The Murray-Darling Basin Authority (MDBA) is on notice that significant changes must be made to the Basin Plan to ensure Basin communities have a future.
A second consensus document has now been agreed between Victoria, New South Wales, Queensland, South Australia and the Commonwealth.
"The latest consensus document highlights many of the issues that the Ministerial Council raised in the advice to the MDBA of 9 July and allows for further discussion and agreement between State and Commonwealth water ministers to occur," Mr Walsh said.
"There are many issues that require further discussion from ministers as the MDBA has not taken these earlier comments into account.
"The extension of time that allows State ministers to continue providing advice to the Federal Minister is warranted given that critical issues remain outstanding."
Further to the consensus document, Victoria and New South Wales have also provided Minister Burke with an agreed notice.
"Victoria and New South Wales are in agreement in asking for a sustainable diversion limit adjustment mechanism to apply in the final Basin Plan to stop irrigation water being stripped from rural communities and food and fibre producers, and to achieve better environmental outcomes," Mr Walsh said.
"Victoria and New South Wales also do not support the Commonwealth entering the water market with further buyback tenders unless it is aligned with irrigation upgrades," Mr Walsh said.
Mr Walsh again urged the MDBA to listen to the Basin ministers and respond to the genuine concerns by making appropriate adjustments to the August 6 proposed Basin Plan draft.
"These final stages of the Basin Plan's development will hinge on trust between the States and the Commonwealth, and between all Basin ministers and the MDBA.
"If the MDBA cannot deliver a plan that the ministers support, it is time to revert to the shared management of the Murray-Darling Basin to achieve the outcomes, without a Basin Plan," Mr Walsh said.