Reported Decision : 137 LGERA 320 New South Wales Court of Appeal Nature Conservation Council of New South Wales Inc v The Minister Administering the Water Management Act 2000 [2005] NSWCA 9 CITATION: This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 3/11/04, 4/11/04, 5/11/04, 6/11/04 JUDGMENT DATE: 9 February 2005 JUDGMENT OF: Spigelman CJ at 1; Beazley JA at 97; Tobias JA at 98 DECISION: Appeal dismissed with costs CATCHWORDS: CONSTRUCTION AND INTERPRETATION - Minister's water management plan - definition of "performance indicators" - whether "performance indicator" must be in the form of a "target" or "standard" - s 50 Water Management Act 2000 - CONSTRUCTION AND INTERPRETATION - Minister's water management plan - rule expressed in terms of "extraction limit" - whether a rule for the "identification, establishment and maintenance of water" within the meaning of the Act - STATUTES - Construction - Acts done in breach of form requirements regulating a statutory power - Whether invalid - Substance-based test. - WATER RIGHTS - whether management plan invalid for failing to provide environmental water rules required under the Act - s 8 Water Management Act 2000 - WATER RIGHTS - Whether amendments to Act invalidate Plan - WORDS AND PHRASES - Performance Indicators, Water Interpretation Act 1987: s30(1)(c) Local Government Act 1993: s36(3)(c) State Water Management Outcomes Plan 2002 LEGISLATION CITED: Water Management Act 2000 Water Management Amendment Act 2004 Water Sharing Plan for the Gwydir Regulated River Water Source 2003 Nature Conservation Council of New South Wales Inc v Minister for Sustainable Natural Resources [2004] NSWLEC 33 CASES CITED: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Seaton v Mosman Municipal Council (1996) 93 LGERA 1 Nature Conservation Council of NSW Inc PARTIES: The Minister Adminstering the Water Management Act 2000 FILE NUMBER(S): CA 40112/04 T F Robertson SC / J Jagot (Appellant) COUNSEL: N Hutley SC / N Perram / A Crossland (Respondent) Environmental Defenders Office (Appellant) SOLICITORS: Crown Solicitors Office (Respondent) LOWER COURT JURISDICTION: Land & Environment Court LOWER COURT FILE NUMBER(S): 40573/03 LOWER COURT JUDICIAL OFFICER: Talbot J - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40112/04 SPIGLEMAN CJ BEAZLEY JA TOBIAS JA Wednesday 9 February 2005 NATURE CONSERVATION COUNCIL OF NEW SOUTH WALES INC v THE MINISTER ADMINISTERING THE WATER MANAGEMENT ACT 2000 The Respondent Minister made the Water Sharing Plan for the Gwydir Regulated River Water Source 2003 ("the Plan") pursuant to the provisions of the Water Management Act 2000 ("the Act"). The Appellant challenged the validity of the Plan in the Land and Environment Court. Talbot J rejected each ground of challenge and dismissed the application to that Court. The Appellant appeals to this Court on two grounds. 1. Performance indicators Pursuant to s35(1)(d) of the Act, a management plan must contain performance indicators to measure the success of strategies for reaching the objectives identified in the plan. The Appellant submitted that the Plan did not contain such performance indicators. The Appellant submitted that a performance indicator will not satisfy the statutory requirement unless it contains some component against which the success of each strategy may be measured in the sense that there is a quantity or quality that has been fixed. Specifically, any performance indicator must indicate the direction of any change which indicates success and also provide an indication as to the magnitude of any change which may indicate success or lack of success. HELD The legislative scheme does not require a performance indicator to be expressed in the form of a "target" or "standard" ( Seaton v Mosman Municipal Council (1996) 93 LGERA 1 distinguished.) It is clear from the indicators identified in the Plan as to the direction of any change or movement which would indicate success rather than failure. Although neither Notes nor Appendices to a plan form part of a plan, Appendix 4 to the Plan does identify matters capable of quantitative assessment and matters requiring qualitative assessment. It is sufficient for a plan to state indicators in general terms, with more detailed modes of assessment provided for in an appendix. Alternatively, the detail in Appendix 4 is such that a failure to comply with the statutory requirement in s35(1)(d) in the present case is not a failure which invalidates the Plan. ( Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91] applied.) In the further alternative, the requirement for a Minister's plan is that it must deal with matters required in a management plan but only in "general terms". Even without reference to the Appendix, the Plan contains performance indicators that satisfy this requirement. 2. Environmental Health Water A management plan under the Act must establish environmental water rules for the identification, establishment and maintenance of water which is committed to a fundamental ecosystem held at all times. Furthermore, a Minister when formulating a plan must give priority to the principle that water sharing must protect the water source and its dependent ecosystems. The Appellant submitted that the Plan contained no rules for the identification, establishment and maintenance of water that was committed to fundamental ecosystem health at all times. That part of the Plan which purported to comply with this obligation was expressed in terms of a volume of water in excess of a long-term extraction limit, as defined in the Plan. HELD The submission of the Respondent that it was sufficient for the Plan to deal with "an abstract concept" of water, rather than actual water, rejected. What is required by the Act is water that is constantly provided for and which, absent acute drought conditions, will in fact be available to protect fundamental ecosystem health. A rule expressed in terms of an amount in excess of an "extraction limit" was not a rule for the "identification, establishment and maintenance of water" within the meaning of the Act. The environmental water rule that required a minimum quantity of water to flow through to the Gwydir Wetlands, at the western extremity of the regulated water source, may ensure fundamental ecosystem health of the Wetlands, but it does not appear that that flow would also be adequate to ensure fundamental ecosystem health elsewhere. The Respondent relied upon amendments to the Act made in 2004 which, in its submission, had the effect of relevantly validating the Plan. The relevant provisions are not retrospective and do not have the consequence that a Ministerial plan made under the Act before the commencement of the Amendment Act is taken to have been made under the Act as amended. 3. Validity Parliament was concerned with matters of substance, rather than of form, when it required the establishment of environmental water rules. Although the provisions of the Plan which purport to comply with the requirement to rules for the identification etc of water committed to fundamental ecosystem health do not do so in form, on the face of the Plan, and in the absence of any other relevant evidence, the Plan does, as a matter of substance, contain such rules. There was no legislative purpose to invalidate the exercise of the statutory power by reason of the failure identified in the present case. (Project Blue Sky Inc supra at [91] applied.) The appeal is dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40112/04 SPIGLEMAN CJ BEAZLEY JA TOBIAS JA Wednesday 9 February 2005 NATURE CONSERVATION COUNCIL OF NEW SOUTH WALES INC v THE MINISTER ADMINISTERING THE WATER MANAGEMENT ACT 2000 Judgment 1 SPIGELMAN CJ: On 21 February 2003, acting pursuant to the Water Management Act 2000 ("the Act"), the Respondent Minister declared rivers in the Gwydir River System to be regulated rivers and made the Water Sharing Plan for the Gwydir Regulated River Water Source 2003 ("the Plan"). The Appellant challenged the validity of the Plan in the Land and Environment Court. Talbot J rejected each ground of challenge and dismissed the application. 2 The Appellant appeals to this Court on two grounds: 1. His Honour erred in finding that the Plan contained performance indicators within the meaning of s35(1)(d) of the Act . 2. His Honour erred in finding that the Plan contained an environmental water rule for environmental health water within the meaning of s8 of the Act. A third ground of appeal was abandoned. The Legislative Scheme 3 The Plan was made as a Minister's plan pursuant to s50 of the Act which provided at the time the Plan was made: "50(1) The Minister may, by order published in the Gazette, make a plan (a Minister's plan ): (a) For any part of the State that is not within a water management area, or (b) for any water management area or water source, or part of a water management area or water source, for which a management plan is not in force, or (c) for any water management area or water source, or part of a water management area or water source, for which a management plan is in force, but only so as to deal with matters not dealt with by the management plan. (1A) A Minister's plan may be made for more than one water management area or water source or for parts of more than one water management area or water source. (2) A Minister's plan must in general terms deal with any matters that a management plan is required to deal with, and may also deal with any other matters that a management plan is authorised to deal with, other than matters that are already dealt with by a management plan. (3) Before making a plan that establishes environmental water rules, the Minister must obtain the concurrence of the Minister for the Environment to the establishment of those rules. (4) Except to the extent to which this Act otherwise provides, a Minister's plan has the same effect as a management plan. (5) The Minister must cause each Minister's plan to be periodically reviewed at intervals of not more than 5 years." 4 The reference to a "management plan" in s50(2) is a reference back to Ch 2 Pt 3 of the Act which makes provision for the making of a management plan by the Minister under s41 of the Act, after a process of drafting and consultation has occurred in accordance with that Part. Section 50 is an alternative power to make a Plan. Nevertheless, s50(2) refers back to the obligatory or permissible content of a management plan under Ch 2 Pt 3. 5 Section 16 of the Act provides: "16(1) A management plan must be consistent with: (a) the State Water Management Outcomes Plan, and … (e) government policy, including government policy in relation to the environmental objectives for water quality and river flow. (2) For the purposes of this section, governmental policy includes such matters as are declared by the regulations to be government policy." 