Introduction
7.1
The committee considered 'water availability, infrastructure, agreement and supply measures' as part of its terms of reference. Australia's water resources serve various vital functions, including servicing communities and amenities, recreational and cultural purposes. In addition, Australians rely on water for almost every industry in the nation's economy, particularly agriculture. This chapter provides a brief overview of submitters' views on the demand for water and the legislative and administrative arrangements for federal water management. The following discussion then addresses the evidence of inquiry participants regarding opportunities for improvement to the ways in which water is shared, managed and used.
Demand for water
7.2
Despite being the world's driest inhabited continent, Australia is one of the highest per capita water consumers in the world with the vast majority of water extractions used in agricultural production. In most parts of Australia, surface water is the main source of water supply, making it vulnerable to droughts.
7.3
There are a number of demands on Australia's limited water resources. The committee received evidence that '[w]ater is the most limiting factor to agriculture in Australia'. The Australian Meat Industry Council (AMIC) explained that the meat processing industry is also a significant water consumer, with water used for both food safety and meat hygiene throughout operations. Figure 7.1 outlines historical water taken for agriculture, urban and industrial users.
7.4
Increasing demand for water use is expected in Australia due to a growing population and drying climate. In 2019, the Coordinator-General for Drought warned that Australia's finite water resources are under increasing pressure. The report particularly highlighted the following factors:
climate change is making water availability less predictable and secure;
increasing frequency and intensity of droughts;
growth in the agriculture and other sectors, such as mining, that are competing for water.
7.5
In addition, the Australian Government's Drought Response, Resilience and Preparedness Plan (the Drought Plan) predicts that 'demand for agricultural water use will increase by 80 per cent by 2050, requiring a step-change in the productivity and efficiency of water use'.
7.6
The NSW Irrigators' Council provided its view as the peak body representing over 12 000 water access license holders in New South Wales:
At the present time, water availability for irrigation farmers is dramatically reduced because of both climatic water availability (with the worst drought in Australia's recorded history), as well as regulatory water availability with the implementation of arguably the largest water reform in Australia's history (Murray–Darling Basin Plan) and 0% allocations.
7.7
In its annual overview report of Australia's water situation for 2019–20, the Bureau of Meteorology reported that:
Dry conditions were experienced across most of Australia for the second successive year.
Combined water storage across Australia on 30 June 2020 was 46 per cent of capacity, similar to the previous year.
Total water taken in Australia for consumptive use was 14 270 GL, six per cent less than the previous year.
Climate change
7.8
In a changing climate, planning for future climate variability and climate change is extremely important. Throughout this inquiry, the committee heard repeatedly that climate change is worsening drought events—droughts are becoming more severe due to hotter and drier conditions. In addition, submitters raised concern regarding declining water security caused by climate change.
7.9
Mr Benjamin Cronshaw submitted that '[r]ising temperatures have already meant that droughts have become hotter with implications for water availability for human use'. He added that climate change and increasingly severe drought conditions are likely to exacerbate current water pressures. As a result, we 'need to adapt and change our lifestyles to meet the new challenges'.
7.10
For Ms Claire Miller, Chief Executive Officer, NSW Irrigators' Council, irrigators are 'on the front line of climate change'. She framed the key question for drought management as follows: 'is there a better way to share the water and to accept that the rivers of living memory are not going to be what the rivers look like in the future with climate change?'
Federal water management
7.11
In 1994, the Council of Australian Governments (COAG) agreed to a national Water Reform Framework in recognition of the fact that the 'management of Australia's water resources … would require cooperation between the Commonwealth and basin states'.
7.12
In 2004, the Water Reform Framework was renewed by the COAG with the introduction of the National Water Initiative which is a 'shared commitment by governments to increase the efficiency of Australia's water use, leading to greater certainty for investment and productivity, for rural and urban communities and for the environment'.
7.13
Subsequently, the Australian Government enacted the Water Act 2007 (Cth) (the Water Act) which established the Murray–Darling Basin Authority (MDBA) and provided the legislative framework for ensuring that the Murray–Darling Basin is managed in the national interest. In doing so, the Water Act recognises that Australian states in the Murray–Darling Basin continue to manage Basin water resources within their jurisdictions.
The Murray–Darling Basin
7.14
The committee is aware that the management of the Murray–Darling Basin, and the allocation and monitoring of its water resources, is the topic of ongoing debate and discussion.
