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The information contained in this fact sheet is current as at 22 May 2007.

Topic 4 – Natural Resources

4.5 Water Management

The Water Management Act 2000 and Water Act 1912 control the extraction of water, the use of water, the construction of works such as dams and weirs and the carrying out of activities in or near water sources in New South Wales. [1]

As part of the national water reform process, the National Water Initiative, New South Wales is reforming its water laws, and it is intended that the Water Management Act will eventually fully replace the Water Act. However, at the moment the Water Management Act only applies to those areas in which water management plans for water sharing have been developed.

Note: For the purposes of this publication the provisions of the Water Management Act will be reviewed unless otherwise specified. This is because that Act will control all aspects of water management when it becomes fully operational.

For information on water pollution, see Section 3.1 – Air and Water Pollution.

4.5.1 Water Management Planning

The Water Management Act provides for the preparation of water management plans, which contain much of the detail necessary for the operation of the Act. Water management plans address matters such as water sharing, water use, drainage and floodplain management and water source protection.[2]

Water management plans are created by a water management committee for a water management area or by the Minister for Climate Change, Environment and Water.[3] Water management committees are appointed by the Minister, and each committee must develop a water management plan in accordance with terms of reference set by the Minister. [4] Importantly, the Act stipulates that a management committee must exercise its functions consistently with the principles of ecologically sustainable development.[5]

If the committee fails to prepare the draft management plan, the Minister may proceed to make the plan without the committee's assistance.[6] The water management area that each water management plan applies to is the area established by the Minister.[7]

Once a draft plan has been prepared by the committee, it must be placed on public exhibition. [8] The committee must consider any comments received before submitting the draft plan to the Minister for approval.[9] The Minister has the power to change the draft plan.[10]

The Minister can make plans in certain circumstances (for example, for areas not within a water management area) and can deal with matters not covered by a water management plan prepared by a water management committee.[11]

A water management plan made by the Minister has the same effect as a plan prepared by a water management committee. The Minister is not required to seek public submissions before making the plan. [12] However, the Minister may choose to do so.[13] Water management plans must be consistent with other documents, such as state environmental planning policies under the Environmental Planning and Assessment Act, and the State Water Management Outcomes Plan prepared under the Water Management Act.[14] For more information on state environmental planning policies, see Section 2.1- NSW Planning and Assessment Law.

Once approved, a water management plan remains in force for ten years.[15] It must be reviewed by the Minister five years after it was made, to assess whether the plan is still adequate and appropriate in implementing the water management principles set out in the Water Management Act.[16]

The Minister may at any time amend a water management plan but if the change reduces a licensee's water allocation, compensation may, in very limited circumstances, be payable.[17]

The validity of water management plans may be challenged in the Land and Environment Court 's judicial review jurisdiction within 3 months of the plan being published in the Gazette.[18] For more information on taking legal action, see Section 7.8- Legal Advice and Litigation.

After a plan has been accepted, the Minister may, with the consultation of the relevant management committee, establish programs for the implementation of management plans. These programs must set out the means by which the Minister intends to achieve the objectives of the management plans. [19]

4.5.1.1. Protection of Water Sources

The Water Management Act provides a number of mechanisms for protection of water sources via the water management planning process.

First, a water management plan may prohibit or impose restrictions on certain controlled activities, such as requiring a licence for water use. [20]

Second, the Minister must take all reasonable steps to give effect to the requirements of a water management plan when exercising functions under the Water Management Act – for example, when granting licence approvals or deciding to take enforcement action for breaches. [21]

Thirdly, public authorities (such as local councils) must have regard to any relevant provisions of the water management plan when exercising their functions. [22]

4.5.2. Water Access Licenses

A person may only extract water from a water source in accordance with an access licence[23], unless that person holds basic landholder rights related to domestic and stock watering purposes, floodplain harvesting or native title rights. [24]

An access licence entitles its holder to:

• specified shares in the available water within a water management area or from a specified water source (share component); and
• take water at specified times, at specified rates or in specified circumstances and in specified locations or areas (extraction component). [25]

There are a number of different categories of access licences. These categories include:

• local water utility;
• major utility;
• domestic and stock;
• regulated river (high security);
• regulated river (general security);
• regulated river (conveyance);
• unregulated river;
• aquifer;
• estuarine; and
• coastal access licences.[26]

As a general rule, access licences for utilities, high security uses and domestic and stock purposes will have priority over other access licences. [27]However, a management plan may provide for different rules of priority. [28]

There is also a category of licence called a ‘specific purpose licence' which may have conditions that ensure that the licence is only used for the purpose for which it was granted (for example, mining). [29] When the activity for which the licence was granted is completed the licence will be cancelled. [30]

4.5.2.1. Access Licence Application Process

Water access licences may be obtained by applying to the Minister for either:

• the grant of a new licence,[31] or
• the transfer of an existing licence. [32]

The Water Management Act essentially places a statewide embargo on the granting of new licences unless the Minister makes a declaration for a specified water management area that enables people to apply for new licences[33].