6 Section 6 provides for the State Water Management Outcomes Plan: "6(1) The Governor may, by order published in the Gazette, establish a State Water Management Outcomes Plan for the development, conservation, management and control of the State's water resources in furtherance of the objects of this Act. (2) The objects of a State Water Management Outcomes Plan are as follows: (a) to set the over-arching policy context, targets and strategic outcomes for the management of the State's water sources, having regard to: (i) relevant environmental, social and economic considerations, and (ii) the results of any relevant monitoring programs, (b) to promote the water management principles established by this Act, (c) to give effect to any government policy statement in relation to salinity strategies. (3) The State Water Management Outcomes Plan must be consistent with: (a) government obligations arising under any inter-governmental agreement to which the government is a party, such as the Murray-Darling Basin Agreement referred to in the Murray-Darling Basin Act 1992, and (b) government obligations arising in connection with any international agreement to which the government of the Commonwealth is a party, and (c) government policy, including government policy in relation to the environmental objectives for water quality and river flow. (4) For the purposes of this section, government policy includes such matters as are declared by the regulations to be government policy." 7 Of particular relevance for the present proceedings are the sections relating to the required and permissible content of a water management plan with respect to water sharing found in Ch 2 Pt 3 Div 2: "19(1) This Division applies to the provisions of a management plan to the extent to which they deal with water sharing. (2) The water sharing provisions of a management plan may apply to the whole or any part of a water management area, or to the whole or any part of one or more water sources within a water management area. 20(1) The water sharing provisions of a management plan for a water management area or water source must deal with the following matters: (a) the establishment of environmental water rules for the area or water source in relation to each of the classes of environmental water referred to in section 8 (1), (b) the identification of requirements for water rules within the area or from the water source, or water source to satisfy basic landholder rights, (c) the identification of requirements for water for extraction under access licences, (d) the establishment of access licence dealing rules for the area or water source, (e) the establishment of a bulk access regime for the extraction of water under access licences, having regard to the rules referred to in paragraphs (a) and (d) and the requirements referred to in paragraphs (b) and (c). (2) The bulk access regime referred to in subsection (1)(e): (a) must recognise and be consistent with any limits to the availability of water that are set (whether by the relevant management plan or otherwise) in relation to the water sources to which the regime relates, and (b) must establish rules according to which access licences are to be granted and managed and available water determinations for be made, and (c) must recognise the effect of climatic variability on the availability of water, and (d) may establish rules with respect to the priorities according to which water allocations are to be adjusted as a consequence of any reduction in the availability of water, and (e) may contain provisions with respect to the conditions that must (as mandatory conditions) be imposed on access licences under s 66 (1), including conditions providing for the variation, from time to time, of the share and extraction components of access licences, and (f) must be consistent with the water management principles. (3) The rules referred to in subsection (2) (d) must comply with the priorities established under section 58. (4) The access licence dealing rules established under subsection (1) (d): (a) must comply with the access licence dealing principles, and (b) subject to those principles, may regulate or prohibit any dealing under Division 4 of Part 2 of Chapter 3. 21 The water sharing planning provisions of a management plan for a water management area or water source may also deal with the following matters: (a) the rates, times and circumstances under which water may be taken from any water source in the area, or the quantity of water that may be taken from any water source in the area or delivered through the area, (b) the kinds of water supply works that may be constructed and used in the area, (c) the operation of water accounts for the area or water source, such as the carrying over of credits from one accounting period to the next, and the maximum credit that may be allowed to accumulate in any account, (d) water sharing measures for the protection and enhancement of the quality of water in the water sources in the area or for the restoration or rehabilitation of water sources or their dependent ecosystems, (e) measures to give effect to the water management principles and the objects of this Act, (f) such other matters as are prescribed by the regulations." 8 Each of s20(2)(f) and s21(e) makes reference to the water management principles. Section 21(e) also makes reference to the objects of the Act. 9 The objects of the Act are identified in s3: "3 The objects of this Act are to provide for the sustainable and integrated management of the water sources of the State for the benefit of both present and future generations and, in particular: (a) to apply the principles of ecologically sustainable development, and (b) to protect, enhance and restore water sources, their associated ecosystems, ecological processes and biological diversity and their water quality, and (c) to recognise and foster the significant social and economic benefits to the State that result from the sustainable and efficient use of water, including: (i) benefits to the environment, and (ii) benefits to urban communities, agriculture, fisheries, industry and recreation, and (iii) benefits to culture and heritage, and (iv) benefits to the Aboriginal people in relation to their spiritual, social, customary and economic use of land and water, (d) to recognise the role of the community, as a partner with the government, in resolving issues relating to the management of water sources, (e) to provide for the orderly, efficient and equitable sharing of water from water sources, (f) to integrate the management of water sources with the management of other aspects of the environment, including the land, its soil, its native vegetation and its native fauna, (g) to encourage the sharing of responsibility for the sustainable and efficient use of water between the Government and water users, (h) to encourage best practice in the management and use of water." 10 The water management principles are contained in s5 and include subsections relevant to water sharing: "5(1) The principles set out in this section are the water management principles of this Act. (2) Generally: (a) water sources, floodplains and dependent ecosystems (including groundwater and wetlands) should be protected and restored and, where possible, land should not be degraded, and (b) habitats, animals and plants that benefit from water or are potentially affected by managed activities should be protected and (in the case of habitats) restored, and (c) the water quality of all water sources should be protected and, wherever possible, enhanced, and (d) the cumulative impacts of water management licences and approvals and other activities on water sources and their dependent ecosystems, should be considered and minimised, and (e) geographical and other features of indigenous significance should be protected, and (f) geographical and other features of major cultural, heritage or spiritual significance should be protected, and (g) the social and economic benefits to the community should be maximised, and (h) the principles of adaptive management should be applied, which should be responsive to monitoring and improvements in understanding of ecological water requirements. (3) In relation to water sharing: (a) sharing of water from a water source must protect the water source and its dependent ecosystems, and (b) sharing of water from a water source must protect basic landholder rights, and (c) sharing or extraction of water under any other right must not prejudice the principles set out in paragraphs (a) and (b)." 11 Section 9 imposes certain duties with respect to the exercise of functions under the Act: "9(1) It is the duty of all persons exercising functions under this Act: (a) to take all reasonable steps to do so in accordance with, and so as to promote, the water management principles of this Act, and (b) as between the principles for water sharing set out in section 5 (3), to give priority to those principles in the order in which they are set out in that subsection. (2) It is the duty of all person involved in the administration of this Act to exercise their functions under this Act in a manner that gives effect to the State Water Management Outcomes Plan." 12 One of the matters with which a management plan must deal is that found in s20(1)(a), set out above, requiring the establishment of environmental water rules for each of the classes of environmental water in s8(1). Section 8 provides: "8(1) The following classes of environmental water are recognised for the purposes of this Act: (a) water that is committed for fundamental ecosystem health at all times, and may not be taken or used for other purposes ( environmental health water ), (b) water that is committed for specified environmental purposes at specified times or in specified circumstances, but may, at other times and in other circumstances, be taken and used for other purposes ( supplementary environmental water ), (c) water that, pursuant to an access licence, is committed for specified environmental purposes, either generally or at specified times or in specified circumstances ( adaptive environmental water ). (2) Rules for the identification, establishment and maintenance of each class of environmental water ( environmental water rules ) are to be established for all of the water sources in the State, by means of a management plan, as soon as practicable after the commencement of this Act." 13 The significance of the environmental water rules is emphasised by the fact that such rules are one of the mandatory core provisions of a management plan and by s48 which provides: "48 When exercising functions under this Act, the Minister must take all reasonable steps to give effect to the provisions of any management plan and, in particular, to ensure that any environmental water rules established by the plan are observed." 