Chapter 3Buybacks
Introduction
3.1The first part of this chapter provides contextual information on the 450GL target and water buybacks. It then explains the bill’s main provisions and key concerns raised by inquiry participants in relation to the proposals to increase project flexibility.
3.2The chapter then explores the key arguments opposing and supporting buybacks. The second part of the chapter outlines:
concerns regarding constraints relaxation (where relevant to buybacks);
suggested alternatives to buybacks;
suggested actions should significant buybacks need to occur;
the bill’s decoupling of the 450GL from the southern Basin;
criticism of community adjustment packages; and
views on over recovered water and Held Environmental Water.
The 450GL of additional environmental water
3.3As discussed in the previous chapter, the Basin Plan includes two different water recovery targets—one that ‘bridges the gap’ between historical overuse and a sustainable level of use and another that ‘enhances environmental outcomes’. The second target is 450GL and aims to achieve enhanced environmental outcomes. This 450GL is also referred to as ‘additional environmental water’.
3.4For context, when the Basin Plan was being developed in 2012, it was initially proposed that a long-term annual average of 2750GL should be returned to the river (the ‘Bridging the Gap’ target). At the time, the South Australian Government argued that 2750GL was insufficient and that an additional 450GL was needed. As a result, an additional 450GL target was built into the Basin Plan in 2013.
3.5By using the SDLAM, [Sustainable Diversion Limit Adjustment Mechanism] Basin governments agreed that the additional 450GL of environmental water would be able to be met via ‘efficiency measures projects’. Efficiency measures projects seek to improve water use practices and allow ‘saved water’ to be allocated to the environment. The water that has been saved is allocated to the Commonwealth Environmental Water Holder (CEWH) account.
3.6The additional 450GL aims to deliver enhanced environmental outcomes throughout the River Murray system, including increased flows to floodplains in NSW and Victoria, but it is particularly important for maintaining the health of the Coorong and Lower Lakes in South Australia.[2]
Funding of efficiency projects
3.7A dedicated fund, called the Water for the Environment Special Account(WESA), was established in 2013 to fund projects to deliver the 450GL target. At that time, $1.775 billion was allocated to the WESA to be credited over 10 years. Since the WESA was established, the Australian Government has provided funding via four different programs. The most recent of these programs is the Off-farm Efficiency Program.[3] Under this program, Basin states put forward project proposals for assessment by the Commonwealth and, if agreed, the projects were to be delivered and funded in accordance with a Commonwealth-State agreement. There are currently five approved off-farm projects with two each in NSW and Victoria and one in South Australia.[5]
Achieving the 450GL target
3.8Efforts to meet the 450GL target using efficiency measures projects have been behind schedule for some time.[6]
3.9In 2018, Basin governments—through the Murray-Darling Basin Ministerial Council—placed parameters around the recovery of the 450GL by stipulating that projects must be required to undergo a stringent test to guarantee ‘neutral or positive socioeconomic outcomes’ for communities, consistent with the principle in the Act. Some have since attributed the difficulty in reaching the 450GL to this socioeconomic neutrality test.
3.10In July 2023, the MDBA confirmed in its formal advice to the Minister for Environment and Water, the Hon Tanya Plibersek MP, that the 450GL would not be achieved by 30 June 2024 under current settings, and that only 26GL, around 6 per cent, of the 450GL had been contracted for delivery.
Contextual information on buybacks
3.11Farmers who operate in the Basin need to hold an appropriate water access right, together with a water access entitlement or allocation, granted under relevant state or territory legislation, in order to pump water from the system. As the water access entitlements associated with these licences exceed sustainable permitted extraction limits in some areas, the Australian Government has been purchasing water access entitlements (in full or in part) back from willing sellers through both open and targeted tender processes for more than a decade. These voluntary water purchases are known as ‘buybacks’.
3.12As mentioned in Chapter 2, in 2015 the Australian Government legislated a 1500GL cap on surface water purchases. There is currently 270GL left remaining under this cap. In 2018, Basin Water Ministers agreed that efficiency measures projects to meet the 450GL target should be subject to socioeconomic neutrality criteria because of concerns over potential socioeconomic harm. In 2020, the Australian Government announced that no more buybacks would be considered and it would instead shift its focus to off-farm projects.[10]
3.13As mentioned earlier, only 26GL of the 450GL target has so far been contracted for recovery, and an approximately 315GL shortfall within the 605GL target is expected to arise from supply projects either running late or failing to materialise. In August 2023, the Commonwealth reached a new Basin Plan agreement with all the Basin Water Ministers except Victoria (outlined in Chapter 2).