For new licences, the Minister is only required to provide public notice in limited circumstances. [34] If the application is required to be advertised, any person has the right to object to the granting of the licence. [35] If objections are made, the Minister is obliged to consult with the applicant and the objector to try to reach agreement on the matters raised by the objection. [36]

An access licence must not be granted unless the Minister is satisfied the granting of the licence is permitted by the relevant water management plan, and that adequate arrangements are in force to ensure that minimal harm will be done to any water source as a result of water being taken under the licence. [37]

As a result of amendments to the Water Management Act in 2004, the duration of most access licences was extended from a fixed period to a perpetual right to access the water[38].

An access licence may be transferred, subdivided, consolidated or assigned in accordance with the Water Management Act, the water management principles and any access license dealings, principles or rules established under relevant provisions of a water management plan. [39] Dealings with access licenses will also require the consent of the Minister and conditions may apply. [40]

The Department of Planning is required to keep a register of access licences which will be available at the head office of the Department for inspection by the public free of charge. [41]

Each access licence will have conditions that regulate how water may be taken. These may either be conditions that the Minister chose to impose when granting the licence, or conditions that the relevant water management plan requires to be imposed on all licences. [42]

4.5.2.2.  Protection of Environmental Flows

In addition to regulating individual licences, the Water Management Act seeks to establish a scheme to ensure that, taking into account all water extractions from a water source, there is still sufficient water for the environment. [43]

Protection of environmental water under the Water Management Act is dependent upon a complex interaction between:

• the environmental water rules set for the water source in a water management plan;
• the bulk access regime set up by a water management plan; and
• available water determinations that are made by the Minister from time to time.

Environmental Water Rules

Under a water management plan, environmental water rules are created to identify, establish and maintain the two classes of environmental water established under the Water Management Act.

The two classes of environmental water are:

• planned environmental water - water that is committed, under a management plan for fundamental ecosystem health or other specified environmental purposes, either generally or at specified times or in specified circumstances, and that cannot be taken or used for any other purpose. [44]
• adaptive environmental water - water that, under an access licence, is committed for specified environmental purposes, either generally or at specified times or in specified circumstances. [45]

The rules for the identification, establishment and maintenance of each of these classes of environmental water must be established for all of the water sources in New South Wales – via the preparation of water management plans – as soon as possible after the Water Management Act comes into force. [46]

The 2003 commencement of the Catchment Management Authorities Act 2003 saw the introduction of environmental water trust funds. These funds are managed by Catchment Management Authorities, in order to acquire and manage adaptive environmental water. [47]

2005 amendments to the Water Management Act have introduced the requirement that management plans must commit planned environmental water by referring to at least 2 of the following;

• the physical presence of water in the water source
• the long-term annual average commitment of water as planned environmental water; and
• water that is not committed after allowing for commitments of water for extraction rights. [48]

Bulk Access Regime

A bulk access regime is the set of rules created by a water management plan that guides the extraction of water under access licences. [49]The bulk access regime must take into account the environmental water rules and the needs of water users (including licence holders and people with basic landholder rights).[50]

In addition, a bulk access regime:

• must be consistent with any limits to the availability of water that are set;
• must establish rules according to which access licences are to be granted and managed and available water determinations to be made;
• must recognise the effect of climatic variability on the availability of water; and
• may establish rules for the priorities according to which water entitlements under access licences are adjusted if there is a reduction in the availability of water. [51]

Available Water Determinations

The Minister can make determinations at any time about the availability of water for a particular water management area or water source. [52] As the licence entitles the licensee to take a proportion of the available water in a water source, available water determinations directly affect the actual amount of water that may be extracted from any specified water source.

4.5.3. Water Use and Water Supply Works Approvals

An access licence simply gives the holder of the licence the right to the water. It does not give the right to use the water or to build any of the works such as pipes, pumps or dams that may be physically required to extract the water. These works require a ‘water-use' approval and a ‘water supply work' approval.