7.15
Water is shared according to rules set out in the Murray–Darling Basin Agreement (the Basin Agreement), which forms part of the Water Act. In addition, the Murray–Darling Basin Plan (the Basin Plan), which came into effect in late 2012, guides governments, regional authorities and communities in sustainably managing and using the surface and underground waters of the Murray–Darling Basin. Implementation of the Basin Plan, led by the MDBA, has now been underway for nine years, with full implementation due by 2024.
Review of the Basin Agreement
7.16
The committee heard that the climatic and regulatory environment is fundamentally different today than at the time the Basin Agreement was developed. The NSW Irrigators' Council submitted that 'to be effective, the MDB Agreement must reflect the contemporary climatic and regulatory conditions'. To this end, a review of the Basin Agreement is needed 'to ensure it remains appropriate to contemporary times'. However, it noted that this is addressed to some extent through the Interim Inspector-General of
Murray–Darling Basin Water Resources' inquiry into the management of
Murray–Darling Basin water resources.
Sustainable Diversion Limits Adjustment Mechanism
7.17
The Basin Plan sets sustainable diversion limits (SDLs) on the amount of water allocated to consumptive use. To provide flexibility, the Basin Plan includes a mechanism (known as the SDL Adjustment Mechanism) to adjust SDLs in the southern Murray–Darling Basin. The mechanism requires a suite of projects, including supply and efficiency measures, to be implemented.
7.18
The NSW Irrigators' Council submitted that SDLs are 'the most critical component to future implementation of the Basin Plan, providing the lowest risk to communities, and realising targeted environmental outcomes'. However, it expressed concern that several projects under the SDL Adjustment Mechanism have been poorly developed without input from local communities and 'are thus not supported'.
7.19
The committee heard that community input is critical to the design and implementation of these projects. In addition, the NSW Irrigators' Council argued that flexibility and adaptability for new and improved SDL Adjustment Mechanism projects are essential to the Basin Plan's success.
Water allocations
7.20
Basin states allocate water within each water catchment, depending on how much water is available. The NSW Irrigators' Council expressed concerns that South Australian irrigators are disadvantaged by water sharing arrangements under the Murray–Darling Basin Plan—namely, '[t]his management regime effectively concentrates the drought burden on the Murray'. It noted that:
… the requirement for large parcels of environmental water to move downstream, and the extensive drought across the Basin has put enormous pressure on the Murray when the Northern Basin has been out of water from extreme drought.
7.21
In addition, Ms Miller raised concern that irrigators are the lowest priority in the allocation hierarchy and as a result 'are the first and hardest hit of all water users when it comes drought … This is severely impacting the profitability and viability of many farming businesses'.
Failure to meet water recovery target
7.22
It is now widely recognised that taking too much water out of Australia's rivers and groundwater systems can have detrimental economic and environmental consequences. The Australian Government has a legislated requirement to recover an additional 450 gigalitres (GL) for enhanced environmental outcomes by June 2024. However, the First Review of the Water for the Environment Special Account found that '[t]he volume of water recovered through efficiency measures programs and transferred to the Commonwealth at 30 June 2024 will be well short of 450 GL'.
Water infrastructure
7.23
In order to combat the challenge of Australia's naturally variable rainfall, water infrastructure is used to store water and enhance efficiency. Under the Drought Plan, the Australian Government supports long-term resilience and preparedness by building infrastructure to increase water security.
7.24
According to the Department of Agriculture, Water and the Environment, '[w]ater infrastructure activities have focused primarily on improving the efficiency of delivery of water and on-farm use'. Key Australian Government initiatives include:
The Sustainable Rural Water Use and Infrastructure Program;
The $3.5 billion National Water Grid Fund, administered by the National Water Grid Authority;
The On-farm Emergency Water Infrastructure Rebate Scheme;
The Water for Fodder program, which provides 100 GL of discounted water to primary producers to grow fodder, silage and pasture; and
The $27.6 million Improving Great Artesian Basin Drought Resilience program which co-funds eligible water supply infrastructure projects over five years from 1 July 2019.
7.25
According to the Bureau of Meteorology, large storages are essential for coping with the highly variable rainfall and high temperatures that are prevalent in much of Australia. In its 2020 report, Water in Australia 2018–19, the Bureau of Meteorology reported that the total accessible storage capacity is about 81 000 GL. This comprises over 500 major storages, several thousand small storages and in excess of two million farm dams.