What the bill proposes to do
3.14The Water Amendment (Restoring Our Rivers) Bill (the bill) aims to give legislative effect to the new Basin Plan agreement. In relation to buybacks, the bill would:
give the Commonwealth greater flexibility in achieving the 450GL target, including through voluntary buybacks;
remove the 1500GL limit on buybacks (as mentioned in Chapter 2, the cap does not apply to the WESA);
allow the WESA to be used for buybacks (concerns regarding buybacks are explored throughout this chapter);
allow the Commonwealth to provide community adjustment support packages where there has been flow on impacts from buybacks towards the 450GL; and
provide a different way to achieve the 450GL that is not subject to the socioeconomic test.[11]
Greater flexibility in achieving the 450GL target
3.15In terms of increasing flexibility, the Australian Government agreed to expand the ways in which the 450GL target can be reached, including through measures such as water entitlement purchases (known as ‘buybacks’), land and water purchase packages, counting over recovered water, and other projects.[12]
3.16The bill would also give the Commonwealth more time to enter contracts to recover any outstanding balance of the 450GL not achieved (specifying 31December 2027 as the deadline).[13] That is, efficiency measures must be in operation by 31 December 2026, but contracts for resulting entitlements only need to be entered into by 31 December 2027, and non-efficiency projects (such as voluntary water purchases) must also be contracted by 31 December 2027. However, for efficiency projects that are contracted before 31 December 2027, there is no proposed statutory deadline for returning the water saved from these projects to the environment.
3.17To mitigate impacts on communities, the Australian Government agreed that, where buybacks have flow-on impacts, ‘community adjustment packages’ will be provided using funding drawn from the WESA.[15] Concerns regarding community assistance packages are explored towards the end of this chapter.
3.18As mentioned earlier, an undisclosed sum, ‘which cannot be publicly released due to commercial sensitivities’, was secured in October 2022 and May 2023 to deliver the Basin Plan.[16] A further approximately $1.3 billion is available via the WESA.
3.19Importantly, the Commonwealth does not need the agreement of the states to conduct voluntary water purchases.[18] There is also no formal obligation on the Commonwealth to use buybacks to make up any remaining shortfall in water recovery targets.
Allowing different types of measures to count towards water recovery
3.20As discussed, the bill allows for a broader range of measures to contribute to the 450GL target.
3.21The NSW Government advised it will be putting forward a plan to the Australian Government on the projects that should be considered to meet the 450GL target, noting that it already has several off-farm efficiency projects ready to progress as soon as the Australian Government can accept applications for projects for delivery after 30 June 2024.
3.22In its submission, the NSW Government suggested that these new measures should include rule-based changes or other projects that enhance connectivity in the northern Basin. According to the NSW Government, these changes ‘arguably provide greater environmental protections than purchasing licences’. In combination with rule-based changes, the NSW Government suggested that broader projects such as changing infrastructure to support fish movement will help, pointing to the NSW Chief Scientist’s recent report which found that a mixture of change is needed to avoid further environmental degradation.
3.23DCCEEW advised that it is ‘proposing to prioritise delivering the 450GL basically straightaway when the legislation passes rather than deal with the 605shortfall’. DCCEEW explained that it has a pathway to achieve the 450GL by 2027:
We went out a while ago to look at all options—those that are not purchased, basically. We got a huge response from it, and we've reported back on what we've heard through all of that in looking at non-purchase options. To be frank, a number of them are kind of complementary measures that don't actually...result in water entitlement. Others are good ideas for new programs, projects that we can consider and run with. We would certainly open very quickly with all of the programs that are non-purchased programs that would deliver a water entitlement outcome, see what the appetite is for delivering those projects and programs and then move to purchase.
Socioeconomic test
3.24While the bill does not remove the socioeconomic test (it remains for efficiency projects), it does provide a different way to achieve the 450GL of additional held environmental water that is not subject to the test.
3.25Some submitters, including the NSW Government and farming groups, opposed this proposal.[25]
3.26For example, Renmark Irrigation Trust argued that socioeconomic neutrality is important for irrigation-dependent communities.[26] The AustralianDairyIndustry Council argued that bypassing the test would be a step backward that ‘ignores the evidence of impact on communities gathered through extensive reviews and from the lived experience of farmers themselves’.
