A new report from the National Productivity Commission said that revitalising water management is urgently needed to address climate change and changing water demands.
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The 2004 National Water Initiative (NWI) interim review released earlier this week outlined that its foundations are outdated and need to be expanded to accommodate more prolonged droughts and intense flooding.
The review also found Victoria "does not have a clear, legislatively defined risk assignment framework to guide potential future reductions in the availability of water for consumptive use."
The Victorian government's current legislative processes for considering risks to resources include long-term water resource assessments and sustainable water strategies.
The interim review was otherwise favourable to Victoria's water management but called on all governments to plan for the water demands towards the transition to net zero emissions.
Western Australia and the Northern Territory have not implemented statutory perpetual water rights, while in WA, Queensland and the NT, independent economic regulators do not have the power to set prices.
"Water is essential to the wellbeing of all Australian communities, the environment, and the economy," Commissioner Joanne Chong said.
"The National Water Initiative has set strong foundations for managing this precious resource over the past 20 years but there are gaps that must be addressed."
She said current NWI objectives are focused on water resource management, but providing water services in cities and regions remains a challenge.
"Communities in some regional and remote areas still do not have access to safe drinking water," Commissioner Chong said.
"In a renewed National Water Initiative, governments should commit to ensuring safe and reliable drinking water for all Australians."
A Victorian government spokesperson said that while state leaders had yet to be consulted on developing a new National Water Agreement, the government supported a renewal of the NWI.
"We advocate for a meeting of Water Ministers to discuss the potential benefits of renewing the NWI and how it could be shaped by meaningful engagement, particularly with Traditional Owners," the spokesperson said.
"The Victorian Water Act 1989 assigns how water availability risks are distributed and considers long-term risks such as climate change, providing security and certainty to water entitlement holders."
The interim report also said a renewed NWI should better support the role of water in the lives of Aboriginal and Torres Strait Islander people.
