20 Core provisions
(1) The water sharing provisions of a management plan for a water management area or water source must deal with the following matters:
...
(c) the identification of requirements for water for extraction under access licences,
...
206In my opinion, as the respondents accept, by reason of ss 18(1) and 5(2)(g) the Minister was bound to have due regard to the socio-economic impacts of the proposals considered for inclusion in the Plan.
207I do not accept the applicants' submission that the Minister was under a duty to maximise the social and economic benefit to the community. A duty framed in such terms overlooks that s 9(1) requires the Minister to "take all reasonable steps", when making a water management plan, to do so in accordance with the water sharing principles in s 5, and that s 5(2) commences with the word "Generally". The water sharing principles compete to some extent. In my opinion, the Minister's obligation, which requires an evaluation, is to take all reasonable steps to generally promote those principles as a whole.
208As early as 2001 the MGMC discussed commissioning a formal socio-economic study, whether it should compare a "no plan" scenario relative to what would happen under the proposed Plan, and whether it was possible to conduct a farm-by-farm analysis of the impact of the proposed Plan. In 2002 the MGMC established a socio-economic sub-committee to pursue this further. The MGMC was unable to arrive at a consensus as to methodology for a socio-economic study and no consultant was engaged or formal study conducted. The MGMC did consider the ways that the effects of the proposed reduction in entitlements could be minimised or distributed more fairly between licence holders, including consideration of representations of a large piggery business in the area regarding the impact on its operations.
209No formal socio-economic study was carried out on a farm-by-farm basis or otherwise. This was brought to the Minister's attention in a letter dated 24 July 2006 from the MGMC after public exhibition of the draft Plan and the MGMC's consideration of public submissions. The letter summarised the submissions and brought to the Minister's attention the "lack of socio-economic consideration of the impact of the plan or individual licence holders in the region". The MGMC recommended that "a comprehensive socio-economic study to investigate the impact of entitlement reduction on the viability of affected farms and the region" be carried out "during the first five years of the plan".
210In my opinion, the statutory obligation on the Minister to have due regard to the socio-economic impacts of a proposed plan did not include a mandatory requirement to conduct a formal socio-economic study nor to consider individual impacts on a farm-by-farm basis.
211In my view, the applicants' socio-economic case is premised on a misunderstanding of s 20(1)(c). That provision is directed to requirements for licences under the Plan and not the needs, desires or intentions of landholders more generally. The applicants' contrary concept was rejected by the Court of Appeal in Murrumbidgee Groundwater at [103] - [108].
212In Harvey and Tubbo v Minister Administering the Water Management Act 2000; [2008] NSWLEC 165, (2008) 160 LGERA 50 at [74] it was unsuccessfully alleged that the amendment of a water sharing plan by the Minister under s 45 of the 2000 Act was invalid because of failure to have regard to socio-economic impacts. Jagot J held that the s 18 obligation did not burden the Minister in exercising the amendment power in s 45. Her Honour said at [74]:
As noted, the "public interest" is a broad concept and, no doubt, would often include consideration of the socio-economic impact of proposals (as contemplated by s 18). However, consideration of that matter does not require the Minister to have regard to submissions about the particular impact of the plan on the financial position of individuals. Consistent with the respondent's submissions, the level of generality or specificity at which the Minister approaches the socio-economic impacts of proposals in a plan, as part of the public interest, is not prescribed by the statute and thus is a matter for the Minister.
213In these very proceedings in NA & J Investments Pty Ltd v Minister Administering the Water Management Act 2000; Arnold v Minister Administering the Water Management Act 2000 [2011] NSWLEC 51, (2011) 181 LGERA 166 at [58], Craig J said with reference to Harvey:
Although her Honour was addressing socio-economic impacts of a plan in the context of a requirement to consider the "public interest" her observations are, with respect, equally apt to the specific requirements for consideration identified in s 18(1). If, as in the case of Harvey, consideration of socio-economic impacts did not compel consideration of the "devastating effect on the applicants" (at [73]), as had been represented to the Minister would be the case, so also is it the case that the particular representations made to the Arnold Applicants do not engage the statutory provision in the sense of mandating their consideration by the Minister prior to the making of a plan.