3.27Likewise, the Victorian Farmers Federation voiced its concern at the proposal to remove the test.
3.28Conversely, several submitters, including the SA and ACT Governments, Environmental Justice Australia, and academics, supported the removal of the test.[29] The SA Government argued that the test had had ‘the practical effect of almost stopping all recovery of water towards the 450GL...[yet] the criteria are invalid’.
3.29Similarly, the joint submission from Professor Wheeler and colleagues argued that the ‘test is without foundation’ and that ‘any potential project in relation to any government project would not pass the neutrality test. Further, when evaluating a project under the neutrality test, who measures impact?’.[31]
3.30For the avoidance of doubt, the SA Government suggested repealing this part of the Basin Plan.
Opposition to buybacks
3.31Several submitters, such as the NSW and Victorian Governments, certain farming groups, and irrigation dependent communities, were opposed to using buybacks to meet water recovery targets.[33] Several industry submitters also opposed the removal of the 1500GL cap on buybacks.[34]
3.32The Victorian Government explained that it had assessed that a purchase of 100GL in that state ‘would lead to an estimated 460 direct agricultural job losses and $140 million per year (net present value) in lost gross value irrigated agricultural production’. The Victorian Government argued that, to ensure the Basin Plan’s environmental objectives are met, ‘it is critical our next steps are more sophisticated than just water recovery’ and that efficiency projects, by comparison, are a ‘win-win’ approach and should be used as the primary recovery mechanism.
3.33Farmers and irrigators questioned the link between buybacks and environmental gains, and emphasised how destructive buybacks can be to irrigation communities. For example, Cotton Australia submitted that:
While the impacts will vary from commodity to commodity...for every on‑farm job, there is a multiplier of 3-4 jobs lost along the overall supply chain...This loss of jobs flows through to losses of services in areas such as health and education, as population in these irrigated communities’ decline. Eventually they enter a tipping point—they pass the point of recovery back to vibrant communities.[37]
3.34The Australian Dairy Industry Council (ADIC) highlighted the findings of the Sefton Review, which assessed the social and economic conditions in the Basin in 2020 and found that buybacks:
exacerbated business risk to farmers who participated in previous buybacks, and who now rely on the water market for their annual water requirements, particularly at times of drought when water availability is at its lowest and prices at their highest;
have negatively impacted certain irrigation regions where fewer farmers now shoulder the costs of maintaining irrigation infrastructure, affecting farmer competitiveness and risking stranded assets in those areas;
negatively affected service industries and businesses due to flow-on changes in regional supply chain demand; and
resulted in a loss of community through a loss of population and investment in community and recreational facilities and capacity.
3.35These concerns were echoed in submissions from Victorian grape growing businesses, Cordoma Group and Davoli Table Grapes, who argued that ‘enabling buybacks will destroy communities’ and ‘compromise food security’.
3.36Cordoma Group drew attention to economic research commissioned by the Victorian Government in 2022, which modelled different buyback scenarios and the potential socioeconomic impacts on the southern Basin. The upper range scenario modelled 750GL of buybacks where 424GL of the 450GL target and 326GL of the 605GL target were purchased in line with the current mixture of water entitlements held by the Commonwealth Environmental Water Holder (CEWH). This scenario estimated that there would be up to $855 million per annum reduced gross value irrigated agricultural production across the southern Basin, up to $450 million per annum reduced gross value agricultural production in northern Victoria, and up to 1500 fewer agricultural jobs in northern Victoria.
3.37The Victorian Farmers Federation (VFF) argued that there is empirical evidence demonstrating the socioeconomic harm associated with buybacks:
There is overwhelming evidence from multiple sources that the 450GL cannot be recovered without causing social and economic harm. Based on this empirical evidence it is the VFF’s position is that the Basin Plan does not require the 450 GL to be recovered. Furthermore, it is the VFF’s position that there must be no further reduction in the amount of water available for food production to avoid cost of living increases locally and risks to food security internationally.
3.38Some submitters felt that communities would be unfairly impacted for the failure of state governments to implement water efficiency projects on time.[42] For example, Cotton Australia submitted that, ‘the progress on supply projects has been too slow. However, that has not been the fault of the irrigation communities of the Basin, so they should not have to pay the costs for government’s collectively failing to deliver these supply projects’.
