EXPLANATORY STATEMENT
Issued by the Authority of the Murray-Darling Basin Authority
Water Act 2007
Murray-Darling Basin Agreement (Schedule D – Processing Interstate Exchange Rate Transfers) 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 - Processing Interstate Exchange Rate Transfers) Protocol 2010 (Protocol), is made under section 18E of the Act and paragraph 6 (1) (f) of Schedule D to the Agreement. The Protocol is a legislative instrument: see section 18D of the Act.
The purpose of the Protocol is to specify processes and principles to be followed by the Authority, each of the Governments of New South Wales, Victoria, South Australia, Queensland and the Australian Capital Territory (State Contracting Governments) and each licensing authority to record and to facilitate the interstate transfer of entitlements by exchange rate trade. Paragraph 3(1)(a) of Schedule D to the Agreement relevantly provides that:
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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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“licensing authority” means the authority within a State with power to make a final decision whether a transfer may be made into or out of that State;
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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 - Processing Interstate Exchange Rate Transfers) Protocol 2010
Section 1 – Name of Protocol
Section 1 provides that the name of the Protocol is the Murray-Darling Basin Agreement (Schedule D - Processing Interstate Exchange Rate Transfers) 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) (f) of Schedule D to the Agreement, that apply only to interstate transfers of entitlements by exchange rate trade (IER Transfers), are revoked. It also provides that all previous protocols made under paragraph 6 (1) (f) of Schedule D to the Agreement, that deal with IER Transfers and other transfers, have no application to the extent that they deal with IER Transfers.
Section 4 – Application
Section 4 provides that the Protocol applies to IER Transfers.
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 – Notices
Section 6 provides that a notice under the Protocol must be given in writing. It also provides that the Authority must, in consultation with each State Contracting Government and, where appropriate, any relevant licensing authority, determine the form and content of a notice required to be given to or by the Authority under the Protocol.
Section 7 – Processes and principles
Section 7(1) provides that the Authority and each State Contracting Government and licensing authority must follow the processes and principles in the Steps set out in Schedule 1 to the Protocol.
Section 7(2) also provides that State of Origin wholesalers should adopt the principle that, for tributary to Murray exchange rate transfers (Goulburn to South Australia), the fixed charge be billed in the same way as entitlements remaining in the State of Origin are charged, that is, directly to the State of Destination retailer. Section 7(3) provides that, for exchange rate transfers on the Murray, the principle to be adopted should be that the cost is calculated consistently with the existing cost-based formula for State financial contributions used by the Authority.
Section 8 – Review of Protocol
Section 8 provides that an independent auditor appointed under subclause 16 (5) of Schedule D to the Agreement may consider the operation of the Protocol and, if the auditor considers it appropriate, recommend that the Authority review the Protocol. Section 8 also provides that the Authority must review, and if appropriate, consider amending the Protocol in certain circumstances.
Schedule 1 – Processes and principles
Schedule 1 sets out Steps that the Authority and each State Contracting Government and licensing authority must follow.
Step 1 – Preliminary processing of applications
Step 1 sets out what a transferor’s authority must do when a transferor lodges a duly completed application form with the transferor’s authority. Section 5 of the Protocol relevantly provides that transferor’s authority means the licensing authority in a State of origin.
Step 1 also sets out what a transferee’s authority must do when a transferee lodges a duly completed application form with the transferee’s authority. Section 5 of the Protocol relevantly provides that transferee’s authority means the licensing authority in a State of destination.
Step 2 – Consideration of application by transferor’s authority
Step 2 sets out what, in a State where Step 2 is capable of applying, a transferor’s authority must do when the transferor’s authority has received both the transferor's application and the transferee's application for a particular transfer.
Step 2 also sets out what the transferor’s authority must do when the transferor’s authority decides that either:
(a) the transferor's application will not be granted; or
(b) the transferor's application may be granted.
Step 3 – Consideration of proposed transfer by the Authority
Step 3 sets out what the Authority must do when the Authority receives a notice from a transferor’s authority that an application may be granted.
Step 4 – Notifying parties that water cannot be delivered
Step 4 sets out who a transferor’s authority must notify if the transferor’s authority receives a notice from the Authority under paragraph (c) of Step 3 (being a notice that that the water cannot be delivered).
Step 4 also sets out who a transferee’s authority must notify if the transferee’s authority receives a notice from the Authority under paragraph (c) of Step 3.
Step 5 – Consideration of application by transferee’s authority
Step 5 sets out what, in a State where sub-clause (1) of Step 5 is capable of applying, a transferee’s authority must do when the transferee’s authority receives a notice from the Authority that water can be delivered.
Step 5 also sets out who the transferee’s authority must notify when the transferee’s authority decides that either:
(a) the transferee's application will not be granted; or
(b) the transferee's application will be granted.
Step 6 – Finalisation of transfer arrangements
Step 6 sets out what a transferor’s authority must do when the transferor’s authority receives a notice from a transferee’s authority that an application will be granted.
Step 6 also sets out what a transferee’s authority must do when the transferee’s authority receives notice from a transferor’s authority that a transfer is complete.
Step 7 – Adjustment of records by Authority
Step 7 sets out what the Authority must do when the Authority receives a notice from a transferee’s authority that a transfer is complete.
Step 8 – Reconciling records
Step 8 provides that, within 7 days after the end of each month, each licensing authority within a State must send to the Authority a copy of its records relating to interstate transfers of entitlements and allocations for the month.
Step 8 also provides that the Authority must examine whether there are any discrepancies between information in the records of a licensing authority provided with respect to each month and:
(a) similar records provided by that licensing authority in any preceding month of that year; and
(b) information recorded in the Transfer Register.
Step 8 imposes recording and reporting obligations on the Authority with respect to discrepancies other than allowable discrepancy. Sub-clause 4 of Step 8 defines allowable discrepancy.
Step 8 sets out what a licensing authority must do when the licensing authority receives a report mentioned in paragraph (3) (b) of Step 8 (being a report provided by the Authority on discrepancies other than allowable discrepancies).
Step 8 also sets out what the Authority must do if a discrepancy is not resolved within the same month in which a licensing authority receives a report mentioned in paragraph (3) (b) of Step 8.
Step 9 – Preparation of interstate transfer report
Step 9 provides that the Authority must, within 30 days after the end of each quarter, prepare and give to each Contracting Government and every licensing authority within each State an interstate transfer report with respect to the preceding quarter. Step 9 also describes the type of information that the report must contain.