Areas for improvement
7.26
The committee heard that water infrastructure is critical for all water users as it 'enables improved management of scarce water resources, by improving efficiencies, reducing losses, and enhancing river operations'. The Australian Government's investment in water infrastructure was largely welcomed; however inquiry participants identified a number of opportunities for improvement.
An assessment of Australia's water resources
7.27
In 2019, the Coordinator-General for Drought warned that:
Australia has no strategic vision for management efforts and investment in water resources which recognises current and future needs and takes account of future challenges under various credible scenarios.
7.28
Inquiry participants reiterated this situation. One submitter argued that that '[t]he management of environmental resources such as water is critical to preparing for and managing drought'.
7.29
The Tasmanian Farmers and Graziers Association (TFGA) told the committee that the 'key to managing water is to understand how much is available and where'. It pointed out that by 2050 urban water use is expected to double and agricultural water use is expected to increase by 80 per cent. The TFGA explained that '[i]t is vital to understand our water reserves and availability to plan for this increasing demand'.
7.30
The NSW Irrigators' Council expressed concern that recent population growth has not been accompanied by a corresponding growth in necessary water infrastructure. It recommended that the Australian Government undertake an assessment to determine what additional water storage capacity is required to withstand droughts into the future, including a 'program for the identification, construction and operation of innovative infrastructure to improve the total available water balance for all water users'.
7.31
Relevant to this inquiry, the Coordinator-General for Drought recommended that the Australian Government undertake a systematic and prioritised assessment of Australia's water resources to inform future management effort and investment, including:
evaluating each of the nation's surface and groundwater basins; and
taking account of future challenges such as changes in climate, population, industry growth and environmental needs.
7.32
The committee understands that, at the time of writing, this assessment is presently underway, led by the National Water Grid Authority. No update on this work has been provided to the committee.
Improved coordination
7.33
The committee notes that a number of key Australian Government agencies are responsible for managing water. Submitters, such as the TFGA, welcomed the creation of the National Water Grid Authority—announced on 1 October 2019—as 'an important step in aligning the Federal Government, states and territories in water management and investment'. Despite this, Mr Tony Mahar, Chief Executive Officer, National Farmers' Federation (NFF), expressed concern that a key barrier to water infrastructure development is 'getting that cooperation between industry and government, and state governments and/or local governments'.
Strategic investment
7.34
The NSW Irrigators' Council also called on the Australian Government to develop new innovative water infrastructure to ensure our water supply can endure long droughts.
7.35
Ms Claire Miller, Chief Executive Officer, NSW Irrigators' Council, stated that 'pet projects', such as the Bradfield scheme, were not drought resilience solutions, but there were many smaller projects that had merit. She argued that:
You can see overseas benefits from things like building weirs that just hold water back a bit longer, help to keep the system hydrated and help actually to keep rivers flowing for longer. They are not big ribbon-cutting things that politicians often like … these other opportunities, these other types, [] are usually smaller, because smaller has less impact and less negative impact and can often actually have more of a positive impact than those big, grand schemes.
7.36
However, Ms Miller warned against building dams. While dams may bring benefits in some cases, she explained that 'building dams is not only phenomenally expensive', but that it also 'impacts on landholders whose land is inundated where the dam footprint is and issues around downstream environmental and other impacts'.
Funding eligibility
7.37
As noted in earlier chapters, some submitters argued that there is an 'absence of appropriate measures for the post-farm gate sector'. The AMIC pointed out that the post-farmgate industry is not currently eligible for any water efficiency infrastructure grants'. Instead, 'these rebates are only available to primary producers, and can only be used for very specific infrastructure such as pipes, water storage and bores on farms'.
7.38
The AMIC argued that businesses dependent on agricultural production in drought-declared areas, such as meat processing establishments, should be considered for water infrastructure rebates. It suggested that 'rebates could encompass building or upgrading of current infrastructure' which would not only decrease town water usage, 'but also lead[] to future drought proofing and greater water security, which in turn results in economic and environmental benefit for the broader community'. In summary:
The government's response to drought assistance should be revaluated and redefined to ensure that the intent of drought assistance is consistently maintained throughout the supply chain—that is, support provided at the start of the supply chain is not compromised by government policy at the end of the supply chain.
7.39
These concerns were echoed by the Red Meat Advisory Council (RMAC). Similarly, the NFF recommended that the On-Farm Emergency Water Infrastructure Rebate Scheme be extended to all farm businesses.