4.5.3.1.  Water Use Approvals

Water-use approvals are required to use water to which a water access licence holder has water access rights. [53] It is an offence to use water for any purpose other than in accordance with a water-use approval. [54]

A water-use approval is not required if:

• the water is being used for a basic landholder right, or
• the water was supplied by a major utility. [55]

4.5.3.2. Works Approvals

An approval is required for:

• a water supply work;
• a drainage work; or
• a flood work in or in the vicinity of a river or lake, or within a floodplain. [56]

It is an offence to construct or use these works without the appropriate approval. [57]

‘Water supply works' are works such as:

• water pumps or water bores that are constructed or used for the purpose of taking water from a water source;
• tanks or dams that are constructed or used for the purpose of capturing or storing rainwater run-off, or storing water taken from a water source;
• water pipes or irrigation channels that are constructed or used for the purpose of conveying water to the point at which it is to be used;
• banks or levees that have the effect of diverting away from a water source any overflow from the water source; and
• weirs that have the effect of impounding water in a water source. [58]

Water supply works do not include any work that receives water from a water supply work under the control or management of the Sydney Water Board, the Hunter Water Board or a local water utility. [59]

‘Drainage works' are things such as pumps, pipes or channels, constructed or used to drain water from land. A drainage work includes all associated pipes, sluices, valves and equipment, but does not include any sewerage work. [60]

‘Flood works' are things such as barrages, causeways, cuttings or embankments that:

• are located within a floodplain;
• are in or near a river, estuary or lake; and
• due to its size or configuration is likely to have a significant effect on the flow of water to or from a river, estuary or lake, or the distribution or flow of floodwater in times of flood. [61]

Works Approval Application Process

If a works approval is required, applications must be made to the Minister. [62]

An application will only be publicly advertised if advertisement is required by the regulations or by a water management plan (for example, works that remove water from a river). [63]

If an application has been advertised, any person has the right to object to the proposal. [64] If objections are made, the Minister is required to consult with the applicant and the objector to try to reach agreement on the matters raised by the objection. [65]

When determining the application the Minister must take into account any matters specified in the Regulations, and any other matters he or she thinks relevant. [66] An approval must not be granted:

• if there is a relevant embargo in place;
• if the approval would breach the provisions of the relevant water management plan. [67]

Further, an approval must not be granted unless the Minister is satisfied that adequate arrangements are in force to ensure that minimal harm will be done to any water source, or its dependent ecosystems, as a consequence of the granting of the approval. [68]

An approval is subject to any conditions imposed by the Minister or required by the relevant water management plan. [69]

4.5.4 Activities on Waterfront Land

If a ‘controlled activity' is proposed on ‘waterfront land', an approval is required under the Water Management Act.

‘Controlled activities' include:

• the construction of buildings or carrying out of works;
• the removal of material or vegetation from land by excavation or any other means;
• the deposition of material on land by landfill or otherwise; or
• any activity that affects the quantity or flow of water in a water source. [70]

‘Waterfront land' is defined as the bed of any river or lake, and any land lying between the river or lake and a line drawn parallel to and forty metres inland from either the highest bank or shore (in relation to non-tidal waters) or the mean high water mark (in relation to tidal waters). [71]

It is an offence to carry out a controlled activity on waterfront land except in accordance with an approval. [72] There are also restrictions on interfering with aquifers without an approval. [73]

4.5.5. Appeal Provisions

An applicant for an access licence, access licence transfer or works approval may appeal a decision by the Minister to refuse the application or to impose conditions on the licence or approval, to the Land and Environment Court.

Any person who objected to the granting of an approval or licence can appeal that decision to the Land and Environment Court within 28 days of the decision being made. [75] However, there are restrictions on who has the right to make objections. [76]

Any person has the right to take judicial review action for licensing and approvals. [77] There is no time limit under the Water Management Act for taking judicial review action, but you should not delay taking action. [78] For more information on taking legal action, see Section 7.8- Legal Advice and Litigation.

4.5.6. Enforcement of the Water Management Act

The Minister has extensive powers to investigate and enforce breaches of the Water Management Act, including the power to:

• prosecute people who have committed offences; [79]
• issue orders to a person requiring them to do things such as stop wasting water, remove unauthorised works, or remediate damage done to land or water sources; [80]
• suspend or cancel a licence or approval; or [81]
• debit water user's accounts by up to five times the amount of water taken unlawfully.[82]

In addition, any person has the right under the Water Management Act to take action in the Land and Environment Court to stop a breach of the Act or require any resulting damage to be fixed. [83] For more information on taking legal action, see Section 7.8- Legal Advice and Litigation.

