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National Water Account 2015

Melbourne: Administration

City of Melbourne,Yarra River Victoria (iStock © Blues and Views)

Surface water and groundwater management

Water legislation

Surface water

Key legislations for managing surface water in the Melbourne region are Victoria's Water Act 1989 (the Water Act) and Victoria's Water Industry Act 1994 (the Water Industry Act). Under the Water Act, the Victorian Government retains the overall right to use and control flows of Victoria's surface water and to issue entitlements. The Water Act establishes the water entitlement framework for the allocation and management of the State's water resources. It sets out the functions, powers, and governance for Victoria's rural and regional water authorities and Melbourne Water. The Water Industry Act governs how Government-owned retail and regional water authorities are licensed and operate.


Groundwater in Victoria is managed through the 'take and use' licensing of water abstraction for irrigation and commercial purposes. Aquifers are also protected through a bore construction licensing framework that controls the standards of bore–construction. Licensing powers are derived from the Water Act and are delegated by the Victorian Minister for Water. The Water Act provides for:

  • licensing of drillers
  • licensing of bore construction
  • licensing of groundwater abstraction for irrigation and commercial purposes
  • continuation of private rights to groundwater for domestic and stock use
  • preparation of management plans in water supply protection areas (WSPAs).

The assessment of applications for new bore construction licences and groundwater extraction licences takes into account any adverse impacts on existing users, waterways, wetlands, and aquifers. The Water Act allows individuals to extract water for domestic and stock purposes from a range of surface water and groundwater sources without a licence. These domestic and stock rights are defined under sections 8(1) and 8(4)(c) of the Water Act and are not formally licensed.


Water management plans

Victoria's water entitlement and allocation framework provides the basis for the management of Victoria's water resources and governs the way water can be abstracted and used in Victoria. The framework takes a whole-of-system approach to water management in that it considers all water resources (surface water and groundwater) for both consumptive and environmental purposes at all phases of the water cycle. The main planning documents and initiatives that influenced water management in the Melbourne region during the 2014–15 year were:

  • the Central region sustainable water strategy: this includes a series of actions and augmentations to meet the region's water needs for the next 50 years
  • bulk entitlements authorising abstraction of water from Melbourne's rivers for urban and rural use
  • environmental entitlements, surface water, and groundwater licences
  • urban water authorities' water supply demand strategies
  • urban water authorities' drought response plans
  • rural water authority's drought response strategy
  • management plans for managing licensed diversions on unregulated streams and groundwater where the resource is in a declared WSPA.

Streamflow management plans in the Melbourne region are discussed in the Environmental water provisions section. Under Division 3 of Part 3 of the Water Act, groundwater management plans must be developed when a groundwater management unit (GMU) is declared a WSPA. In the Melbourne region, a groundwater management plan is in place for the Koo Wee Rup water supply protection area. It outlines the potential risks to groundwater in the area and management actions, including the permanent trading zones and rules. It also aims to protect water quality by managing use near the coast to reduce the likelihood of seawater intrusion into the aquifers.

In WSPAs, local management rules are developed that describe:

  • the resource
  • management objectives
  • specific rules for restrictions in times of shortage, carryover (if applicable), and trade.

Local management rules cannot amend licence conditions.


Environmental water management

Environmental water legislation

The Victorian Environmental Water Holder (VEWH) is an independent statutory body responsible for making decisions on the best use of Victoria's environmental water entitlements. It collaborates with catchment management authorities and Melbourne Water to achieve the best environmental outcomes with the existing environmental entitlements. Within Victoria, the environment's share of water is called the 'Environmental Water Reserve'. The Environmental Water Reserve is defined in Section 4A of the Water Act and is made up of:

  • entitlements for the environment
  • water set aside for the environment through the operation of conditions on consumptive water entitlements and provisions in water supply management plans
  • above–cap water that includes water left over after limits on diversions are reached, and unregulated flows that cannot be held in storage.


Environmental water provisions

Environmental entitlements

An environmental entitlement is a right to water made by the Victorian Minister for Water and held by the VEWH. As with bulk entitlements, environmental entitlements provide a range of conditions and obligations relating to the abstraction and use of water. During the 2014–15 year, the VEWH held three environmental entitlements in the Melbourne region:

  • Yarra Environmental Entitlement 2006
  • Tarago and Bunyip Rivers Environmental Entitlement 2009
  • Werribee River Environmental Entitlement 2011.

Under these entitlements, the VEWH is entitled to:

  • the first 17,000 ML of net inflow into the Yarra headworks system for each year, and 17,000 ML of storage capacity in the Melbourne headworks system reservoirs not being used by the authorities
  • a 10.3% share of net inflows up to 3,000 ML of storage capacity in the Tarago Reservoir
  • A 10% share of inflows into Lake Merrimu and an inflow share at Melton Reservoir, and a storage capacity to store this inflow in these reservoirs not being used by the authorities.

Water access entitlements: environmental water provisions

In addition to environmental entitlements, the Environmental Water Reserve comprises:

  • water set aside for the environment through the operation of passing flows released as a condition of consumptive bulk entitlements held by the Melbourne's water authorities
  • water set aside for the environment through the operation of passing flow conditions on licensed diversions (regulated and unregulated waterways)
  • water set aside for the environment through the operation of streamflow management plans including operation of passing flow conditions on licensed diversions
  • all other water not allocated for consumptive use (i.e., water above the cap).