14 The format of a management plan is subject to the requirements set out in s35 of the Act: "35(1) A management plan must include the following components: (a) a vision statement, (b) objectives consistent with the vision statement, (c) strategies for reaching those objectives, (d) performance indicators to measure the success of those strategies." The Plan 15 The Plan is made for an identified "water source" specified in an order declaring certain rivers to be regulated rivers. The list of rivers is Appendix 1 to the Plan. This water source forms part of the Gwydir River and Border Rivers Water Management Areas constituted by the Minister by order under the Act. 16 The Gwydir River commences near Armidale in the New England Tablelands and flows in a north westerly direction for about 300 kilometres. Between its headwaters and Moree it receives additional water from a number of substantial tributary systems (that is, streams flowing into the Gwydir). Around Moree the river breaks into a number of effluent streams (that is, streams flowing out of the Gwydir). The Gwydir and its effluent streams then flow into the Barwon River upstream of Collarenebri. 17 About 1000 kilometres downstream from the Gwydir's headwaters in the New England Tablelands there has been constructed a dam known as the Copeton Dam. The "regulated" rivers that make up the majority of the water system lying between Copeton Dam and the junction of the Gwydir River and its effluent streams with the Barwon River make up the Gwydir Regulated River Water Source ("GRRWS"). 18 There are also above the upper reaches of the Copeton Dam a series of unregulated streams feeding into the Gwydir (but not, as a matter of definition, part of the GRRWS) and, additionally, some unregulated rivers which feed, as tributaries, into the GRRWS beneath the Copeton Dam, again not part of the GRRWS. 19 Part 3 of the Plan is entitled "Environmental Water Provisions". It asserts that it is made in accordance with ss5(3), 8(1), 8(2) and 20(1)(a) of the Act. Clause 14 states: " 14 Environmental health water This Plan establishes the following environmental health water rules: (a) water volume in excess of the long-term extraction limit established in clause 30 of this Plan may not be taken from this water source and used for any purpose. (b) water availability is to be managed as specified in clause 32 of this Plan to ensure water volume in excess of the long-term extraction limit is not being taken. Note . By limiting long term average annual extractions to an estimated 388,000 megalitres per year this Plan ensures that approximately 56% of the long-term average annual flow in this water source (estimated to be 875,400 megalitres per year) will be preserved and will contribute to the maintenance of basic ecosystem health. (c) the minimum flow passed through to the Gwydir wetlands is to be the lesser of: (i) the sum of flows in the Horton River at Rider, Myall Creek at Molroy, and Halls Creek at Bingara, plus any water spill or pre-release for flood mitigation purposes from Copeton Dam water storage, and (iii) 500 megalitres per day (hereafter ML/day ), Note . At the time of commencement of this Plan, wetland inflow assessment is based on flows in the Gwydir River at Yarraman minus estimated delivery losses and water use between there and the wetland. (d) the passing of the flows referred to in subclause (c) to the Gwydir wetlands may be suspended or temporarily curtailed if, in the opinion of the Minister, this would be environmental beneficial to the Gwydir Wetlands, (e) advice from the ECA Operations Advisory Committee should be sought before action under subclause (d) is taken, and (f) any flows not passed to the Gwydir Wetlands as a result of action under subclause (d) must be used elsewhere to support fundamental ecosystem health and may not be taken or used for other purposes." 20 It is also pertinent to set out part of cl 15: " 15 Supplementary environmental water This Plan establishes the following supplementary environmental water rules: (a) an environmental contingency allowance (hereafter ECA ) is to be set aside in Copeton Dam water storage, (b) an account of the water credited to and released from the ECA is to be kept, (c) whenever an available water determination for regulated river (general security) access licences is made, the ECA account shall be credited with a volume equal to the lesser of: (i) 45,000 megalitres multiplied by the percentage of share component specified in that available water determination, and (ii) 90,000 megalitres minus the volume currently in the account, (d) water in the ECA account may be released for any of the following purposes: (i) to support a colonially nesting native bird breeding event that has been initiated in the Gwydir wetlands following natural flood inundation, (ii) to provide additional inundation in the Gingham and Lower Gwydir Wetlands during or following periods of extended dry climatic conditions. (iii) to provide inundation of higher level benches in the river reaches between Copeton Dam and Gwydir River at Gravesend, (iv) to provide short-term inundation of the wetlands to promote germination of Hyacinth as part of a weed management strategy involving a wetting and drying cycle, (v) to provide flows for environmental purposes in effluent streams, (vi) to support native fish populations and habitat, (vii) to support invertebrates and other aquatic species, (viii) to support threatened species, and (ix) to maintain aquatic aquatic ecosystem health. (e) an ECA Release Program shall be prepared for each water year and shall establish guidelines for the release of water from the ECA account for the purposes listed in subclause (d). (f) the guidelines established in each ECA Release Program should be aimed at maximising the environmental benefit of releases and full utilisation of the available ECA volume." 21 Part 8 of the Plan is entitled "Limits to the Availability of Water". Division 1 is concerned with long-term extraction limits. It purports to be made under s20(2) of the Act. Clauses 30, 32 and 33 are relevant: " 30 Volume of the long-term extraction limit (1) This Plan establishes a long-term extraction limit for this water source being the lesser of: (a) the long-term average annual extraction from this water source that would occur with the water storages and water use development that existed in 1999/2000, the share components existing at the commencement of this Plan and application of the water management rules defined in this Plan, or (b) the long-term average annual extraction from this water source that would occur under Cap baseline conditions. Note . An assessment of the long-term average annual extraction that would occur under the conditions specified in subclause (1)(a) has been made using the Gwydir IQQM computer model with system file 9002wsp.8.sqqlQQMV6.61.005. This indicates a long-term average annual extraction volume of 388,000 megalitres. Note . As assessment of the long-term average annual extractions resulting from the baseline conditions in subclause (1)(b) has been made using he Gwydir IQQM computer model with system file dv93465a.s6_IQQMV6.61.001. This indicates a long-term average annual extraction volume of 415,000 megalitres. Note . The long-term extraction limit recognises the effect of climatic variability on the availability of water, in accordance with section 20(2)(c) of the Act as historic climate and river flow information is used in its determination. (2) The values referred to in subclauses (1)(a) and (1)(b) shall be adjusted for any access licence dealing under section 71E of the Act. (3) For the purposes of establishing the long-term extraction limit and auditing compliance with it, the following shall be included: (a) all water extractions by all categories of access licences in accordance with the rules used for accounting of Cap diversions for Schedule for the Murray Darling Basin Agreement, (b) domestic and stock and native title rights extractions, (c) volumes of water delivered as adaptive environmental water, (d) floodplain harvesting extractions, determined to be taken for use in conjunction with extractions authorised from this water source, and (e) water allocations assigned from access licence water allocation accounts in this water source to access licence water allocation accounts in another water source. (4) For the purposes of establishing the long-term extraction limit and auditing compliance with it: (a) the assessed volume of extractions shall be reduced by the volume of water allocations being assigned from the water allocation accounts of access licences in any other water source to the water allocation accounts of access licences in this water source, and (b) the following shall not be included: (i) replenishment flows made in accordance with this Plan, or (ii) diversion of water pursuant to the environmental health water rules and the supplementary water rules in Part 3 of this Plan. 31 Assessment of the long-term extraction limit and current long-term average annual extraction. (1) Assessment of the long-term extraction limit and the current long-term average annual extraction shall be carried out after the end of each water year, using the hydrologic computer model that, at the time, is approved by the Department for assessing long-term water use from this water source. (2) To assess the long-term extraction limit, the model referred to in subclause (1) shall be set to represent as closely as possible the conditions referred to in clauses 30(1)(a) and 30(1)(b). (3) To assess current long-term average annual extraction from this water source the model referred to in clause 31(1) shall be set to represent as closely as possible all water use development supply system management and other factors affecting the quantity of long-term average annual extraction from this water source at the time of compliance assessment. 