1. ‘Water sources' are defined very broadly and include any river, lake, estuary, place where water occurs naturally on or below the surface of the ground and New South Wales coastal waters. Water Act 1912, s. 187.
2. Water Management Act 2000, Chapter 2 Part 3.
3. Water Management Act 2000, s. 15.
4. Water Management Act 2000, s. 14.
5. Water Management Act 2000, s. 14(3)
6. Water Management Act 2000, s. 15(3).
7. Water Management Act 2000, s. 11. There is no requirement that water management areas correspond with physical catchments or catchments established under the Catchment Authorities Act 2003.
8. Water Management Act 2000, s. 38.
9. Water Management Act 2000, s.40.
10. Water Management Act 2000, s. 41
11. Water Management Act 2000, s.50
12. Water Management Act 2000, s. 50(2A) (b).
13. Water Management Act 2000, s.50(2A)(a).
14. Water Management Act 2000, s. 16.
15. Water Management Act 2000, s. 43(1).
16. Water Management Act 2000, s. 43(2). If a water management plan deals with water sharing, the Minister may extend the plan upon the recommendation of the Natural Resources Commission (NRC): s43A. The NRC is required to periodically audit the performance of water sharing provisions to determine whether they are achieving state wide natural resource standards and targets: s44.
17. Water Management Act 2000, s. 87.
18. Water Management Act 2000, s. 47.
19. Water Management Act 2000, s. 51.
20. Water Management Act 2000, s. 32.
21. Water Management Act 2000, s. 48.
22. Water Management Act 2000, s. 49.
23. Water Management Act 2000, s.341.
24. Water Management Act 2000, Chapter 3 Part 1.
25. Water Management Act 2000, s. 56.
26. Water Management Act 2000, s. 57.
27. Water Management Act 2000, s. 58.
28. Water Management Act 2000, s. 58.
29. Water Management (General) Regulation 2004, Reg 19..
30. Water Management Act 2000, s. 77A.
31. Water Management Act 2000, s.61.
32. Water Management Act 2000, s.71M.
33. Water Management Act 2000, s.65.
34. Water Management Act 2000, s. 61(3). In particular, public notice is required in relation to an access licence for water not within a water management area, or within a water management area that does not have a water management plan with water sharing provisions in force.
35. Water Management Act 2000, s. 62(1).
36. Water Management Act 2000, s. 62(5).
37. Water Management Act 2000, s. 63(2).
38. Water Management Act 2000, s.69
39. Water Management Act 2000, Chapter 3 Part 2 Division 4.
40. Water Management Act 2000, s. 71Y.
41. Water Management Act 2000, s. 71, Schedule 1A.
42. Water Management Act 2000, s. 66.
43. Water Management Act 2000, s. 3.
44. Water Management Act 2000, s. 8(1)(a).
45. Water Management Act 2000, s. 8(1)(b).
46. Water Management Act 2000, ss. 8(2), (3).
47. Catchment Management Authorities Act 2003 s.30A.
48. Water Management Act 2000, s8(1A)
49. Water Management Act 2000, Dictionary.
50. Water Management Act 2000, s.20(1)(e).
51. Water Management Act 2000, s. 20(2).
52. Water Management Act 2000, s. 59.
53. Water Management Act 2000, s. 89.
54. Water Management Act 2000, s. 342.
55. Water Management Act 2000, s. 342 (2) & (3) For example, the Sydney Water Corporation, a local water utility, an irrigation corporation or a private irrigation board holding a water use approval for the relevant use.
56. Water Management Act 2000, s. 90. There are minor exceptions for people with basic landholder rights.
57. Water Management Act 2000, s. 343.
58. Water Management Act 2000, Dictionary.
59. Water Management Act 2000, Dictionary.
60. Water Management Act 2000, Dictionary.
61. Water Management Act 2000, Dictionary.
62. Water Management Act 2000, s. 92. Approvals are not required to use or complete the construction of a work for which construction started before the Water Management Act came into force.
63. Water Management Act 2000, s. 92(7); Water Management (General) Regulation 2004, cl. 32.
64. Water Management Act 2000, s. 93(1).
65. Water Management Act 2000, s. 93(5).
66. Water Management Act 2000, s. 96.
67. Water Management Act 2000, s.95(3).
68. Water Management Act 2000, s. 97.
69. Water Management Act 2000, s. 100.
70. Water Management Act 2000, Dictionary.
71. Water Management Act 2000, Dictionary. The distance of forty metres can be reduced by the regulations. Depending upon the regulations, land adjoining coastal waters may also be waterfront land.
72. Water Management Act 2000, s. 344(1)(a).
73. Water Management Act 2000, s. 344(1)(b).
74. Water Management Act 2000, s.368.
75. Water Management Act 2000, s. 368(3).
76. Water Management Act 2000, s. 368(4).
77. Water Management Act 2000, s. 336.
78. If there is significant delay, the judge may take this into account when determining what orders should be made. This means that even if the legal argument is successful, the judge may not make orders to correct the situation if too much time has passed.
79. Water Management Act 2000, s. 348. Depending upon the offence, this may result in fines of up to $275,000 for a corporation, or $132,000 for a person.
80. Water Management Act 2000, s. 325.
81. Water Management Act 2000, s. 68.
82. Water Management Act 2000, s. 85B.
83. Water Management Act 2000, s.336.

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