A royal commission into allegations of widespread water theft from the Murray-Darling Basin is set to begin in South Australia next year.
It follows an independent basin authority review which says NSW and Queensland are failing to make sure irrigators comply with water rules and are not transparent about their compliance arrangements.
Victoria is doing better, but also suffers from a "notable" lack of transparency, two reports released by the Murray-Darling Basin Authority reveal.
SA is the state doing the best in terms of compliance with the plan, and its Premier Jay Weatherill believes a royal commission is needed to get to the bottom of alleged upstream water theft.
The commission is set to start early next year and will have "wide-ranging coercive powers" to investigate breaches of the Murray-Darling Basin Agreement, Mr Weatherill said.
It will look at whether any legislative or policy changes to the agreement contradict its purpose, to return water to the basin system and ensure its health.
Mr Weatherill says the royal commission will also consider reviews and reports by other bodies and states, including NSW.
"It's clear some irrigators in upstream states have no regard for people who live and work downstream," he said in a statement on Sunday.
"This scandal is so extensive, we need a rigorous, independent inquiry with the coercive powers of a royal commission."
Malcolm Turnbull said there had already been five inquiries after ABC's Four Corners program in July revealed billions of litres of water earmarked for the environment were diverted for cotton irrigation in NSW.
"(It's) the Murray-Darling Basin Authority's compliance review, an exhaustive inquiry, the results of which I released yesterday, that sets out ... what the problems were, consistent with all the other inquiries," the prime minister said.
Federal officials wouldn't stand in the way of SA's royal commission but it was a waste of money, Mr Turnbull added.
On Saturday the prime minister accepted all recommendations in the two reports by the basin authority and an independent panel.
These included making the MDBA more effective, getting states to toe the line, and the introduction of a 'no meter, no pump' policy.
Victorian Premier Daniel Andrews on Sunday said he supported an independent inquiry into "exactly what has gone on here".
"There's been some very bad practises ... if there is not an inquiry then I don't think we can hope to restore trust in the way the basin plan works," he said.
NSW insists it is already doing enough to address problems with the state's water administration.
Regional Water Minister Niall Blair on Saturday said he'd review the findings but noted they were in line with a recent interim report raising concerns about lax compliance and enforcement arrangements.
He later questioned the need for an expensive and lengthy royal commission when several other inquiries were already underway.
But federal Greens leader Richard Di Natale sided with South Australia, and said what happened in the basin was "nothing short of a scandal".
"Our irrigators are effectively stealing water from Australians," he added.