Water delivery
7.40
Some submitters raised concern regarding the prohibitive cost of carting water to small communities. For example, the ALGA advised that:
In June 2019 Lachlan Shire Council had spent $90k in 12 months carting water to one town but at that time were only getting $50k back from the State Government. The southern Queensland town of Stanthorpe has been trucking in water at the cost of $800,000 a month.
7.41
The AMIC pointed out that producers in areas of severe drought are similarly 'facing the imminent prospect of carting water, which is economically unfeasible'.
7.42
The ALGA noted that, in addition to the costs of carting water, 'there is the wear and tear on road infrastructure that will take years to repair because of the impact of water and hay cartage'. It reported that councils believe that the cost of carting water should be fully subsidised by the Australian and state governments.
Research and development
7.43
The importance of research and development is recognised in the Drought Plan which notes that 'innovation is a key driver of farm productivity and competitiveness'.
7.44
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) outlined its work to improve farm resilience and water efficiency. This included improved farming systems practices, such as dual-purpose crops and early sowing, and developing innovative technologies that improve farm profitability and productivity.
7.45
Inquiry participants called for further investment in research, development and innovation. Of these, a number emphasised the role of innovation and new technology to increase water efficiency, thereby reducing the amount of water needed for the same crop or product.
7.46
Submitters, such as Mr Benjamin Cronshaw, explained that we have the knowledge, technology and economic resources to manage our water resources much more efficiently and effectively.
7.47
The NSW Irrigators' Council argued that '[t]he future of our agriculture sector should be a future of continuous improvements in water governance and management through innovative technologies and best-practice management options'.
7.48
Similarly, the TFGA called for further investment into research to better understand opportunities to use water as efficiently as possible. Importantly, the TFGA noted that in addition to research and development, funding must also be directed to extension as '[e]nsuring producers can access, understand and use innovations and technologies resulting from research and developments will enable them to increase their resilience and drought management'. Similarly, the RMAC submitted that '[i]nvestment into research, development and extension … is a must'.
7.49
The AMIC suggested a number of changes which can lead to substantial water conservation—from efficient spray nozzles and high pressure cleaning rings to water reuse systems and recycling. It argued that, although these water saving methods are available, their adoption is hindered by long payback times.
Plant biotechnology
7.50
The committee heard that plant biotechnology, such as genetic modification and crop protection products, has the potential to help Australian farmers 'address the unprecedented challenges that are facing in a changing climate', such as 'drought, soil acidity and/or salinity, as well as emergent diseases'.
7.51
CropLife Australia argued that to combat the impacts of climate change while remaining internationally competitive, 'farmers must be able to adopt the latest safe and proven agricultural technologies and innovations'. It submitted that this includes access to agricultural biotechnology innovations as well as biological and chemical crop protection products.
7.52
The committee heard evidence that genetically-modified crops bring about a number of benefits, including: reducing pesticide usage; reducing carbon dioxide emissions; increasing crop yields; and using fewer natural resources, such as water. CropLife Australia noted that since genetically-modified crop cultivation began, more than 183 million hectares of land have been saved from ploughing and cultivation, leading to improved water storage, limited soil erosion and increased availability of land for other environmental uses.
7.53
CropLife Australia called for further investment to support development and introduction of new crop protection products better targeted to Australian pests and climate. It explained that it takes over 11 years of research and development and a cost of over $3.6 million to bring just one new successful crop protection product to the market.
7.54
In addition, the committee heard that 'one threat to the potential success of [crop biotechnology] is the lack of a nationally consistent scheme for gene technology regulation in Australia'. CropLife Australia submitted that responsible use of agricultural chemicals must be supported by a regulatory scheme that 'maximises the benefits associated with their responsible use, while minimising the costs from excessive, unnecessary, inappropriate and/or ineffective regulation'.
ONE Basin CRC
7.55
The NSW Irrigators' Council expressed alarm that there is presently no national research body looking into constraints on water availability, water productivity and on-farm management. It argued that new and sustained investment into research and development will 'underpin prosperity, sustainability and resilience for the future in which water security is most likely to become increasingly under threat'.
7.56
To this end, the NSW Irrigators' Council expressed its support for a ONE Basin CRC as a centre of excellence that brings together research providers with complementary expertise, industry and the community into partnership to address research priorities for enduring irrigation farming and its dependent communities.
7.57
Ms Claire Miller explained that 'we want that CRC to look more broadly at what are some of the things that can be done in terms of good farm practice and changing farm practice'.
