 to include conversion factors for the Murray Victoria, Goulburn, Campaspe and Loddon valleys, when these factors become available.
Section 7 – Application of conversion factors
Section 7 establishes how conversion factors in section 6 are to be applied when converting one type of entitlement to another type of entitlement. The conversion factor is multiplied by the volume of the first type of entitlement.
Section 8 – Applications to convert lower reliability entitlements
Section 8 sets out the circumstances in which a State must approve an application to convert a lower reliability entitlement to a higher reliability entitlement in any year.
Section 9 – Suspension of conversion
Section 9 imposes notification obligations on a State Contracting Government where, under a law of the State, it decides to suspend, or end the suspension of, the conversion of one type of entitlement into an entitlement of another type, within one or more valleys in the State.
Section 8 also imposes notification obligations on the Authority if it receives a notice from a State Contracting Government under subsection 9(1) or 9(2).
Section 10 – Exchange rates
Section 10 contains a table setting out exchange rates to be applied to a transfer of a particular type of entitlements to another type of entitlement.
Section 11 – Application of exchange rates
Section 11 specifies how exchange rates determined by the Protocol are to be applied.
Section 12 – Reviews of exchange rates and conversion factors
Section 12 sets out the circumstances in which a State Contracting Government may ask the Authority to review a conversion factor or exchange rate.