214The applicants submit that Harvey and NA &J are distinguishable or, alternatively, should not be followed. I do not accept either submission. They are contrary to the applicants' case and consistent with Murrumbidgee Groundwater.
215The concept of socio-economic impacts in the 2000 Act itself is very broad. Section 3(c) provides that one of the Act's objects is "to recognise and foster the significant social and economic benefits to the State that result from the sustainable and efficient use of water", including "benefits to the environment". Thus, the legislature has recognised that social and economic benefits may include environmental benefits. When considering the socio economic impacts of a proposed plan, the Minister is therefore entitled to consider that the environmental benefits may also have a positive socio-economic impact.
216The overarching way in which the Minister had due regard to socio-economic impacts was the recognition that entitlements had to be reduced to ensure the sustainable long-term use of the resource. Although no formal or farm-by-farm socio-economic impacts study was conducted, the MGMC and the Minister considered a wide range of socio-economic factors including the following:
(a)The move from across-the-board cuts to history of extraction was done out of a concern to offer greater assistance to, and hence reduce the impacts on, those who had actively used their historical water entitlements (as distinct from those who had entitlements that were not significantly used). For example, the Minister wrote in a 2006 letter to the Parliamentary Secretary to the Prime Minister that this move was "to minimise economic and social disruption".
(b)The ASGE program was adopted that would provide substantial ex gratia payments to eligible licence holders to alleviate impacts of entitlement reductions.
(c)Supplementary water access licences, provided for in the Plan, were to be issued to alleviate the impact on those who had actively used their water entitlements in the past.
(d)The MGMC commented on the public submissions and provided a summary to the Minister.
(e)The Murray CMA consulted the community on the basis for water entitlement reductions, availability of supplementary water access licences, and access to ASGE Program funds.
217The evidence before the Court is replete with examples of consideration of socio-economic impacts by the Minister and others involved in developing the Plan (the respondents have listed examples in a 30 page list forming part of their submissions).
218The applicants seek to diminish the significance of offers of ASGE payments by submitting that they were weighted in favour of high and low users rather than the average user, that the compensation offer was "not reasonable", and that the community component was "negligible". The applicants seek to exemplify the alleged inadequacy of the amounts offered in the case of six of the applicants by tendering a schedule comparing the offer amount with higher amounts that would result if there were to be adopted the value of inactive water at $85/ML and active water at $304/ML in a 2006 valuation advice by Mr Peter Spackman to the Department of Lands. The applicants justify this approach by citing the reference to "detriment" in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40, (1986) 162 CLR 24 at 44.8 per Mason J who said: "Once it is accepted that the subject-matter, scope and purpose of the Act indicate that the detriment that may be occasioned by a proposed land grant is a factor vital to the exercise of the Minister's discretion, it is but a short and logical step to conclude that a consideration of that factor must be based on the most recent and accurate information that the Minister has at hand". In the present case, I do not see a relevant detriment. If it be the case that the amount offered was less than a valuation that had been obtained, that does not establish that the Minister thereby did not take the offer of those payments into account as a socio-economic consideration. It is for the decision-maker and not the Court to determine the appropriate weight be given to matters required to be taken into account.
219The applicants submit that as neither the Chair of the MGMC nor the Minister was called to give evidence in the respondents' case, it should be inferred, in accordance with the principle in Jones v Dunkel [1959] HCA 8, (1959) 101 CLR 298, that their evidence would not have assisted the respondents, first, as to satisfying the Court that "due regard" was given to socio-economic impacts, and secondly, in refuting the applicants' submission that "due regard" to the socio-economic impacts necessitated a formal socio-economic study involving a no-plan versus plan scenario or a farm-by-farm study. Although a Jones v Dunkel inference may be drawn in judicial review proceedings, the circumstances in which it will be drawn are limited. Judicial review proceedings generally proceed on the documents and it is not the usual practice to call the decision-maker. In any event, the respondents called the Executive Officer of the Water Sharing Plan for the Murray/ Lower Darling Regulated River and the Lower Murray Alluvium (Mr Digby Jacobs) and the then chairman of the CMA (Mr Kelvin Baxter), both of whom figured in the making of the Plan. I think that the case should be decided, as far as possible, on the contemporaneous documents and objective probabilities. The principle in Jones v Dunkel concerning the effect of an omission to call a witness is concerned with the strengthening of an inference that is otherwise available: Visa International Service Association v Reserve Bank of Australia [2003] FCA 977, (2003) 131 FCR 300 at [647]. I do not consider that any inference to enliven the operation of this principle should be drawn.
