A royal commissioner has questioned the legality of the Murray-Darling Basin Plan.

Bret Walker SC is running a royal commission into alleged water theft by irrigators in upstream states.

In an issues paper this week, Mr Walker said there is a “real risk” that all or parts of the Murray-Darling Basin Plan are unlawful.

Mr Walker says that the federal Water Act — which underpins the Basin Plan — prioritises environmental considerations, but the Basin Plan takes economic and social impacts into account as well.

“The legal issue, therefore, is whether social and economic outcomes are to be considered in determining an ESLT (environmentally sustainable level of take), or whether such outcomes are to be engaged with only after an ESLT has been determined,” he said.

Mr Walker said environmental targets from the Basin Plan may not reflect the definitions and objectives outlined in the Water Act, which would make those parts of the plan potentially “unlawful”.

“If social and economic outcomes are to be treated equally with environmental outcomes in the determination of an ESLT, it may be that the definition of this term in the Water Act needs to be amended,” he said.

“Alternatively … it may be that an amendment needs to be made to the Basin Plan.”

The plan itself is in limbo right now, with New South Wales and Victoria threatening to walk away from the agreement after the Senate voted to block proposed changes to the plan.

The changes sought to cut the amount of environmental water returned in southern Queensland and northern New South Wales.

Mr Walker said there was also some doubt as to whether that idea is consistent with the Water Act.

“It is mandatory for the Basin Plan to at all times reflect an environmentally sustainable level of take,” Mr Walker said in the issues paper.

“The [Murray-Darling Basin Authority] has, however, expressly indicated in a number of its reports that the current basin-wide SDL (2,750 gigalitres for the environment) has been based on what it describes, in simplistic terms, as a triple bottom-line approach.

“The commissioner is considering whether in taking this approach to the construction of the Water Act, the MDBA has fallen into legal error.”