32 Compliance with the long-term extraction limit (1) The long-term average annual extraction from this water source may not be permitted to exceed the long-term extraction limit specified in clause 30. (2) Pursuant to subclause (1): (a) if it has been assessed that the current long-term average annual extraction from this water source, exceed: (i) the volume specified in clause 30(1)(a) by 3% or more, (ii) the volume specified in clause 30(1)(a) by more than half the difference between the volume specified in clause 30(1)(a) and the volume specified in clause 30(1)(b), or (iii) the volume specified in clause 30(1)(b), or (b) if the assessments for 3 consecutive water years indicate that the current long-term average extraction from this water source exceeds the long term extraction limit, (c) then the maximum available water determination made for supplementary water access licences under clause 30 shall be reduced, and (d) once the maximum available water determination for supplementary water access licences has reduced to zero, the maximum volumes that may be taken or assigned from a regulated river (general security) access licences under clause 33 shall be reduced. (3) The degree of reduction under subclause (2) shall be that assessed necessary to return long-term average annual extractions to the long-term extraction limit. (4) Reductions in the percentages specified in clauses 33(a) and 33(b), pursuant to subclause (3), are to be of the same proportion. Note . Subclause (4) means that if the percentage specified in clause 33(a) is reduced from say 125% to 100% (ie by one fifth), then the percentage specified in clause 33(b) is to be reduced from 300% to 240% (ie one fifth). (5) If action has been taken under subclause (2), and a subsequent assessment under clause 31 indicates that the current long-term average annual extractions is below the long-term extraction limit by more than 3%, then previous reductions under subclause (2) may be reversed to the degree that it is assessed necessary to return the long-term average annual extractions to the long term extraction limit. (6) Any reversal of previous reductions under subclause (5): (a) shall not exceed previous reductions made under subclause (2), and (b) shall first reverse any previous reductions relating to regulated river (general security) access licences. (7) The assessment of the degree of any reduction required under subclause (2) or degree of any reversal under subclause (5), shall be made using the same computer model used to carry out assessments under clause 31. 33 Limit to the volumes that may be taken under or assigned from regulated river (general security) access licences. The maximum volume that may be taken under or assigned from a regulated river (general security) access licence in this water source: (a) during any water year, shall be 125% of the share component of the access licence, or such lower percentage that may result from clause 32, plus the volume of water allocations assigned to the access licence from another access licence during that water year, and (b) during any 3 consecutive water years, shall be 300% of the share component of the access licence, or such lower percentage that may result from clause 32, plus the volume of water allocations assigned to the access licence from another access licence during the 3 water years." 22 Division 2 of Pt 8 makes provision for available water determinations. 23 The words "long term average annual extraction" referred to in each of cls 14, 30, 31 and 32 are defined in Dictionary to mean: "The average of annual water extractions from the water source over the period for which an assessment is carried out." 24 Clause 30 makes reference to the "Cap baseline conditions" and also to the Gwydir IQQM computer model. The Dictionary defines "Cap baseline conditions" to mean "those used for assessment of CAP in Schedule F of the Murray-Darling Basin Agreement and relate to the level of water resource development at June 1994". 25 The Murray-Darling Basin Cap is made relevant to the Plan through the device of the State Water Management Outcomes Plan ("SWMOP") made under s6 of the Act: see s6 and s9(2) set out above. One of the targets in the SWMOP, under the heading "Limits on Extractions", is the following: "Extractions in Murray-Darling Basins regulated rivers limited to the level of long term average annual extraction below the Murray-Darling Basin Ministerial Council (MDBMC) Cap which results from the long term impact of environmental flow rules." 26 The Gwydir IQQM enables a decision-maker to assume the current set of access rules and state of development in the river system and apply it over the entire period of 110 years of data for which information on climate and river flows is available. 27 Under cl 31(3) the long term average annual extraction is to be assessed with the current state of affairs, including planning rules and the state of development, to identify what the annual average extractions would have been if that state of affairs had subsisted since the 1890s. That is to say the IQQM model assumes that things in the GRRWS have always been exactly as they are today and applies that situation to the available data since the 1890s. It generates a figure as to how today's state of affairs would behave over the long term in terms of extraction. 28 Clause 30(1) establishes the long term extraction limit in terms of the lesser of two figures. The figure in cl 30(1)(b) is the Cap dictated by Sch F to the Murray-Darling Basin Agreement. However the Cap assumes development levels at 1994. The figure in cl 30(1)(a) is similar to the Cap but it assumes development levels at 1999–2000. The long term extraction limit for which cl 30(1) provides is the lesser of these two figures. 29 The reason proffered for the adoption of a long term extraction limit and the lowering of the Cap extraction limit, is that set out in the SWMOP itself: "Long term average annual extraction limits set an upper bound on the amount of water that can be taken from a surface or ground water source in any year, or group of years. Extraction, for this purpose, includes both the water pumped directly from the river or aquifer as well as those volumes extracted from the rivers via irrigation or other channels measured at the offtake point, and therefore includes the transmission losses associated with those extractions. In the past there was a reluctance to set limits on extraction because there was a belief that: · the environmental damage resulting from increased extraction was the inevitable and acceptable cost for economic development, · future demand for water could be met from high flows with minimal environmental impact, · an extraction limit would unacceptably impact on the economic return from continued water resource development, and · an extraction limit would mean that future activation of undeveloped entitlement would be at a cost to the water supply reliability of active water users. There is, however, increasing acceptance of the need to place overall limits on extraction, typically defined as long term average annual extraction limits, in order to halt the environmental decline that is becoming evident in many water sources. High flows in an up-river management area, for example, will often translate to lower flows so that additional extraction will compromise the security of supply to downstream users. Clear specification of the limits to extraction are essential for the clarification of access rights, the effective operation of a water market, informed business planning and efficient investment decisions. Extraction limits protect the security of supply of existing licence holders by limiting the granting of new licences in a 'fully allocated' water source. In the absence of an extraction limit, over-use can arise or be exacerbated, causing conflict within a community, devaluing individual entitlements and encouraging inefficient investment. A recent 'Review of the Operations of the Cap – Social and Economic Impacts' by Marsden Jacobs and Associates 2000, observed that: 'The prime benefit of the Cap is the guaranteeing of security on a valley-by-valley basis. In the absence of the Cap there would be substantial erosion of security of entitlements across the Basin. The Cap provides a better and more certain climate for investment and jobs growth.' In the absence of constraints to extraction there are generally few motivations for efficient water use and the marginal value of water will generally remain low. While it is difficult to define exactly what level of extraction is 'sustainable' as it would involve a complex measure of biophysical interactions and social and economic demands, a number of State and inter-Government policies establish appropriate limits. Evidence of significant environmental damage and the continuing erosion of supply reliability to downstream users led the Murray-Darling Basin Ministerial Council (MDBMC) to place a cap on water extractions in the Basin at 1993/94 development levels (the MDBMC Cap). However, there is scientific evidence to suggest that water extractions at the Cap level may be responsible for unacceptable degree of environmental damage in parts of the Basin and a lower extraction limit may be required to rehabilitate these water sources and ensure the effectiveness of the environmental water rules. The extraction limit target for the NSW regulated rivers of the Murray-Darling Basin is therefore set at a level of extraction below the MDBMC Cap, which results from the impact of the prevailing environmental water rules. This lower extraction limit is necessary to ensure that river flows not specifically targeted or restored by environmental water rules cannot be further diminished by extractions. Because the extraction limit is below the Cap it ensures that this external obligation is also met." 30 Clauses 9 to 12 of the Plan are made pursuant to s35 of the Act: " 9 Vision The vision for this Plan is to have a sustainable, healthy river system that provides reliable water through flow management for the community, environment, agriculture and industry. 10 Objectives The objectives of this Plan are to: (a) protect, maintain and enhance the environmental values of the Gwydir Regulated River Water Source, (b) manage the Gwydir Regulated River Water Source to ensure equitable sharing of water between all uses, (c) protect the Gwydir Regulated River Water Source by ensuring that extraction minimises any adverse impacts. (d) improve water quality in the Gwydir Regulated River Water Source, (e) provide opportunities for ecologically sustainable market based trading of surface water entitlements in the Gwydir Regulated River Water Source, (f) manage the Gwydir Regulated River Water Source to preserve and enhance basic water rights, (g) ensure extraction from the Gwydir Regulated River Water Source is managed properly within the Murray Darling Basin Ministerial Council Cap, and (h) manage the Gwydir Regulated River Water Source to preserve and enhance cultural and heritage values. Note . Although there are no specific strategies directly related objective (h) in this Plan, the environmental water provisions in the Plan make a contribution towards the preservation of cultural and heritage values. 