Commonwealth Consolidated Acts Commonwealth Consolidated ActsNote: See section 4.
This Schedule sets out:
(a) the Basin water charging objectives; and
(b) the Basin water charging principles.
Note 1: These objectives and principles are relevant to the formulation of water charge rules under section 92 of this Act.
Note 2: These objectives and principles are based on those set out in clauses 64 to 77 of the National Water Initiative when Part 2 of this Act commences.
Part 2 -- Water charging objectives
The water charging objectives are:
(a) to promote the economically efficient and sustainable use of:
(i) water resources; and
(ii) water infrastructure assets; and
(iii) government resources devoted to the management of water resources; and
(b) to ensure sufficient revenue streams to allow efficient delivery of the required services; and
(c) to facilitate the efficient functioning of water markets (including inter - jurisdictional water markets, and in both rural and urban settings); and
(d) to give effect to the principles of user - pays and achieve pricing transparency in respect of water storage and delivery in irrigation systems and cost recovery for water planning and management; and
(e) to avoid perverse or unintended pricing outcomes.
Part 3 -- Water charging principles
(1) Pricing policies for water storage and delivery in rural systems are to be developed to facilitate efficient water use and trade in water entitlements.
(2) Water charges are to include a consumption - based component.
(3) Water charges are to be based on full cost recovery for water services to ensure business viability and avoid monopoly rents, including recovery of environmental externalities where feasible and practical.
(4) Water charges in the rural water sector are to continue to move towards upper bound pricing where practicable.
(5) In subclause (4):
"upper bound pricing" means the level at which, to avoid monopoly rents, a water business should not recover more than:
(a) the operational, maintenance and administrative costs, externalities, taxes or tax equivalent regimes; and
(b) provision for the cost of asset consumption; and
(c) provision for the cost of capital (calculated using a weighted average cost of capital).
(6) If full cost recovery is unlikely to be achieved and a Community Service Obligation is deemed necessary:
(a) the size of the subsidy is to be reported publicly; and
(b) where practicable, subsidies or Community Service Obligations are to be reduced or eliminated.
(7) Pricing policies should ensure consistency across sectors and jurisdictions where entitlements are able to be traded.
4 Cost recovery for planning and management
(1) All costs associated with water planning and management must be identified, including the costs of underpinning water markets (such as the provision of registers, accounting and measurement frameworks and performance monitoring and benchmarking).
(2) The proportion of costs that can be attributed to water access entitlement holders is to be identified consistently with the principles set out in subclauses (3) and (4).
(3) Water planning and management charges are to be linked as closely as possible to the costs of activities or products.
(4) Water planning and management charges are to exclude activities undertaken for the Government (such as policy development and Ministerial or Parliamentary services).
(5) States and Territories are to report publicly on cost recovery for water planning and management annually. The reports are to include:
(a) the total cost of water planning and management; and
(b) the proportion of the total cost of water planning and management attributed to water access entitlement holders, and the basis upon which this proportion is determined.
(1) Market - based mechanisms (such as pricing to account for positive and negative environmental externalities associated with water use) are to be pursued where feasible.
(2) The cost of environmental externalities is to be included in water charges where found to be feasible.
6 Benchmarking and efficiency reviews
(1) Independent and public benchmarking or efficiency reviews of pricing and service quality relevant to regulated water charges is or are to be undertaken based on a nationally consistent framework.
(2) The costs of operating these benchmarking and efficiency review systems are to be met through recovery of regulated water charges.