The options under which the CEWH can trade is explained in the Trade Infographic.
The trade of Commonwealth environmental water is governed by Section 106 of the Water Act, which outlines the circumstances under which trade can be undertaken and the purpose of the trade. As a government entity, the CEWH and Commonwealth Environmental Water Office staff must also comply with a wide range of existing legislative requirements. This includes: financial management arrangements for Commonwealth agencies; freedom of information; and policies relating to information management, auditing, employee conduct and accountability.
As the Commonwealth holds environmental entitlements across four states, the CEWO must also comply with the prudential, trade and water resource management frameworks of those states.
The Commonwealth environmental water holdings are subject to the same trade, allocation and carryover rules for each entitlement type as all other entitlement holders (e.g. agricultural users). The CEWH also pays the same fees and charges as all other entitlement holders.
Commonwealth legislation applies specifically to the way in which the CEWH and CEWO operates, including its trading function. State water management legislation sets out the rules that apply to all water entitlements, including those that form part of the Commonwealth environmental water holdings.
The Water Act 2007 requires the CEWH to manage environmental water for the purpose of protecting and restoring the environmental assets of the Murray Darling Basin. It sets out when and how the CEWH can trade and how the proceeds of a sale are used. The Commonwealth Environmental Water Trading Framework provides further information on legislation relevant to the trade of Commonwealth environmental water.
In addition to the obligations of the Water Act 2007, the CEWH and CEWO staff are required to comply with the following legislation and subservient regulations:
- Basin Plan 2012;
- Public Service Act 1999, Public Service Regulations 1999, Australian Public Service Commissioners Directions 2013, and the APS Values and Code of Conduct;
- Public Governance, Performance and Accountability Act 2013 (PGPA Act) and Commonwealth Procurement Rules 2014 (CPR);
- Freedom of Information Act 1982 (FOI Act); and
- Relevant State water management legislation.
The Commonwealth Environmental Water Trading Framework was developed to help ensure that the CEWH's trading activities:
- support enhanced environmental outcomes;
- have regard to social and economic outcomes;
- consider impacts on the market, including any third-party impacts;
- are undertaken in a manner which meets legislative requirements;
- are financially responsible, fair, equitable, transparent and accountable; and that
- the CEWH and Commonwealth Environmental Water Office (CEWO) staff act with integrity and high ethical standards.
The Trading Framework was first released in 2014 and most recently updated in November 2016 to incorporate amendments to the Water Act 2007.
The Commonwealth Environmental Water Trading Framework contains a set of Operating Rules that provide clear guidelines on how the CEWH and CEWO staff will behave through the trading process. These include:
- The CEWH will not trade if aware of a water announcement that has not been made generally available.
- All trades will be undertaken using a competitive process.
- Decisions to trade will be informed by a market assessment.
- Price limits will be used in every trading action.
- Trade offers will be based on consistent, equitable and transparent assessments. The CEWH will provide regular guidance on trading intentions.
- Trading actions will be announced prior to trade.
- Market information will be released prior to each trading action.
- Public reporting will occur following trading actions.
The protocols have been developed to assist the CEWH and CEWO staff in meeting their requirements as per the Basin Plan water trading rules and to reflect the CEWOs corporate values as an Australian Public Service agency.
The Basin Plan water trading rules govern how persons or agencies are to behave if they are aware of a water announcement that has not been made generally available that could materially affect a person’s decision to trade water. These rules come into effect on 1 July 2014.
The Protocols include:
- 'Chinese wall' arrangements to preserve the integrity of advice within the CEWO;
- avoiding exposure to inside information and conflicts of interest;
- disclosing and managing inside information and conflicts of interest if they arise ;
- record keeping and information management;
- being aware of water announcements and decisions to trade; and
- sanctions for breaches of the APS Code of Conduct.