11 Strategies The strategies of this Plan are to: (a) establish environmental water provisions (Part 3 of this Plan), (b) identify water requirements for basic landholder rights (Part 4 of this Plan), (c) identify water requirements for access licences (Part 6 of this Plan), (d) establish rules for granting access licences (Part 7 of this Plan), (e) establish provisions that place limits on the availability of water (Part 8 of this Plan), (f) establish rules for making available water determinations (Part 8 of this Plan), (g) establish rules for the operation of water accounts (Part 9 of this Plan), (h) establish provisions specifying circumstances under which water may be extracted (Part 9 of this Plan), and (i) establish access licence dealing rules (Part 10 of this Plan). 12 Performance Indicators The following indicators are to be used to determine the performance of this Plan against its objectives: (a) change in ecological condition of this water source and dependent ecosystems, (b) change in low flow regime, (c) change in moderate to high flow regime, (d) change in water quality in this water source, (e) extent to which domestic and stock rights requirements have been met, (f) extent to which local water utility requirements have been met, (g) change in economic benefits derived from water extraction and use, (h) extent of recognition of spiritual, social and customary values of water to Aboriginal people, and (i) extent to which native title rights have been met. Note. Appendix 4 details the objectives to which these performance indicators relate and the methods for assessing indicators." Performance Indicators 31 The Appellant contends that the Plan fails to comply with s35(1)(d). It relies on the fact that performance indicators are stated to have the following purpose: "to measure the success of those strategies". These are the "strategies for reaching those objectives" referred to in s35(1)(c), being in turn the objectives referred to in s35(1)(b). 32 The primary submission of the Appellant is that the performance indicators have to be of such a character that it could be said that they were capable of, and specifically adapted to, the purpose of measuring the success of the selected strategies to reach the objectives consistent with the vision statement. It was submitted that the particular performance indicators outlined in cl 12 of the Plan were not of that character. Indeed the terminology of cl 12 is that the indicators would be used "to determine the performance of this plan against its objectives". This formulation omits the intermediary provision in s35(1)(c) of any reference to "strategies". It is submitted that this is a significant distinction. 33 The Appellant submits that a performance indicator will not satisfy the statutory prescription unless it contains some component against which the success of each strategy may be measured. There must be some quantity or quality that has been fixed or approved in the management plan, so that a person who applies the performance indicator is capable of ascertaining the result. This is of particular significance, the Appellant submits, because of the importance of the public participation and accountability provisions of the Act. Reliance is also placed on the obligation in s43(2) for the Minister to review each management plan "for the purpose of ascertaining whether its provisions remain adequate and appropriate for ensuring the effective implementation of the water management principles". Section 43(4) goes on to make provision for a new management plan to replace an earlier management plan. Reliance is also placed on a range of provisions which indicate the significance of accountability in the legislative scheme. The performance indicators are, it is submitted, fundamental to the scheme. 34 In such a context a performance indicator must indicate the direction of any "change" which indicates success, and also must provide an indication as to the magnitude of any "change" which may indicate success or lack of success. The Appellant submits that cl 12 contains no mechanism, methodology or criterion which establishes any base line against which any change may be assessed, nor even any direction of movement which indicates success. 35 The Appellant thus submits that the failure to comply with the requirements of s35(1) is such as to affect the validity of the Plan. It notes the inclusion of mandatory terminology – "must include" – in the introductory words of s35(1). 36 Before Talbot J and in this Court, the Appellant relied on the judgment of this Court in Seaton v Mosman Municipal Council (1996) 93 LGERA 1. In that case the Court was concerned with compliance with s36(3)(c) of the Local Government Act 1993 making provision for plans of management for community land. That paragraph required that that plan of management "must identify … the means by which the Council proposes to achieve the plan's objectives and performance targets". That case was determined on the basis of the failure to identify any "means". No equivalent issue arises in the present case. In any event an "indicator" is not a "target". 37 Talbot J rejected the Appellant's case in this respect in the following passages of his reasons: "[23] "It can be ascertained from the indicators listed in cl 12(a) to (i) that they are each a category of matter that is capable of being used to point out or direct attention to the performance of the plan in the context of its application to the Gwydir Regulated River Water Source. This effect may be compared to a steam pressure gauge on an engine. The gauge is an indicator of what is occurring to facilitate an assessment of the performance of the engine. The applicant's argument, however, demands that the plan specify standards in order to comply with s35(1). [24] I regard an indicator as one that points out or directs attention to something. Whatever the indicator identifies might then be used to measure the success of the operation of the strategies for achieving an objective. It is not the role of the indicator to provide a standard or ultimate conclusion but rather to provide information that can be used for the purpose of making an assessment of performance. [25] Each of the matters specified in cl 12(a) to (i) are factors that can be used to indicate whether changes have occurred which contribute to or detract from the achievement of the objectives of the plan in cl 11. They are part of the means of making an assessment in order to measure the success of the plan in reaching the stated objectives. The result of that assessment will itself be a means to measure the success of the strategies. All that s 35(1)(d) requires is that the plan provide the source of the information to be used in the assessment and monitoring process. In my opinion, cl 12 achieves that purpose. In my view, there is a clear distinction between ' performance targets ', which were the subject of the Court of Appeal's decision in Seaton , and 'performance indicators ' referred to in s 35(1)(d) of the Act." 38 I agree with Talbot J that nothing in the nature, purpose and content of the legislative scheme requires a performance indicator within s35(1)(d) to be expressed in the form of a "target" or a "standard". An "indicator" is an element which may vary over the period of the Plan, and the variation of which will suggest success, or otherwise, of the strategies adopted for the attainment of the objectives. What is required is an ability, with the benefit of hindsight, to identify, to the extent possible to do so in a quantitative manner, the relevant changes that have occurred in the water source. 39 The objectives are set out in cl 10 as quoted above. They are stated in general terms and do not suggest the need for a "standard" or "target" as distinct from an "indicator". 40 In my opinion, there is no error in the fact that cl 12 refers to the indicators as being used "to determine the performance of this Plan against its objectives", without referring to the s35(1)(d) formulation: "measure the success of those strategies". As s35(1)(c) makes clear, the strategies are the means "for reaching [the] objectives". 41 Each of the performance indicators in cl 12 of the Plan commence with either the word "change" or "extent". They do not state expressly the direction of any "change" or the level of any "extent" which can be said to indicate "success" of the "strategies". Nevertheless it is quite clear from the indicators as to the direction of any "change", or movement in "extent", which would indicate success rather than failure. 42 For example, "change in water quality" in indicator cl 12(d), does not constitute a target. However, it is quite clear as to the direction of any change consistent with success. Similarly, the performance indicators identified in cl 12(b) and cl 12(c) – change in low flow regime and change in moderate to high flow regime – are such that there can be no doubt as to which direction of change is consistent with success. 43 In my opinion, each of the matters identified as performance indicators are capable of being reported on in terms of what movement over a period of time will suggest success, as distinct from failure, with respect to the strategies adopted to achieve the objectives. 44 What cl 12 states it is doing is to provide indicators which may determine the performance of a plan in attaining the objectives in cl 10. Those objectives use language such as "protect", "manage" and "improve". The strategies are the detailed provisions set out in succeeding Parts of the Plan. In my opinion there can be no doubt as to what direction of a "change" or movement in "extent", with respect to each of the performance indicators introduced by such a term, will constitute success in achieving the objectives identified in cl 10. 45 Section 55 of the Act provides that neither Notes nor Appendices form part of the Plan. Appendix 4 which is referred to in the Note to cl 12 contains a number of columns with respect to each of the performance indicators referred to in pars (a)–(i) of cl 12. One column relates the indicators to the various objectives of the Plan which are listed in cl 10 of the Plan. There is also a column headed "As measured by", which contains information with respect to measurement mechanisms for each of the performance indicators identified as pars (a)–(i). It is unnecessary to set each of these out. Their nature can be indicated by a number of examples. 46 Against performance indicator (a), i.e. "Change in ecological condition etc.", the following appears: · "Monitoring of ecological response to change flow regimes by IMEF (each water source will have specific hypotheses from the set developed under IMEF). · Other relevant studies as may be undertaken in specific water sources." 