220Brief reference was made in submissions to written expert affidavit evidence from Professor Curtis and Mr Nichol tendered by the applicants and admitted subject to the respondents' objections, including an objection that it was irrelevant. The applicants submit that these experts identify the elements of socio-economic impact that were relevant to the Minister's consideration.
221Professor Curtis is experienced in undertaking social impact statements. He cannot give evidence as to what the 2000 Act requires, only as to what he would do if engaged to do a statement. Mr Nichol really only indicates what his company might do if asked to do a statement. Their evidence is irrelevant to determining the content of the obligations imposed by s 18 of the Act. Their evidence appears to me to be based on a misconstruction of the Act as it assumes that the Minister was required to conduct a formal socio-economic impact study or to have regard to specific socio-economic impacts. In my opinion, even if their evidence is admissible (which it is unnecessary to decide), the consideration that was in fact given to socio-economic matters, to which I have earlier referred, was sufficient to satisfy the Minister's statutory duty to have due regard to the socio-economic impacts of the proposed Plan.
222The applicants also submit that the Minister did not have due regard to the socio-economic impacts because (a) the Plan failed to identify "the requirements for water for extraction under access licences" as required by s 20(1)(c) of the 2000 Act, (b) therefore the Plan's bulk access regime did not have "regard" to that requirement as required by s 20(1)(e). I do not accept the first of those two steps in the applicants' reasoning process for the reasons discussed below when considering the Form issue.
223Consultation by the Murray CMA as to the potential socioeconomic impact of various proposals of the Plan, and ways to minimise socio-economic disruption, was generally thorough. It included forming and consulting with an Advisory Group of licence holders and holding public meetings of licence holders in relation to the ratio of active to inactive water for the purposes of a history of use formula, provision of supplementary water access licences and distribution of financial assistance. By early December 2005, following nominations from licence holders, the CMA had formed a ten member Advisory Group whose members represented a range of water users, levels of dependency and geographic spread of licences. One of the criteria for selection to the Advisory Group was "demonstration of...an understanding of social and economic issues" and one of the objectives of the Advisory Group was community engagement to result in recommendations to "minimise social economic impacts of entitlement reductions". The Advisory Group met on five occasions. As regards the relative weightings to be given to active and inactive use, the Advisory Group recommended a ratio of 28:22 and this was adopted.
224However, the applicants submit that the Murray CMA's consultation with licence holders from late 2005 to about May 2006 did not have due regard to socio-economic impacts because across-the-board cuts were an option but Mr Baxter, the Chair of the Murray CMA, understood and indicated to licence holders that it was not part of the Murray CMA's brief to consult with them on whether the across-the board cuts methodology of reducing water extraction entitlements should be adopted.
225There was no statutory duty on the Minister or the Murray CMA to consult with licence holders on this matter. Under the 2000 Act it is mandatory for a water management plan to be consistent with government policy and inter-governmental agreements: above at [6]. An across-the-board cuts methodology seems inconsistent with government policy and the principles of the intergovernmental ASGE Agreement: above at [49], [51]. What Mr Baxter told licence holders and his understanding appear to be consistent with the following:
(a)At a meeting of the GAC on 5 August 2004, attended by Mr Baxter, Mr Peter Sutherland, who was both the Chair of the GAC and a Departmental representative, advised that "neither the GAC's or CMA's were being asked to consult on whether History of Use (HOU) should be used" and that "this would be a decision made by Governments".
