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For the first time, major industries in the Northern Territory will be charged for the water they use, in a policy shift the Environment Minister says is aimed at “bigger industries”, not “small businesses and small farmers trying to make a go of it”.
Key points:
- The NT government has announced it will charge the oil and gas industry for its water use by next year
- Other industries such as cotton and irrigated crops could be charged too
- The Minerals Council of Australia says additional costs to operations will jeopardise the industry
Until now, water has been free for major oil and gas companies, mines and irrigated agriculture, while most households pay around $2 a kilolitre, amounting to hundreds of dollars a year.
Water — who controls it and how it has been governed — has long been controversial in the NT, as big industries migrate to the north and a string of massive water allocations with no price tag have been handed out.
“This isn’t about discouraging investment,” Environment Minister Lauren Moss told the ABC on Friday morning.
“This is just about making sure that we have a fair system.
“This is not about stock and domestic users. This is about a charging regime around industry.”
Despite it being a requirement under the National Water Initiative for more than half a decade, the Northern Territory is the only jurisdiction, apart from WA, where water is free.
Charges for oil and gas industry start next year
In 2018, a key recommendation of the Pepper Inquiry into fracking stipulated that the government introduce a charge on water for all onshore shale gas activity.
But as for other industries and growers, it remained unclear if or when they would be charged.
“It’s more about in the first instance, your onshore petroleum industry, mining industry, those sorts of things,” Ms Moss said.
“But we will go out over the next 12 months to really make sure that we are consulting with both the community and industry about what that charging framework looks like going forward.”
An actual cost and system the charge would come under would likely take months, Ms Moss admitted, but it was likely the charge would be about recovering the cost of water management.
Australian Petroleum Production and Exploration Association (APPEA) CEO Samantha McCulloch said the oil and gas industry welcomed the charges as it fast-tracked the “extraordinary opportunity” of the Beetaloo Basin.
But a string of unanswered questions has cast uncertainty for other industries.
NT Farmers chief executive Paul Burke said charging for water was not something that was going to be popular among its membership, which included cotton growers and irrigated crop producers.
“But that is a discussion we will have with the department and stakeholders over the coming year, about where we want to go as an industry … and [how we] strike a balance that doesn’t discourage development,” Mr Burke said.
“We don’t get it [water] for free.
“In the Northern Territory, the development, the finding of the water, the pumping of the water is all borne by the farmers, so we believe we pay a significant amount of money for that water.”
Djingili elder and director of Nurrdalinji Aboriginal Corporation Elaine Sandy said the policy shift should have been made a long time ago.
“Our water should never have been free for industry to use in the first place,” she said.
While the government says it has consulted widely with industries that will likely be impacted, not all are on board.
Cathryn Tilmouth, North Australia’s director of the Minerals Council of Australia, said the mining industry did not support potential charges, adding it would be “another layer of red tape”.
“In a jurisdiction like the Northern Territory, where there isn’t that sort of level of competition for water resources, there isn’t that need for a pricing structure,” she said.
“You’re wanting to build industry in the territory, wanting to build investment, you want to create jobs … to put another disincentive in the Territory, another cost impost, just doesn’t make sense.”
Erin O’Donnell from the Centre for Resources, Energy and Environment Law at the University of Melbourne — who has extensively researched NT water governance for years — said setting a price on water for commercial use was an “important and necessary step”.
However, Dr O’Donnell said in the absence of a “transparent pricing strategy [it could] be a recipe for disaster”, which had the potential to create inequities and “risk underselling the value of water, which is a big problem”.
“This is a good step from the Northern Territory government to start the process of imposing cost recovery … it means firstly, the taxpayers of the NT are not cross-subsidising commercial users like the oil and gas industry,” she said.
“But you have to do that with a really strong evidence base, and you have to do that with a clear and transparent plan to address inequities in water access, otherwise you risk entrenching those.”
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