47 With respect to the performance indicator (b), "Change in low flow regime", the "As measured by" column contains the following: · "Number of days per water year where flow is below natural 95th and 80th percentile. · Average and maximum number of days per water year of continuous periods of flow which is below natural 95th and 80th percentile. · Measurement at end of system and specified key sampling site." 48 It is sufficient to note that the measurements identified include a series of matters capable of quantitative assessment, but also include matters requiring qualitative assessment. There is nothing in the nature of a standard or target, but there is a clear indication of the nature of the measurements to be made. 49 Mr T F Robertson SC, who appeared for the Appellant, accepted that Appendix 4 did contain performance indicators, at least in part, but emphasised that the Appendix was not part of the Plan. He noted that some contained targets and others did not. He submitted that the Appendix was no more than guidance and the Act required something firmer than guidance (T 14-17). 50 In my opinion it is sufficient for the Plan to state the indicators in the general terms it does, with more detailed modes of assessment to be provided for in an appendix, even if the appendix does not form part of the Plan. 51 Even if I were of the contrary view, the detail contained in Appendix 4 is quite sufficient to ensure that such failure as may arise in this respect to comply with the statutory requirement in s35(1)(d) is not a failure of a character which Parliament intended was such as to invalidate the Plan. (See Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91].) The detail provided in the Appendix would save the Plan from invalidity if I were otherwise of the view that there was a failure to comply with the section. 52 Alternatively, I would reach the same conclusion because, in the case of a Minister's plan, s50(2) requires the Minister to deal with matters required to be dealt with in a management plan, including the "components" referred to in s35, but only "in general terms". That, in my opinion, has been achieved. A lesser degree of specificity is permissible in a Minister's Plan. Even without reference to the Appendix, the Plan does, in my opinion, contain performance indicators "in general terms". Environmental Health Water 53 The second ground of appeal is that, contrary to the requirements of the Act, the Plan fails to establish a system to ensure that water is committed for fundamental ecosystem health at all times. I have set out the relevant statutory provisions above. In summary: · A management plan must establish environmental water rules in relation to each class of environmental water (s20(1)(a)). · A bulk access regime for extraction of water must have regard to the environmental water rules so established (s20(1)(e)). · The phrase "environmental water rules" is defined as "rules for the identification, establishment and maintenance of each class of environmental water" (s8(2) and the Dictionary). · One class of environmental water, called "environmental health water", is water that is committed for fundamental ecosystems at all times and may not be taken or used for other purposes (s8(1)(a)). · Environmental water rules are required "to be established for all of the waters in the State by means of a management plan" (s8(2) and the Dictionary). · It is the duty of the Minister when formulating a Minister's plan with respect to water sharing to give priority to the principle that sharing of water must protect the water source and its dependent ecosystems over any other right to extract water, relevantly water access licences (ss9(1)(b), 5(3)(a) and 5(3)(b)). 54 The last proposition requires a certain amount of straining of the statutory language. Section 9(1)(b) refers to priority between principles in s5(3). A careful reading of s5(3) would suggest that par (a) and par (b) are such principles. It is by no means clear that s5(3)(c) answers the description of a "principle". It states that other rights of access to water must not "prejudice the principle set out" in the previous two paragraphs. Nevertheless the intent is clear that, in exercising functions under the Act, including the making of a Minister's plan, decision-makers should give priority in relation to water sharing to protecting the water source and its dependent ecosystems. 55 There is a distinction between the statutory requirements in ss20(1)(a), 8(2) and 9(1)(b). 56 Section 20(1)(a) requires a plan to "deal with" the "establishment of environmental water rules" including, relevantly, water committed for fundamental ecosystem health. The Plan does "deal with" this matter. 57 Section 9(1)(b) requires, relevantly, a Minister when formulating a Minister's Plan, to give priority to the principle that water sharing must protect the water source and its dependent ecosystems. This obligation refers generally to ecosystems and does not focus on "fundamental ecosystem health". I do not detect any basis on which it could be said that, considered overall, the Minister failed to give priority to this principle in the Plan. 58 Section 8(2) requires rules to be "established" for "the identification, establishment and maintenance of", relevantly, water committed for fundamental ecosystem health. The Appellant's submissions concentrated on this requirement. 59 The Appellant submits that cl 14 of the Plan contains no "rules" for the "identification, establishment and maintenance" of that class of environmental water committed for fundamental ecosystem health being water which must be present at all times and which may not be taken or used for other purposes. Its submissions focus on cl 14(a) and cl (b) of the Plan, as quoted above. It submits that water, which is asserted to be "environmental health water" for the purposes of these two subclauses, is defined in terms of a water volume in excess of a long term extraction limit. The Appellant submits that these two subclauses are devoid of content unless and until the long term extraction limit is defined and that such definition is itself at large by reason of the fact that it is dependent on a calculation over a period. The Appellant submits that there is no rule which, of itself, identifies, establishes and maintains an amount of actual water that is committed for fundamental ecosystem health at all times, being a quantity of water which may not be taken or used for other purposes. Clause 14(a) and cl 14(b) 60 The case before Talbot J focussed on the Appellant's submissions that only cl 14(a) and cl 14(b) were capable of answering the description of an environmental water rule with respect to environmental health water. 61 As set out above, cl 14(a) and cl 14(b) reserve for the environment only such volume of water as is in excess of the "long term extraction limit". The issue before the Court is whether a rule expressed in terms of an amount in excess of an "extraction limit" is capable of being a rule for the "identification, establishment and maintenance of water that is committed for fundamental ecosystem health at all times and may not be taken or used for other purposes". The long term water extraction limit is determined by the application of cl 31 and cl 32 of the Plan as set out above. 62 Talbot J dealt with the issue in the following way: "[49] It is difficult to comprehend how the respondent's argument can jump from an acceptance that cl 14(a) and cl 14(b) do not create, commit or otherwise operate as a rule that sets aside a specific body, volume or other identifiable portion of the water within the water source to a point where it is claimed the same clauses operate as a rule that does in fact establish and identify the class of environmental water recognised by s 8 as environmental health water. [50] The following note appears after cl 14(b) of the plan:- Note. By limiting long term average annual extractions to an estimated 388,000 megalitres per year this Plan ensures that approximately 56% of the long-term average annual flow in this water source (estimated to be 875,400 megalitres per year) will be preserved and will contribute to the maintenance of basic ecosystem health. [51] Irrespective of the veracity of the statement in the note, it is expressly provided by cl 5(3) of the plan that notes in this plan do not form part of the plan, although the effect of terms used may be explained by the notes by dint of cl 5(1). [52] Moreover, the statement that limiting the long-term average annual extraction to 388,000 megalitres ensures that approximately 56 per cent of the long-term average annual flow will be preserved has the potential to be as difficult to understand, in practical terms in the context of one water year, as attempting to describe what physically happens in any one year by reference to the long-term extraction limit or, for that matter, the long-term average annual extraction. Nevertheless, the question might still be asked whether the provisions of cl 14 can amount to a rule within the meaning of s 8(2) even if minds differ as to their potential to be effective. [53] Spread over time, the concept of the plan appears to be to constrain extractions to a particular average level thereby maintaining an average balance of water and leaving it uncommitted to any other purpose except to remain in the system, thereby theoretically preserving it as environmental water in the long-term. Clause 32 then has the effect of maintaining the average volume by reducing other water determinations whenever the current long-term average annual extraction exceeds the volumes in cl 30(1)(a) or (b). [54] The environmental water is in that way identified as that average volume which is the difference between the long-term extraction limit and the long-term average flow. It is established as an average volume calculated using the results of the assessments made pursuant to cl 31 of the plan. Clause 32 ensures the average volume committed is maintained by adjusting other entitlements until the current long-term average annual extraction from the water source is made to equate to the long-term extraction limit. Even though the period over which the average is to be calculated is left at large by the plan, so too are other inputs to the hydrolic computer model. Nonetheless, the model is described in general terms as the one "that at the time, is approved by the Department for assessing long-term water use from this course" . Dictating the inputs to such a model should not, and probably cannot, be achieved through an instrument such as a water sharing plan. The extent of variables to be taken into account in respect of climate alone is recognised by the combined effect of s 20(2)(c) and s 20(1)(e) or s 20(1)(a), (b), (c) and (d). Arguably, therefore, if a fixed period was designated by the plan, say 10 years, vital information obtained in respect of an earlier period could be excluded. The evidence is that the model can be set up to assess the river flows and