Victoria and South Australia reach water sharing agreement

South Australia and Victoria have settled the constitutional challenge to Victoria's water trading rules. A combination of previous and agreed new actions by the Victorian Government and changed circumstances in water availability in the Murray-Darling Basin system have enabled the two states to reach a mutually acceptable settlement.

Since the Rann Government's decision to pursue a legal challenge to restrictions on water trade out of Victoria in March 2009, the Victorian Government has voluntarily removed its 10 per cent absolute cap on water trade out of a district.

Victoria also struck an agreement with the Federal Government to allow the purchase of water for environmental purposes, and reaffirms the agreement to lift the 4 per cent annual cap by 30 June, 2014.

These moves significantly ameliorated some of South Australia's concerns with Victoria's water trading rules.

Through negotiation, the Victorian and South Australian governments have now been able to reach an agreement that gives South Australia the right to purchase water from Victoria to meet any potential shortfall in critical human needs supply.

The states have also agreed that Victoria will immediately sign the relevant schedules under the Murray-Darling Basin agreement which provide South Australia with permanent rights to store water in upstream storages such as the Hume and Dartmouth dams.

This will enable South Australia to develop a long term carry over policy for its irrigators and critical human needs.

The commitment to totally remove restrictions in 2014, combined with other agreed changes and greatly improved water availability in the Basin, mean that there is little to be gained for either state by continuing to pursue this matter through the courts.