(b)A draft paper dated 14 July 2004 titled "Information for CMA Chairs on Groundwater Adjustment Committee" set out the draft parameters, principles and process for review of entitlement reductions methodologies and financial assistance in the six valleys. The CMAs were to "consult with water user groups and licence-holders on the review of the entitlement reduction and assistance package methodologies". The paper stated:
"The Government has agreed to amend the approach agreed in 2001 from reducing all entitlements in over-allocated groundwater sources equally, to an approach tailored for each groundwater system that, where appropriate, recognises historical extraction."
(c)On 19 May 2006 the Murray CMA sent its report to the GAAC. The covering letter states:
"Given a draft Water Sharing Plan had not been made publicly available prior to consultation commencing, it was agreed that the Authority would consult licence holders on the following:
- Sharing available water, by defining History of Extraction (HOE) and a weighting of active to inactive water)
- Sharing available financial assistance
- Access to Supplementary Water Access Licence (SWAL) by defining a reduction profile and access."
The report stated that its package met "licence holder expectations and broader community interests... while keeping within the two key principles of the Program". The report advised that although "a sector of licence holders were strongly in favour of an 'across the board' cut, the CMA did not present this as one of the options given it would not satisfy the two principles of the [ASGE] Program", namely:
· to recognise water-dependent investments made by licence holders, and
· to recognise that all groundwater entitlements, whether extracted or not, have a value.
(d)These two key principles were communicated to licence holders in a Murray CMA discussion paper at meetings in February 2006 and identified in a brochure to be sent to licence holders included in a ministerial briefing in October 2005.
(e)The option of 'across the board' cuts was not included in the brochure about the ASGE program sent to licence holders in late 2005, which referred only to the CMAs' ability to submit a proposal for an "alternative method to the HOE process" and stated that this would be tested against the "ASGE Program's principles and the level of support by licence holders." According to that brochure, if "the alternative process does not meet this criteria, the HOE will be the default process." Since across-the-board cuts did not fulfil the principle of recognising water-dependent investment, any proposal to use such a methodology would not meet the criteria, and the default process of history of use would therefore apply instead.
(f)GAAC's terms of reference suggest that it was expected to consider proposals which were alternatives to "across the board" cuts. One of GAAC's objectives was to "consider proposals for alternative entitlement reduction methods, giving consideration to history of use (HOU) or equivalent methodology, and consequent changes to groundwater sharing plans". "Alternative" referred to alternatives to the previous policy of "across the board" cuts and an "equivalent methodology" to HOU would likely be one which recognised water-dependent investment. GAAC's specific functions included providing advice to GAOC on "alternative entitlement reduction methodology, giving consideration to HOU or equivalent methodology, and assistance methodologies consistent with level of funding available and key principles guiding the review." It was also required to assist the Chairs of the CMAs in the task of consulting about and reviewing the Water Sharing Plans "and ensure that the changes are consistent with the principles of the review." It was not consistent with GAAC's functions to consider or endorse an "across the board" cuts methodology, since this would not be consistent with the review principles.
(g)Mr Baxter indicated in evidence that at meetings he was told by Mr John Verhoeven, one of the senior government officials involved in the process, that the model was to be one of history of extraction, that there was 6.3 million dollars to be apportioned for that model, or a history of use default model, or, within the same guidelines, a better proposal that the CMA deemed to be more equitable and that had the support of the majority of land holders.
(h)An Information Bulletin published by the Murray CMA on 3 February 2006 indicated that the Murray CMA could consider alternative options to history of use "provided they fulfil the principles of the Achieving Sustainable Groundwater Entitlements Program, can be undertaken in the time period available, and have licence holder support."
(i)In March 2006, in an Information Bulletin, the Murray CMA reported that it had "developed a model that responds to licence holders' feedback while keeping within the constraints of Sustainable Yield, financial assistance available and the principles of the Achieving Sustainable Groundwater Entitlements Program." One of the ways in which the model was said to be consistent with those principles was that it recognised "water dependent investment through weighting water availability towards History of Extraction".