volume of water extractions that would have occurred each year since the 1890's had the current rules and current level of development been in place at that time. As further information becomes available, in any respect, that contributes to a more accurate undertaking of how the Gwydir system operates it can be used to assess the long-term extraction limit. [55] That the period of an assessment will not be constant is highlighted by the definition in cl 31 of "long-term average annual extraction" as the average of annual water extraction from the water source over the period for which an assessment is carried out. Alternatively, cap baseline conditions are separately determined as those used for assessment of Cap in Sch F of the Murray-Darling Basin Agreement. [56] The respondent emphasises the dynamic nature of a water source such as a river system and that, accordingly, rather than averages being an ineffective criteria for making a rule for committing any water for a particular purpose, conversely there can be no meaningful rule that takes account of the physical conditions prevailing in any one year period. There can of course be exceptions where, for example, it may be possible to calculate a minimum volume of inflow to maintain the health of a particular ecosystem such as has been done with the Gwydir wetlands in cl 14(c) of the plan. The task is obviously greater as the complexity of the system expands and hence a demand for formulae arises. [57] The Act does not require that the rules contemplated by s 8 operate to specify volumes or amounts of water in a particular year or over any other given period but instead it speaks in a timeless way by merely specifying that the rules be for identification, establishment and maintenance of each class of environmental water. That the actual volume of water remains wholly unknown and unknowable by reference to the outputs, as contemplated, does not, according to the Minister, detract from the operation of the clause as a rule for the management and control of a dynamic system such as a river. The water committed for fundamental ecosystem health in the abovementioned way is allowed to remain in the system. The amount of actual water itself will vary from time to time according to prevailing climatic conditions. Clause 14(a) and (b) are rules about averages that act as a device to ensure that the extractions over the long-term will not exceed the limit specified in cl 30. [58] In accordance with s 20(2)(b) of the Act available water determinations are required, by cl 34 of the plan, to be expressed as a percentage of the share component of each access licence in a licence category, according to the criteria in clauses 35, 36, 37, 38 and 39 respectively. Although the total share component for issued licences exceeds the long-term average annual extraction determined under cl 30 by approximately 300,000 megalitres, the available water determinations for regulated river (high security) access licences and (general security) access licences are to be based on the volume available in Copeton Dam water storage after making "provision for the environmental water provisions established by this Plan" . [59] The climatic conditions are part of the dynamics of any water source that ultimately depends on natural resources for its replenishment. Over time, environmental health water will be maintained at the level of the average annual flow above the long-term extraction limit. When it drops below that level adjustments will be made to restore the deficiency, albeit not at once. There is no evidence to persuade me that such a formula will be or will not be adequate for the purpose. That is not an issue the Court can decide in these proceedings. The present issue is the construction of the provisions of the plan against the requirements of the Act. [60] Notwithstanding that the concept may be arguably nebulous, I am nonetheless not persuaded that the environmental health rules contained in cl 14 must be treated as invalid because they say nothing at all about what might happen to any water in any year as the applicant contends they should. Furthermore, it is not correct to say that cl 14 does not commit water for fundamental ecosystem health at all times when the mechanics of the provisions of the plan ensure that a constant average component of flow is retained in the water source and that adjustments must be made to other determinations to maintain that commitment when necessary. [61] I do not accept that the Minister in making the plan has put the cart before the horse by determining the rules for the establishment of the bulk access regime prior to the establishment of the environmental health water rules. For the purposes of cl 14(a), the long-term average annual extraction is that which would occur in the circumstances that existed in 1999/2000. The operating bulk access regime under the plan deals with the actual water. Moreover, the bulk access regime is established consequently to the environmental health water rules in cl 14 and, as stated in cl 20, having regard to the environmental water provisions established in Pt 3 of the plan. [62] Finally on this issue, there is no evidence to show whether the Minister, in exercising his functions under s 50, did or did not subjectively give priority in accordance with s 5(3) of the Act. On the construction of the plan adopted me, the plan does not show, on its face, that the duty framed in s 9(1)(b) was disregarded as the applicant contends." 63 The Respondent's principal submission is that s8(1)(a) does not require the identification of any actual volume of water. Rather, all that is required by s8(2), for the purposes of s20(1)(a), is a statement of rules for the identification establishment and maintenance of water. Clause 14(a) and cl 14(b) answer this description. Specifically cl 32 answers the description of "maintenance" and cl 14(a) and cl 14(b) are rules for identification and establishment. 64 The Respondent submits that the Plan deals with what its submissions describe as an "abstract concept" of water, rather than actual water. It submits that the word "water" in s8 is of the broadest meaning and must apply to every water management area in the State, e.g. tidal waters which constantly ebb and flow, lakes which are static and lakes which are fed into by other rivers. In my opinion nothing in the Act suggests that some kind of "abstract concept" is involved in the use of the word "water". The Appellant's focus of attention on actual water is correct. 65 Environmental water rules under s8(2) require the "identification, establishment and maintenance" of "water that is committed" for the stated purpose and which may not be used for any other purpose. The idea of "commitment" is quite inconsistent with any abstract or theoretical concept of water. What must be identified is actual water. The words "establish" and "maintain" are not suggestive of anything other than actual water. 66 What is required is water that is constantly provided for and which, absent acute drought conditions, will in fact be available to protect "fundamental ecosystem health". To the extent water is present at all, priority is to be given to fundamental ecosystem health. 67 In my opinion, cl 14(a) and cl 14(b) do not "identify, establish and maintain" any water for "fundamental ecosystem health" in a way that can be described as a "commitment" "at all times" of water that "may not be taken or used for any other purpose". Clause 14(a) and cl 14(b) rely upon cl 32 to ensure that water in excess of the long term extraction limit is not being taken. That provision, however, does not "identify, establish and maintain" any water that may not be taken. It assumes that water is taken. 68 In this regard, cl 14(a) and cl 14(b) invert the statutory requirement. A "bulk access regime" under cl 20(1)(e), including the recognition of limits to the availability of water under s20(2)(a), for which cl 30 and cl 32 of the Plan provide, must be established "having regard to" the environmental water rules established under s20(1)(a). However, cl 14(a) and cl 14(b) are environmental water rules established "having regard to" the bulk access regime. The statute requires the opposite to be done. Clause 14(c) 69 The Appellant's submissions include the proposition that the rule contained in cl 14(c) relates only to the Gwydir Wetlands and, accordingly, can be set aside. Clause 14(c) establishes a minimum quantity of water that must flow through to the Gwydir Wetlands. I note that 500 megalitres per day is about 180,000 megalitres per year. The Note to cl 14(a) and cl 14(b) estimates the total annual flow in the water source as 815,000 megalitres per year. Accordingly, the minimum flow to the Wetlands is about 20 per cent of the estimated annual flow. 70 The rule established by 14(c) creates a minimum flow of the lesser of 500 megalitres per day or the sum of certain other flows, being sources of water into the Gwydir River towards the east of the Gwydir River catchment, namely: spill or release from the Copeton Dam; the Horton River at Rider; the Myall Creek at Molroy; and Halls Creek at Bingara. Each of the last three water sources are not part of the Gwydir Regulated River Water Source and, accordingly, are outside the Plan (see Appendix 1). Indeed the Horton River has its own water sharing plan (Blue AB 304B). 71 In order to carry out the assessment of the minimum flow (to be measured at the time of the commencement of the Plan at Yarraman) that must be permitted to pass through to the Gwydir Wetlands, it will be necessary to compare the reading at Yarraman minus water losses between there and the Wetlands (to assess the "500 megalitres per day" part of the equation) and the sum of the flows at the four other points identified. This is, in substance, a comparison of the flows of the Gwydir River at the eastern end of the catchment, with the flows at the western end of the catchment. 72 Yarraman is near Moree to the west where the effluent streams flow from the Gwydir to the Barwon River. No suggestion was made that the flow to the Wetlands, as measured at Yarraman, would not also result in a minimum flow to those effluent streams. In any event, water is otherwise committed to ensure fundamental ecosystem health in those streams. 73 Section 8(1)(b) of the Act makes provision for supplementary environmental water, being water committed for specified environmental purposes. Clause 15 of the Plan establishes supplementary environmental water rules. It requires an environmental contingency allowance of up to 90,000 megalitres to be set aside in Copeton Dam. Water so retained can only be released for a list of environmental purposes, one of which is cl 15(d)(v): "to provide flows for environmental purposes in effluent streams". 