Minority Report by Independent Senator Nick Xenophon
Background
1.1
The inquiry
into sustainable management by the Commonwealth of water resources was
established to look into the ability of the Commonwealth, across state borders, to sustainably manage water
resources in the national interest.
1.2
In
particular, the Committee was asked to address:
i.
the
issuing, and sustainability of water licences under any government draft
resource plans and water resource plans;
ii.
the
effect of relevant agreements and Commonwealth environmental legislation on the
issuing of water licences, trading rights or further extraction of water from
river systems;
iii.
the
collection, collation and analysis and dissemination of information about
Australia's water resources, and the use of such information in the granting of
water rights;
iv.
the
issuing of water rights by the states in light of Commonwealth purchases of
water rights; and
v.
any
other related matters.
1.3
Unfortunately,
as a result of a lack of participation and cooperation by some key stakeholders,
this Senate Inquiry was unable to thoroughly assess issues such as overland
flows, water speculation and the decision-making process around licences,
particularly those issued in Queensland.
1.4
Further,
while there are a number of existing intergovernmental agreements relating to
Murray-Darling water resources – the National Water Initiative 2004, the
Australian Government Water Fund 2004, the National Plan for Water Security
2007, the Water Act 2007, Water for the Future 2008 and Water Amendment Act
2008 – these do not provide for the allocations of water resources to be
managed at a Federal level in the national interest.
Rather, they continue to allow
states and territories to manage water resources in their own interests, to the
detriment of the Murray-Darling system as a whole.
1.5
South
Australia is particularly impacted by the 'each-state-for-itself' approach as
it is inevitably reliant on the eastern states – New South Wales, Victoria and
Queensland – to effectively manage and allow water to flow to the southern
catchments.
1.6
This was
demonstrated first hand following flood events in December 2009 and January
2010 in the north-east of New South Wales.
Approximately 300 gigalitres of
water was injected into the Murray-Darling River system as a result of the
floods. However, a significant proportion of this water was to be dammed and
diverted upstream for New South Wales' use only, with none allowed to flow into
the drought-affected South Australian catchments.
Following pressure from the
Federal, Victorian and South Australian governments, the New South Wales
Government agreed to release 148 gigalitres of the floodwaters, which was
diverted into the Lower Lakes where water levels have dropped to dangerously
low levels.
1.7
This event
made it apparent that, despite the existence of intergovernmental agreements,
individual states make water management decisions in the interests of themselves,
not necessarily in the interests of the Murray-Darling Basin as a whole.
1.8
It was also
revealed during the Additional Senate Estimates in February 2010 that the
States have the power to veto any Federal Government decisions regarding the
management of the Murray-Darling River.
1.9
This matter
was identified in relation to the 640-gigalitre rule applied to water storage
arrangements at Menindee Lakes in New South Wales.
Senator
XENOPHON—Dr
Horne, if the New South Wales government, for whatever reason, did not want to
review the 640-gigalitre rule, what would that mean? If New South Wales did not
want to review that rule, how could it be changed and at what point could it be
changed? Would the Basin Plan have to come into force for that rule to be
reviewed if one party did not want it to be reviewed?
Dr
James Horne
[Deputy Secretary, Department of the Environment, Water, Heritage and the Arts]—The
review of the agreement requires consensus. So any agreement will need an
overall package of changes. New South Wales clearly has, if you like, the
largest issue or leverage chip, and that is the Menindee clause. And it will no
doubt use that clause.
Senator
XENOPHON—So
an absent agreement from the New South Wales government, and that 640 gigalitre
rule could be with us for many years to come?
...
Senator
XENOPHON—But,
essentially, in the absence of New South Wales agreeing to change the rule, we
are kind of stuck with it for the current period, I think you said.
Dr
Horne—That
is right.
...
Senator
XENOPHON—I
am just trying to understand in relation to the 640-gigalitre rule, in the
absence of New South Wales agreeing to change that rule, if that could be
overridden by the new water-sharing plan in several years time. Is that
something that New South Wales could still have a veto power over in relation
to that 640-gigalitre rule? That is my discrete question. I think the answer is
that it is—
Senator
Penny Wong [former Minister for Climate Change and Water]—The
Murray-Darling Basin agreement requires consent by the parties to be altered,
and this is an aspect of that.[1]
1.10
Ultimately,
the long-term survival of the Murray-Darling Basin as a whole relies on its
water resources being responsibly managed from the head waters in Queensland to
the Murray mouth in South Australia.
1.11
Dr Robert
Morrish, Chairman of the Cooper's Creek Protection Group, says that management
of the system as a single river, rather than based on jurisdiction, in crucial
to ensuring the survival of the Murray-Darling Basin:
There is clearly a need for
rationalisation of water management across all the states, in the view of the
current crisis of over-allocation by different states acting independently and
in their own interests. The ecological integrity of rivers and wetlands can
only be achieved by whole-of-catchment management, and for rivers which span
several states there is an obvious need for a broader set of policies and principles
of river management with which the states should conform.[2]
1.12
The Murray
Valley Water Diverters Advisory Association (NSW) agrees and says that:
Unless there is a fundamental
shift in government policy on water matters as relates to productive use and
environmental needs, I [Mr Neil Eagle AO, Chairman] have grave concerns for
Australia's irrigation industry and future national food security.[3]
1.13
The
Murray-Darling Basin contains over 40 per cent of all Australian farms and
produces one third of Australia's food supply and, therefore, it is crucial
that the river system be managed as a single system to ensure its
sustainability into the future.