226As the applicants submit, there was some indication in two documents that the across-the-board reduction method remained open. The first is a draft 2004 document titled "Information for Consultation by Catchment Management Authorities (CMAs) with Groundwater Licence Holders". It indicated that the starting point was "the policy preference for weighting to History of Extraction". History of extraction was also the "default methodology". Other methodologies (such as history of reliance) could be adopted, but valleys wishing to depart from history of extraction would "need to put a very strong case to the GAAC through their CMAs". "If a valley decides on the earlier 'across the board' cuts approach, the indicative funding for the valley calculated using the HOE methodology and the Valuer-General's valuation will be retained by governments and redistributed to other valleys if required". This document was endorsed at a GAAC meeting of 21 September 2005 as a "work in progress". There is nothing to suggest it was adopted in final form. Its statement about the option of "across the board" cuts should therefore be treated with caution and understood in light of other documents to which I have referred indicating that this option was not available.
227The second document to which the applicants refer is related to the first. It is an email dated 7 March 2006 to Mr Baxter and others in which Mr Verhoeven said that GAAC had "agreed at its meeting of 21 September 2005 that if a valley decides on the across-the-board cuts approach, the indicative funding will be retained by governments and distributed to other valleys if required". Mr Baxter did not recall such an agreement. It is unclear why Mr Verhoeven thought that it had been "agreed" that a valley could adopt across-the-board cuts. It may have been because the GAAC meeting of 21 September 2005 endorsed the draft document entitled "Information for Consultation by Catchment Management Authorities (CMAs) with Groundwater Licence Holders" as a work in progress (see above). This email was part of an email exchange initiated by the Murrumbidgee CMA and, understood in context, it is doubtful that it supports the applicants' position given the following:
(a)On 3 March 2006 Mr Verhoeven emailed GAAC members (including Mr Baxter) to say that the Murrumbidgee CMA had forwarded a pro rata reduction proposal for consideration as an alternative to history of use, which was "the same as across-the-board cuts, having active:inactive weightings of 50:50". Mr Verhoeven proposed to advise the Murrumbidgee CMA that this was not approved because it did not meet the ASGE principles of recognising water dependent investment and recognising that all entitlements have a value. The NSW Irrigators Council declined to support the proposal for the same reason.
(b)On 5 March 2006 the Chair of the Murrumbidgee CMA, Mr Jim McDonald, emailed Mr Verhoeven, members of GAAC (including Mr Baxter) and a representative of the Minister's Office, saying "it is not the role of the GAAC to take, or be seen to be taking, positions"; however, he agreed to GAAC recommending that the proposal "does not meet the principles for participation in the ASGE program for the funding portion".
(c)On 7 March 2006, in the email to the GAAC members (including Mr Baxter), Mr Verhoeven made the statement to which the applicants refer (above). However, he remained firm in his opinion that this approach was inconsistent with the governments' two key principles and made clear that the GAAC's objectives were to consider proposals giving consideration to history of use or equivalent methodology (not to proposals for "across the board" cuts).
(d)A review of the Draft Meeting Outcomes of the GAAC meeting of 21 September 2005 (a meeting attended by Mr Baxter), which were adopted at the GAAC meeting of 18 October 2005, does not record any such agreement being reached. On the contrary, GAAC considered a proposal from the Lachlan CMA to use a history of reliance model, and it was agreed that this "approach is consistent with governments' two principles, and that the Lachlan CMA could proceed with the HOR surveys". This suggests that GAAC was proceeding consistently with its terms of reference in testing proposed methodologies against the government principles.
228Looking at the evidence as a whole, I am not satisfied that the across-the-board method of reducing entitlements was still open or that Mr Baxter was in error in indicating to licence holders that it was not part of the Murray CMA's brief to consult with them about it. Even if I am in error, in the circumstances, I do not consider that this establishes the alleged ground of judicial review. Consultation with licence holders on a history-of-use methodology was not mandated by the 2000 Act. As discussed earlier, there was a great deal of consideration of socio-economic impacts by the Minister and the Murray CMA. The Minister had the Murray CMA's May 2006 report that a sector of licence holders was strongly in favour of across-the-board cuts. The Minister expressly indicated that he had taken into account that some users with a low history of extraction sought a return to across-the-board cuts, and that the government considered this method to be inequitable (eg above at [64]).
229For these reasons, I do not accept the applicants' socio-economic case.