74 The effect of the rule in cl 14(c) is that there may be less than 500 megalitres per day flow through to the Wetlands in some years, but this will only be because the sum of the flows at the eastern part of the system has proved to be particularly low so that the sum of those flows is less than the computed 500 megalitres per day to the Wetlands, calculated, at least at first, by measuring the flow at Yarraman less estimated losses between Yarraman and the Wetlands. The Appellant accepted that compliance with the requirements for environmental health water could occur without a quantitative statement in volume terms. A rule under s8(2) does not need to state that there must always be water in the system (T8). 75 Mr N Hutley SC, who appeared for the Respondent, submitted that cl 14(c) establishes, in substance, a regime for environmental water for the whole of the catchment area by reason of the fact that the Gwydir Wetland areas are located towards the western extremity of the river system the subject of the Plan. 76 Mr T F Robertson SC submitted that cl 14(c) cannot be concerned with the system as a whole because there were tributary streams between Moree and the Wetlands (T22). Even if that be so, the Note to cl 14(a) and cl 14(b) suggests that any such flow will be taken into account when determining what quantity flows through to the Wetlands. In any event, the Yarraman is identified only as a point of assessment. 77 I was, at first, attracted to the Respondent's contention in this regard. It appeared to me to be logical to conclude that a requirement that there be a minimum flow at the end of a water system carried an implication that there must be a minimum flow throughout the system. Although that may be so, it does not appear that the flow which will ensure fundamental ecosystem health for the Wetlands, is also adequate to ensure fundamental ecosystem health elsewhere. 78 This conclusion is supported by cl 14(d) and cl 14(f), set out above. If in any year there would be environmental benefits to the Wetlands from sending less than 500 megalitres per day through, then such water must be used for fundamental ecosystem health elsewhere. The 2004 amendments 79 In the alternative the Respondent relied on the Water Management Amendment Act 2004 ("2004 Amendment Act") which, in its submission, had the effect of validating the Plan even if cl 14(a) and (b) did not satisfy the requirements of a plan for the establishment of environmental rules. In particular s8 has been altered to read as follows: " 8 Environmental water (1) For the purpose of this Act, environmental water comprises the following: (a) water that is committed by management plans for fundamental ecosystem health or other specified environmental purposes, either generally or at specified times or in specified circumstances, and that cannot to the extent committed be taken or used for any other purpose ( planned environmental water ). (b) water that is committed by the conditions of access licences for specified environmental purposes, either generally or at specified times or in specified circumstances ( adaptive environmental water ). (2) A management plan must contain provisions for the identification, establishment and maintenance of planned environmental water ( environmental water rules ). The environmental water rules relating to a water source do not need to specify that a minimum quantity of water is required to be present in the water source at all times. (3) Environmental water rules are to be established for all of the water sources in the State as soon as practicable after the commencement of this section. (4) A water management plan must contain provisions relating to adaptive environmental water." 80 Schedule 9 of the Act contains transitional provisions with respect to this amendment of which cl 62 is relevant: " 62 References in management plans to environmental health water and supplementary environment water In any management plan made before the commencement of this clause: (a) a reference to environmental health water or supplementary environmental water is taken to be a reference to planned environmental water, and (b) any environmental water rules established by the plan in relation to environmental health water or supplementary environmental water are taken to have been established in relation to planned environmental water." 81 Section 20(1)(a) was amended by the deletion of the reference to the former s8(1) and s50 was amended by adding s50(2A) which states: "50(2A) Part 3 (except sections 15 and 36–41) applies to a Minister's plan. However, the Minister: (a) may adopt any of the provisions of sections 36–41 in a particular case, and (b) may dispense with a particular requirement of Part 3 in the case of a Minister's plan referred to in subsection 1A." 82 Clause 65 of sch 9 provides: " 65 Minister's plan Section 50, as amended by the 2004 amending Act, applies to: (a) any management plan that was in course of preparation before the commencement of this clause, and (b) any management plan that was made before the commencement of this clause, in the same way as it applies to any management plan that is prepared or made after that commencement." 83 The Appellant contends that the references to "any management plan" in both cl 62 and cl 65 are references to a valid management plan. It asserts that it has an accrued right to challenge the validity of the Plan and invokes s30(1)(c) of the Interpretation Act 1987. 84 It is of some significance on this aspect of the case that the Plan under consideration in the present proceedings had not commenced at the time of the institution of these proceedings. Indeed it commenced on the same day as the Amendment Act came into effect, i.e. 1 July 2004. 85 Clause 62 does not in terms have retrospective effect. However, it does indicate that the operational effect of the Plan will be in accordance with the new terminology of "planned environmental water" in lieu of "environmental health water". 86 The power in s50 remains a power to "make" a plan. Furthermore, pursuant to s47 of the Act, as in force at the time these proceedings were instituted, the validity of a management plan may not be called into question except in proceedings commenced within three months after the date of publication in the Gazette. In this scheme the date of commencement of a plan is not of significance with respect to the rights that accrued to the Appellant. What matters is the date on which a plan is made. 87 Neither cl 62 nor cl 65 is retrospective in its terms. Clause 62(b) permits the pre-existing cl 14 and cl 15 to operate as if they had been rules for "planned environmental water". Clause 62, in my opinion, ensures that any pre-existing plan could continue to operate under the changed legislative scheme by, in effect, deeming the existing rules to be rules with respect to "planned environmental water". 88 Clause 65 applies s50 as amended to a management plan made before the 2004 Amendment Act. The Respondent relies on the reference in s50(2) to the "application" of Pt 3 which, so it submits, incorporates the amended s20(1)(a) and, therefore, the amended s8. That is not, in my opinion, the effect of s50(2A) and cl 65 of the Schedule. Section 20 of the Act always applied to a s50 plan by force of s50(2), which has not changed. The import of s50(2A) and, therefore, of cl 65 is to validate such matters as may fall within par (a) and par (b) of s50(2A). 89 Neither clause has the consequence that a Ministerial plan made under s50 before the commencement of the 2004 Amendment Act, is taken to have be made under the Act as amended, including the alteration to the relevant requirements, namely that water committed for a fundamental ecosystem health may be so committed "in specified circumstances" and further that the rules did not need to specify that a minimum quantity of water was required to be present at all times. Validity 90 Before determining that a failure to observe the requirements of a legislative scheme has the consequence that the exercise of a statutory power has failed and that the result of the purported exercise is invalid, it is necessary to ask whether there is a legislative purpose to invalidate the exercise of the statutory power by reason of the alleged failure. (Project Blue Sky Inc supra at [91].) 91 Textual indicators suggesting invalidity include: · The objects of the Act specified in s3(a) and s3(b). · The water management principles identified in s5(2)(a)and s5(2)(b). · The priority given to protecting the water source and dependent ecosystems in relation to water sharing by s5(3) and s9(1)(b). · The mandatory terms of s8(2) ("rules … are to be established") and of s20(1)(a) ("water sharing provisions … must deal with … the establishment or environmental water rules"). · The specification of an obligation to enforce the environmental water rules by s48. 92 One textual factor in the case of a Minister's Plan tending against a conclusion of invalidity, is s50(2) which requires a Minister to "deal with", relevantly, the s8(2) requirement that a Plan contain environmental water rules, but to do so only "in general terms". 93 On balance these textual indications would support a conclusion of invalidity. It is, however, my opinion that the factual context of the water source, rather than the textual context of the legislative scheme, is determinative in the present case. 94 As the Notes to cls 14(a), 14(b) and 30(1) indicate, the long term extraction of 388,000 mega litres is only 56 percent of the estimated long term average annual flow of 875,400 megalitres. As a practical matter, if not in form, a substantial flow of water is in fact committed to fundamental ecosystem health. In my opinion, the application of the Project Blue Sky test does not, in the circumstances, lead to a conclusion that the Plan is invalid. 95 The objects of the Act set out in s3(a) and s3(b), the water management principles set out in s5(2)(a)–(d) and 5(3)(a), together with the priority established by s9(1)(b) strongly suggest that the Parliament was concerned with matters of substance rather than form when it required the establishment of environmental water rules. On the face of the Plan, together with the analysis in the SWMOP set out in [29] above, and in the absence of any other relevant evidence, the Plan does, as matter of substance, contain rules which identify, establish and maintain water that is committed for fundamental ecosystem health at all times and which may not be used for any other purpose. Conclusion 96 The appeal should be dismissed with costs. 97 BEAZLEY JA: I agree with Spigelman CJ. 98 TOBIAS JA: I agree with Spigelman CJ. ********** 09/02/2005 - - Paragraph(s) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.