Water Regulation Series (Part 2): Recent developments in First Nations water rights

Introduction

The King & Wood Mallesons water team is proud to present Part 2 of our Water Regulation Series.

Since our last instalment, the Water Management Legislation Amendment (Stronger Enforcement and Penalties) Bill 2025 (NSW) covered by Part 1 of this series passed through the Legislative Council (with some amendments), including specific provisions about the value of water to Aboriginal people.^[1]

We have also seen further progress in First Nations water rights, with the NSW Government recently launching its first ever Aboriginal Water Strategy, and the Victorian Environmental Water Holder for the first time incorporating proposed watering actions in its 2025-2026 Seasonal Watering Plan that were submitted by Traditional Owners to promote cultural values.

In this context, Part 2 of this series zooms out to consider the growing legal significance of First Nations water rights, drawing on examples from the Commonwealth, NSW and Victoria. As Federal and State governments move to recognise First Nations water rights in policy and law, it will become more important for water users across Australia to address First Nations perspectives to secure legal support and social licence for their projects.

Commonwealth

For more than three decades, Australian law has recognised the deep ancestral connection of First Nations Peoples to Country. For First Nations Peoples, this connection extends to an obligation to care for Australia’s coastal seas, river systems and other waterbodies. Yet First Nations Peoples – around 4% of the population nationally – hold less than 0.2% of Australia’s surface water entitlements.

Steps have been taken at a Federal level to reduce this disparity, notably through Closing the Gap ‘land and waters’ targets and legislative measures that entrench consultation requirements.

Recently we have seen that these requirements have teeth. In August 2025, the Federal Court found that former Commonwealth Minister for the Environment and Water Tanya Plibersek had failed to meet her obligation under the Water Act 2007 (Cth) to consult with Indigenous groups before approving the NSW Fractured Rock Water Resource Plan, making her decision invalid.^[2] The case confirms that consultation requirements in water management are not merely symbolic and are legally enforceable.

NSW

On 15 October 2025, the NSW Government published its landmark state-wide Aboriginal Water Strategy. The Strategy recognises that water is deeply important to Aboriginal peoples, and aims to keep and strengthen these connections by involving Aboriginal people meaningfully in water management planning, ownership and use. Development of the Strategy has involved extensive consultation over a period of 7 years, leading up to the public exhibition of the draft Strategy and Action Plan in July-September 2024.

Along with the Strategy, the NSW Government launched a registration of interest (ROI) process, open until 10 December 2025, to transfer water to Aboriginal-controlled entities to be used for commercial as well as cultural and environmental purposes. Providing tradable water rights to First Nations communities has rightly been described as ‘a long-overdue reform measure in NSW water resources management’ by one of NSW’s leading water experts.

Now, around 26,000 water shares currently held by the NSW Government are being made directly available, including unassigned water and water from surrendered water access licences (WALs).^[3] There are no application fees, and no payment will be required to obtain the WAL(s) and/or water share(s).

The ROI process provides Aboriginal legal entities direct access to WALs without any intermediary, contrary to the initial proposal in the draft Action Plan for a new statutory Aboriginal water investment entity to hold WALs.^[4]

Beyond this, NSW is building consideration of First Nations perspectives into water policy and legislation more generally. The Natural Resources Access Regulator’s 2024-2025 Regulatory priorities released July 2024 identified Aboriginal cultural values as an ‘enduring priority’, noting that water is intrinsically linked to the obligations of NSW Aboriginal peoples in caring for Country.

Victoria

Existing policy arrangements - Water is Life roadmap

In September 2022, the Victorian Government published the Water is Life roadmap which aimed to address the historical exclusion of First Nations Peoples from water rights and establish a framework to enable Traditional Owner access to and involvement in the management of water in Victoria.

Section B of Water is Life contains Nation Statements from 27 Traditional Owner groups across Victoria, in which Traditional Owners called for the authority to use and allocate cultural water on Country, and identified priorities for preserving cultural values. For example, the Tati Tati Nation called for the immediate return of ownership rights over Margooya Lagoon and the surrounding floodplain in north-western Victoria.^[5]

Whilst not all aspects of the Nation Statements have been reflected in law and/or policy, implementation of Water is Life to date has seen:

• Continued resourcing for Aboriginal Water Officer positions to support Traditional Owners to self-determine how they partner with the water sector, and the establishment of a new First Nations Water Branch within the Department of Energy, Environment and Climate Action (DEECA) in January 2025;^[6]
• The Victorian Government support a number of initiatives identified as priorities within individual Nation Statements, for example through providing funding for the Murray Lower Darling Rivers Indigenous Nations (MLDRIN) to conduct six Aboriginal Waterways Assessments in Victorian Water Resource Plan areas; and
• The Victorian Government make returns of surface and groundwater to Traditional Owners, including:
  • The re-allocation of 16GL of surface water from the Latrobe - Loy Yang 3/4 Bench bulk entitlement in Gippsland to be equally shared between agriculture, the environment and Traditional Owners;^[7] and
  • The transfer of a 1.4ML water licence in the Yarra River for the former Amcor Paper Mill to Wurundjeri Woi-wurrung Cultural Heritage Aboriginal Corporation.

