Options for obtaining additional licence entitlements
Information for local water utilities seeking to obtain additional water access licence shares (entitlement) under the Water Management Act 2000.
Options for additional access licence shares
The ‘share component’ of each water access licence entitles the holder to the specified shares of the available water in the relevant water source. These shares are often referred to as the licence ‘entitlement’. Local water utilities can obtain additional access licence shares in one of the following ways:
- by applying to have their existing local water utility access licence entitlement adjusted under section 66(3) of the Water Management Act 2000 (the Act)
- making an application for additional local water utility access licence entitlement under section 66(4) of the Act
- apply for a new water access licence as per clause 10 of the Water Management (General) Regulation 2018) and under section 61(1)(a) of the Act – see Table 1
- purchase or lease through the water market (under section 71T, 71Q or 71N)
- obtain the right to apply for a new water access licence through a controlled allocation order (section 61(1)(c) and section 65 of the Water Management Act 2000).
Local water utilities should decide which option best suits their individual circumstances and operation.
Adjustment of shares
Adjustment of share component under section 66(3)
Section 66(3) of the Water Management Act 2000 allows the Minister for Water to vary the shares specified in the share component of a local water utility access licence, including those with the subcategory ‘domestic and commercial’, in response to variations in population, together with any variation in commercial activities that has occurred in that area in the past 5 years. Domestic consumption and commercial activities are defined below.
Section 66(3) of the Water Management Act 2000 allows the Minister for Water to vary the shares specified in the share component of a local water utility access licence, including those with the subcategory ‘domestic and commercial’, in response to variations in population, together with any variation in commercial activities that has occurred in that area in the past 5 years. Domestic consumption and commercial activities are defined below.
Adjustment of share component under section 66(4)
Under Section 66(4) of the Water Management Act 2000 a local water utility may apply to the Minister for an increase in the shares specified in the share component of their local water utility access licence, including those with the subcategory ‘domestic and commercial’.
Things to consider when applying for this increase are:
- The purpose of increasing the share component must be to provide an immediate increase in the availability of water for supply by the utility to reflect rapid population growth within the utility’s area of operation.
- Applicant must demonstrate that there has been rapid population growth within the utility’s area of operation, and the minimum volume of additional water required to meet increased demand from that rapid population growth.
Under Section 66(4) of the Water Management Act 2000 a local water utility may apply to the Minister for an increase in the shares specified in the share component of their local water utility access licence, including those with the subcategory ‘domestic and commercial’.
Things to consider when applying for this increase are:
- The purpose of increasing the share component must be to provide an immediate increase in the availability of water for supply by the utility to reflect rapid population growth within the utility’s area of operation.
- Applicant must demonstrate that there has been rapid population growth within the utility’s area of operation, and the minimum volume of additional water required to meet increased demand from that rapid population growth.
Applying for a new water access licence
Local water utilities can apply for a new water access licence listed in clause 10 of the Water Management (General) Regulation 2018.These are distinct from local water utility licences with no subcategory.
For local water utilities, the relevant categories and subcategories of licences that can be applied for are listed in Table 1.
The Water Management Act 2000 (section 66(2A)) requires that these licences have a condition to ensure the licence is used for the purpose for which it was granted. The permissible purposes for these licence categories/ subcategories are identified in the Water Management (General) Regulation 2018 (clause 10) and provided in Table 1.
| Licence category | Subcategory | Purpose | |
|---|---|---|---|
| Local water utility | domestic and commercial' | Domestic consumption and commercial activities (Regulation clause 10(1)(a) | |
| Unregulated river | 'town water supply' | Domestic consumption and commercial activities (Regulation clause 10 (1)(d)-(f)) | |
| Regulated river (high security) | |||
| Aquifer | |||
What does ‘domestic consumption’ mean?
‘Domestic consumption’ is defined in the Water Management Act 2000 (section 52(3)) as meaning consumption for normal household purposes in domestic premises.