Waterway management

Waterway management and general river health management is the responsibility of the Port Phillip and Westernport Catchment Management Authority and Melbourne Water. Streamflow management plans are managed by Melbourne Water. Streamflow management plans were in place for the 2014–15 year for:

  • Diamond Creek
  • Hoddles Creek
  • Little Yarra and Don rivers
  • Olinda Creek
  • Plenty River
  • Stringybark Creek
  • Pauls, Steels and Dixon creeks
  • Woori Yallock Creek.

Local management rules are available for several areas that have a level of demand lower than WSPA catchments. They set the rules to share water within the relevant sub-catchments. In addition to streamflow management plans and local management rules, drought response plans are active at all times to protect the environment. During a drought, licensed diverters’ access to water may be restricted or banned under drought response plans. For more information on the individual streamflow management plans, local management rules, and drought response plans, please refer to Stream Flow Management Plans on Melbourne Water's website. 


Cultural water management

The Victorian Aboriginal Heritage Act 2006 recognises the Aboriginal people as traditional owners of the land. The waterways within the Melbourne region are important to cultural beliefs of traditional owners including the Wurundjeri, Wathaurung, and Bunurong people. The Water Act recognises the right to take water under the Victorian Traditional Owner Settlement Act 2010. Members of a traditional owner group with a natural resource agreement can take and use water from a waterway or bore for traditional, non-commercial purposes.


Organisations responsible for water management

Table C1 lists the organisations responsible for water management and their specific roles within the Melbourne region during the 2014–15 year.


Table C1 Organisations responsible for water management
OrganisationResponsibilityMajor storages operated within the region
Department of Environment, Land, Water, and Planning (Vic)1
  • providing advice on policy, performance, and compliance to the Victorian Minister for Water
  • implementing Government policy
  • liaison between the Victorian Minister for Water and each water business.
Melbourne Water
  • supplying bulk water to:

    – City West Water
    – South East Water
    – Yarra Valley Water
    – Western Water
    – water authorities outside the Melbourne region

  • providing sewerage collection and treatment to:

    – City West Water
    – South East Water
    – Yarra Valley Water

  • operating the Eastern Treatment Plant and the Western Treatment Plant
  • supplying recycled water to a number of authorities for a variety of uses
  • operating inter-region transfers including the North–South pipeline and the Thomson–Yarra pipeline
  • administering diversion licences for the Yarra and Maribyrnong catchments
  • undertaking waterways services, including flood and drainage management, waterway management, and water quality protection for the greater Melbourne metropolitan area.
  • Cardinia Reservoir
  • Greenvale Reservoir
  • Maroondah Reservoir
  • O'Shannassy Reservoir
  • Silvan Reservoir
  • Sugarloaf Reservoir
  • Tarago Reservoir
  • Upper Yarra Reservoir
  • Yan Yean Reservoir
Yarra Valley Water
  • providing water supply and sewerage services to 1.8 million people and over 50,000 businesses in the northern and eastern suburbs of Melbourne
  • operating nine local sewage treatment plants.
South East Water
  • providing water and sewerage services to 1.7 million people and 60,000 businesses in the southeast of Melbourne
  • operating eight sewage treatment plants.
City West Water
  • providing water and sewerage services to over 403,000 residential and business customers in Melbourne's central business district and its inner and western suburbs
  • operating Altona sewage treatment plant.
Southern Rural Water
  • supplying water to irrigation districts at Bacchus Marsh and Werribee
  • supplying bulk water from Rosslynne, Pykes Creek, and Merrimu reservoirs to Western Water for supply to Myrniong, Melton, Macedon, Mt Macedon, Sunbury, Gisborne, and Bacchus Marsh
  • managing groundwater extraction licences in the Melbourne region
  • administering take-and-use licences (surface and groundwater) within the Bunyip catchment.
  • Melton Reservoir
  • Merrimu Reservoir
  • Pykes Creek Reservoir
  • Rosslynne Reservoir
Western Water
  • providing water, recycled water, and sewerage services to a population of about 160,000 in towns outside metropolitan Melbourne, and some that are outside the region
  • operating seven recycled water treatment plants
  • operating seven drinking water treatment plants.
Several minor storages
Gippsland Water
  • supplying water to the towns of Drouin and Neerim South in the east of the region under its entitlement to water within Tarago Reservoir and also supplying water to some urban areas outside the Melbourne region
  • operating a wastewater treatment plant at Drouin.
Central Highlands Water
  • providing urban supply to the towns of Blackwood and Ballan in the west of the region
  • operating a water treatment plant at Blackwood and a wastewater treatment plant at Ballan.
Port Phillip and Westernport Catchment Management Authority
  • coordinated catchment management within the Melbourne region
  • providing leadership to a range of stakeholder groups to deliver integrated catchment management and sustainability of the region's catchments. These groups include Melbourne Water, government agencies, local government, and community groups.
Trility Pty Ltd
  • managing Eastern Irrigation Scheme and delivering recycled water to customers in Melbourne's south east

1The Victorian Department of Environment, Land, Water, and Planning assumed the stated responsibilities from 1 January 2015. Before this date, the Victorian Department of Environment and Primary Industries had been delivering the relevant functions.