The need for a national approach
1.14
The
Murray-Darling River covers 1 061 469 square kilometres across Queensland, New
South Wales, the Australian Capital Territory, Victoria and South Australia.
There are 23 catchments along the entire length of the system and entitlements
differ according to the jurisdiction concerned and whether the water supply is
regulated or not.
1.15
In
Queensland, for example, water management, allocation and trading rules are
determined depending on climate and geography within the state.
In New South Wales, the
allocation process differs between the northern and southern regions, based on
measurement of water in storage, prediction of likely water inflow, review of
historical water data and deduction of removals.
Meanwhile, in South Australia,
existing users have priority access to water over new users and are allocated
water based on a land and water use survey, taking environmental needs into
account. South Australia also issues water permits, which are different to
water licences, and are for water affecting activities such as weirs, dams and
wells.
Finally, in Victoria, there are
four types of water entitlements which change seasonally and sometimes by
decision of the water authorities through bans, rosters or restrictions.[4]
1.16
These
variations between how water entitlements are determined in the four key states
which the Murray-Darling Basin covers clearly indicate a lack of consistency
along the river system, and also confusion around who gets access to what water
resources and when.
1.17
Furthermore,
water allocation trading is restricted between states, which means irrigators,
particularly in New South Wales and Victoria, are at a disadvantage in terms of
being able to sell water licences, and South Australian farmers are unable to
purchase the water they need from their interstate counterparts.
1.18
Victoria
currently has 4 per cent annual limit on permanent trade out of irrigation
areas, although it has been agreed that this will be phased out from July 2011,
and removed entirely by 2014.
1.19
The cap
constrains willing buyers and sellers, and its immediate removal has been
called for by the ACCC, the National Water Commission and the Productivity
Commission.
1.20
Professor Ian
Falconer, member of the Basin Community Committee of the Murray-Darling Basin
Authority, stated in his submission to the Committee that:
The present constraints on the
purchase of water licences by the Commonwealth, which are imposed by the
States, are counter-productive for both the licence owners and the Commonwealth
environmental water purchase.[5]
1.21
Professor
Falconer also argues that:
...the current State water plans
do not provide the speed of response that is necessary for concerted action in
the face of continuing drought.[6]
1.22
The crisis in
the Murray-Darling Basin has shown that a lack of a uniform national approach
is not in the interest of the Murray-Darling river system and the communities
that rely on it.
Each state for itself
1.23
In July 2008,
the New South Wales Government announced it would develop a draft floodplain
harvesting policy across the state, which was finalised in 2010.
1.24
The draft
Floodplain Harvesting Policy Framework is intended to “put a stop to the
unconstrained harvesting of flood waters”[7]
by way of stopping farmers from building channels to illegally divert
floodwaters to their dams.
1.25
Critics,
however, have said that the rules under this draft plan can be rorted by NSW
irrigators.
1.26
The
Australian Conservation Foundation’s healthy rivers campaigner, Arlene Buchan,
says the scheme, which is essentially an honesty system of recording what is
taken by individual NSW farmers, will not stamp out the practice.
Without adequate metering and
monitoring by the government, this policy is ridiculous.[8]
1.27
In May 2010,
I, along with Senator Sarah Hanson-Young, introduced a Private Senator's Bill –
the Water (Crisis and Floodwater Diversion) Bill 2010 – which provides that, in
the event of extreme rainfall in the north of the system and drought in the
south, state/territory powers for the management of water flows would be
transferred to the Federal Government to authorise the Murray-Darling Basin
Authority to manage the water resources in the interest of the river as a
single system, rather than on a state-by-state basis.
This Bill was re-introduced into
the 43rd Parliament.
1.28
The manner in
which water rights have been granted in Queensland, Cubbie Station a prime
example, highlights the need for a robust national approach.
1.29
According to
a report by Melaleuca Media:
Cubbie Station,
with enough capacity to more than swallow up Sydney Harbour. Cubbie holds
licences which mean that in a good year, even more water than this can be taken
from the river, for the total payment to the State of just $3700 a year.
“Effectively, their water is free,” said former Queensland Natural Resources
and Environment Minister, Mr Rod Welford.[9]
Infrastructure versus Water Buybacks
1.30
The
Sustainable Rural Water Use and Infrastructure Program provides $5.8 billion
to the upgrading of out-dated and/or ineffective irrigation systems. $3.7 billion
has already been allocated, subject to due diligence requirements.
1.31
However there
are concerns that the focus on infrastructure is not an effective approach.
1.32
The
Productivity Commission concluded in its March 2010 report, Market
Mechanisms for Recovering Water in the Murray-Darling Basin, that
the money being spent on infrastructure could be better spent on water
buybacks, especially in instances where the infrastructure investment would not
improve the viability of a location's water saving ability.
Conclusion
1.33
As one river
system, there needs to be one set of rules to ensure that the Murray-Darling
Basin is sustainable into the future.
1.34
Decisions
need to be made at a Federal level because States have in the past failed to
act in the national interest.
Recommendation 1
That there be an immediate full Federal
takeover of the Murray-Darling Basin to ensure that there is a uniform and
consistent approach to water licences in the Basin.
Recommendation 2
That the Committee re-visit this
issue following the release of the Murray-Darling Basin Authority's draft Basin
Plan.
Nick
Xenophon
Independent
Senator for South Australia
07
October 2010
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