This includes:
- watering of animals associated with domestic premises for non-commercial purposes, for example, domestic pets and working animals such as horses
- watering of kitchen gardens and animals which supply food for domestic consumption within the domestic premises (but not food which is sold for commercial purposes).
‘Domestic consumption’ is defined in the Water Management Act 2000 (section 52(3)) as meaning consumption for normal household purposes in domestic premises.
This includes:
- watering of animals associated with domestic premises for non-commercial purposes, for example, domestic pets and working animals such as horses
- watering of kitchen gardens and animals which supply food for domestic consumption within the domestic premises (but not food which is sold for commercial purposes).
What does ‘commercial activities’ mean?
‘Commercial activities’ is defined as activities within the categories listed in section 66(3A) of the Water Management Act 2000 which are recognised in the Australian and New Zealand Standard Industry Classification (ANZSIC), 1993 edition (Australian Bureau of Statistics publication, Catalogue No 1292.0).1
The meaning of these activity categories is described in detail in the ANZSIC 1993 edition, available on the Australian Bureau of Statistics website. For example, ‘cultural and recreational services’ (category P) includes recreational parks and gardens, and sports grounds.
The following categories of activities are not included in the Water Management Act 2000 definition of ‘commercial activities’:
- agriculture, forestry and fishing (category A)
- mining (category B)
- manufacturing (category C)
- electricity, gas and water supply (category D).
‘Commercial activities’ is defined as activities within the categories listed in section 66(3A) of the Water Management Act 2000 which are recognised in the Australian and New Zealand Standard Industry Classification (ANZSIC), 1993 edition (Australian Bureau of Statistics publication, Catalogue No 1292.0).1
The meaning of these activity categories is described in detail in the ANZSIC 1993 edition, available on the Australian Bureau of Statistics website. For example, ‘cultural and recreational services’ (category P) includes recreational parks and gardens, and sports grounds.
The following categories of activities are not included in the Water Management Act 2000 definition of ‘commercial activities’:
- agriculture, forestry and fishing (category A)
- mining (category B)
- manufacturing (category C)
- electricity, gas and water supply (category D).
Purchasing through the water market
A local water utility may decide to broaden its options for supplying water to customers by obtaining a general purpose water access licence through the water market. These are water access licences that are not a specific purpose access licence and can be used for any purpose. A local water utility can obtain a general purpose access licence by:
- applying for a licence with zero share component and then buying water entitlements or water allocations on the water market (Water Management Act 2000, section 61(1)(b), 71Q)
- buying a water access licence from another licence holder on the water market (Water Management Act 2000, section 71M)
- leasing a water access licence from another licence holder on the water market (Water Management Act 2000, section 71N).
- obtaining the right to apply for a new water access licence through a controlled allocation Water Management Act 2000, section 61(1)(c) (see the next section for information on this).
When weighing up each of these options, the purchaser or lessee should note that:
- purchase or leasing is subject to availability on the water market
- the category of licence is not changed by the lease or transfer (at purchase)
- licence categories have different priorities under the Water Management Act 2000
- water allocation is subject to available water determinations
- subsequent dealing for the purchased or leased licence, to nominate a water supply work, is required before water can be taken.
Specific considerations for purchase and lease are provided in Table 2 below.
| Option | Things to consider | |
|---|---|---|
| Buy a water access licence (under s71M of the Act) or number of shares (under s71Q of the Act) from another licence holder on the water market. | The Licence is a tradable asset. | |
| Apply to lease a water access licence from another licence holder on the water market under s71N of the Act. |
Lease must be for at least six months. The lessee has the benefit of the allocations already credited to the leased licence. | |
Controlled allocations
Controlled allocation is a process whereby water access licences can be obtained in water sources that are not fully committed. Under section 65 of the Water Management Act 2000, the Minister can make an order that allows proponents to acquire specified access licences by either auction, tender or other competitive means as set out in the order. Controlled allocation orders made to date have typically been made for groundwater sources.
More information on controlled allocation is available on our website, visit controlled allocations.