Water is Life also included an objective to recognise all waterways and surrounding lands as living cultural entities in law, with Traditional Owners to be recognised as the unique voice for these entities.[^8] This followed the introduction of the Yarra River Protection (Wilip-gin Birrarung murron) Act 2017 (Vic) in 2017, which (in an Australian-first) recognised the Yarra River as a single living and integrated natural entity.^[9] The Act also introduced the Birrarung Council, which provides advice to the Minister for Water regarding the protection of the Yarra River and its lands, and must include at least two nominees from the Wurundjeri Woi Wurrung Cultural Heritage Aboriginal Corporation.

Future directions – Yoorrook Justice Commission & Statewide Treaty

The Yoorrook Justice Commission (Yoorrook) was Australia’s first formal First Peoples’ truth-telling process. Established in April 2021 with the powers of a Royal Commission, it was tasked with investigating historic and ongoing injustices for First Nations Peoples arising from colonisation. Part of Yoorrook’s role was to inform the parallel Treaty-making process in Victoria, being led by the Victorian Government and First Peoples Assembly of Victoria (FPAV) – which is at an advanced stage, with the Statewide Treaty Bill currently before Parliament, and expected to pass the upper house in the coming fortnight.

The Yoorrook Justice Commission’s final reports were tabled in Parliament on 1 July 2025. Yoorrook for Transformation Volume 2 addressed land and waters-related injustices for First Peoples, and identified several limitations with Water is Life – for example, that it:

• Effectively maintains the status quo with the State asserting ownership of all ground and surface waters in Victoria (an act characterised as ‘aqua nullius’);^[10]
• Enables the State to exercise ongoing control over the water entitlement system, through which interests are granted to third parties, and significant revenues collected by the State but not directly shared with Traditional Owners;^[11] and
• Did not establish any framework for the return of waters to Traditional Owners.

Yoorrook’s final water-related recommendations included calls for the Victorian Government to:

• Recommendation 37: Recognise First Nations peoples’ water sovereignty as part of Treaty and through substantive legislative reform, including by implementing a cultural flows model into Victorian water law, practice and governance;
• Recommendation 38(c): Commit to enabling First Nations peoples to assume waterway manager responsibilities within the meaning of the Water Act 1989 (Vic);
• Recommendation 38(h): Commit to prioritising the allocation to First Nations peoples of unallocated or newly available water, including through the establishment of buy-back schemes; and
• Recommendation 40: Establish and implement mechanisms for hypothecation of a proportion of water revenues (surface and groundwater) collected in the State of Victoria to be placed into the Self-Determination Fund for the benefit of Victorian Traditional Owners.

Whilst the Victorian Government has not yet formally responded to Yoorrook’s final report – certain of its reform proposals have already been taken forward through the Statewide Treaty Bill, which provides for:

• FPAV to serve as a permanent advisory body to Government (renamed as Gellung Warl) with:
  • Increased oversight of, and involvement in, decisions impacting on First Peoples;
  • The power to make representations to Government, including through regular meetings with Ministers and Cabinet; and
  • The power to make guidelines and standards as to the sharing and trading of water entitlements held by First Peoples or First Peoples organisations;^[12]
• An increased rate of First Peoples appointments to statutory authorities, including Water Authorities and Corporations.

Conclusion

Australia’s legal and policy frameworks for water management are being enhanced to recognise the importance of water to First Nations peoples.

Where historically Australian law and policy has tended to treat environmental and cultural values as equivalent, we are now seeing legal recognition of the spiritual, social, cultural and economic value of water to Aboriginal people.

Water users, governments and Traditional Owners now have more opportunities than ever to work together in water management to deliver beneficial outcomes. We expect that water users will need to:

• Familiarise themselves with relevant environmental and First Peoples policies, strategies and initiatives which may impact upon the grant, renewal or variation of water entitlements (particularly in the case of water resource intensive projects and developments); and
• Prioritise early and culturally-appropriate engagement with Traditional Owners and government, including to identify mechanisms to preserve and enhance cultural values and/or achieve beneficial outcomes for First Nations communities, and uphold social licence.

Stay tuned for Part 3 of the Water Regulation Series from the King & Wood Mallesons water team.