7.58
The NSW Irrigators' Council called on the Australian Government to 'invest in research and development so Australia continues to be world-leading in agricultural water efficiency and productivity'.
7.59
Ms Rachel Connell, First Assistant Secretary, Water Division, Department of Agriculture, Water and the Environment, advised that (as at June 2021) the then Minister for Industry, Science and Technology, the Hon Christian Porter MP, was yet to announce if the ONE Basin CRC had been successful in its bid for funding under the CRC Program.
Greenhouse gas mitigation
7.60
The committee heard that a key initiative of the red meat and livestock industry is to be carbon neutral by 2030. The RMAC discussed the greenhouse gas mitigation potential of the Australian red meat production and processing sectors:
Efforts to avoid GHG [greenhouse gas] emissions and improve carbon storage are important steps for industry to make towards reducing exposure to future risks, such as the effects of drought, of hotter and drier conditions on soil moisture availability and surface water storage.
7.61
The committee was informed that, as a result, the red meat industry's proportion of national greenhouse gas emissions reduced from 21.4 per cent in 2005 to 10.4 per cent in 2016. The RMAC argued that with the right policy settings and new investment in research, development and adoption, the industry's Carbon Neutral 2030 target can be utilised as a drought resilience measure.
Committee view
7.62
Managing water is a complex undertaking. However, it is clear that the management of water resources is critical to preparing for and managing drought. It is the committee's view that if we are to have a thriving agricultural sector into the future this means both increasing water supply and simultaneously working to enhance water efficiency.
7.63
In pursuit of these objectives, the committee has concluded that water infrastructure rebates are an effective measure to improve water efficiency and reduce loss. To this end, the committee supports the Australian Government's continued investment in strategic water infrastructure to ensure our water supply can sustain communities and producers through periods of water scarcity. This includes exploring opportunities to make water infrastructure funding available to agriculture-dependent businesses.
7.64
The committee recommends that the Australian Government consider opportunities to expand eligibility requirements for water infrastructure funding, including the On-Farm Emergency Water Infrastructure Rebate Scheme, to promote drought proofing and greater water security.
7.65
While such investments in water infrastructure are crucial, the committee notes the evidence that more can be done to enhance water efficiency through innovation and research. In particular, submitters identified several sound priorities for investment in research and innovation activities.
7.66
One promising option is further investment in plant biotechnology which has the potential to increase crop yields while using fewer natural resources, such as water. The committee notes that the Future Drought Fund's Research and Adoption program provides an opportunity to fund activity in this area. The committee urges the Australian Government, as part of its priority setting under the national Drought Resilience Research and Adoption Investment Plan, to explore opportunities to fund plant biotechnology research and development.
7.67
The committee recommends that the Australian Government direct significant public funding to research, development and extension of plant biotechnology to enhance water efficiency and reduce water wastage.
7.68
There is also compelling evidence that the establishment of the ONE Basin CRC will build resilience and effectively manage climate and water risks in the Murray–Darling Basin. To this end, the committee welcomes the proposed ONE Basin CRC and recommends that the Australian Government support its establishment as a centre of excellence that brings together research providers with complementary expertise, industry and the community into partnership to address research priorities for enduring irrigation farming and its dependent communities.
7.69
The committee recommends that the Australian Government support the establishment of the ONE Basin CRC as a centre of excellence that brings together industry, communities and research providers with complementary expertise.
7.70
While there is no doubt that Australian Government investment in water programs and coordination is substantial, there is strong evidence that an assessment of Australia's water resources is needed in order to guide planning and investment. This is of particular concern given projected population growth and climate change predictions. The committee understands that an assessment of Australia's water resources is presently underway, led by the National Water Grid Authority. The committee looks forward to the conclusion of this assessment.
7.71
The focus of this inquiry has not been to assess federal water management arrangements. Instead evidence received was primarily concerned with the design and implementation of, and improvements to, drought support measures in Australia. The committee notes the comprehensive work of the Productivity Commission in its recent inquiry into the progress of reform in Australia's water resources sector. The committee encourages the Australian Government to act expeditiously in response to the Productivity Commission's final report.
7.72
In addition, the committee is currently undertaking an inquiry into potential further amendments to the Water Legislation Amendment (Inspector-General of Water Compliance and Other Measures) Act 2021 (Cth) which will provide the opportunity to further investigate the appropriateness of administrative and legislative arrangements in the Murray–Darling Basin.
Senator Glenn Sterle
Chair