3.39Similarly, the National Irrigators’ Council stated that it ‘does not support the removal of the 1500GL limit on water purchases as a means for the Commonwealth to ‘manage’ the states performance’. The NationalIrrigators’Council argued that ‘other incentives should be considered to drive improved accountability...[as] direct water purchase doesn’t directly impact a state but rather the regional communities from which the water is recovered’.
3.40In making its case against the need for further buybacks, Leeton Shire Council argued that ‘a significant amount of water has already been recovered for the environment...and significant improvements in natural habitats and species breeding’.
3.41The National Farmers' Federation (NFF) was concerned that buybacks will distort an already diminishing market. The NFF explained that willing sellers already have the option to sell their water on the market, meaning that all that buybacks achieve is ‘removal of water from the consumptive pool which drives commensurate increases in water pricing’. The NFF stated that analysis from ABARES indicated that ‘water recovery to date has pushed water prices above $200/ML in three out of ten years’ and that ‘[r]emoving a further 450GL could see this threshold being met in 8 of 10 years’. The NFF explained that the $200/ML was important because ‘a number of commodity producers have an aversion level which caps paying over $200/ML to grow a crop’. Similar evidence was provided by the Almond Board of Australia, who argued that the ‘mere prospect’ of the bill broadening buybacks had already influenced the market.
3.42The Murray Regional Strategy Group argued that water price increases would cause a ‘ripple effect’ and have flow on impacts that infiltrate other sectors of regional communities like the service industry, processing, health, education and small business.
3.43In a similar vein, the Central Irrigation Trust explained the potential impact future buybacks could cause in irrigation schemes:
Water buy backs with no safeguards has the real potential to render collaborative irrigation schemes, or parts thereof, such as those managed by CIT, unmanageable and unsustainable. This directly impacts farmers that had no intention of exiting the area and/or the irrigation industry through reduced access to water at an economically viable value. The snowball effect occurs when farmers exit an irrigation scheme leaving the remaining farmers to shoulder increasing portions of the fixed infrastructure costs. Eventually the costs become too great for those seeking to remain forcing them out too.
3.44The Victorian Farmers Federation submitted that the bill:
...enables the Commonwealth to purchase water but fails to provide the most rudimentary safeguards. The bill fails to set out any requirements to document and justify what and where additional environmental outcomes will be achieved by the water purchases. It also fails to set the obligations and processes to be implemented by the Commonwealth to offset the economic damage to rural communities caused reducing irrigation.
3.45Evidence from the Balonne Shire Council argued that the impact of water recovery was able to be determined with precision, noting that the MDBA’s Northern Basin Review was informed by detailed socioeconomic analysis of how different levels of water recovery would likely affect northern Basin communities and associated industries.
3.46However, the Department of Agriculture, Fisheries and Forestry (DAFF) gave evidence that disentangling the impact of water recovery is difficult to determine with precision, given the complexities of the water market, and other factors such as climate change and long-term structural changes in regional Australia:
...these changes have occurred at the same time as a shift in climate has increased the number of dry years and reduced rainfall and water availability in the MDB... Changes in market conditions have also resulted in increased demand for water from some emerging industries... In addition, structural change has been occurring in regional Australia for decades, driven by deep social and economic factors such as individual preferences to live in major cities. Changes in agricultural production methods have also been significant, including technology with reduced labour requirements... These different drivers interact and make it difficult to precisely determine cause and effect of individual factors.
3.47The inquiry received evidence that concerns regarding buybacks are not supported by the credible evidence base; this is discussed later in this chapter.
Support for buybacks
3.48Conversely, the inquiry received support for full implementation of the Basin Plan, that is, for further water recovery, the use of buybacks, and removing the 1500GL cap, such as from the SA and ACT Governments, environmental groups, legal experts, and academics.[55]
3.49For example, in support for removal of the 1500GL cap on buybacks, the ACT Government submitted that, ‘[r]emoval of the 1500GL limit on water purchasing...and other enabling features to progress achievement of the 450GL water target sets a positive direction towards full delivery of the environmental water recovery targets’.
3.50The Australian Conservation Foundation (ACF) argued that ‘[t]he 450GL must be recovered as quickly as possible using voluntary water purchase. All restrictions on water purchase should be removed’. The ACF pointed out that removal of the cap is required to incentivise states’ action on SDLAM projects.
3.51The Wentworth Group of Concerned Scientists gave evidence that it would prefer that the 450GL target be achieved through the voluntary purchase of entitlements. It did not propose the compulsory acquisition of water entitlements.
3.52The South Australian Government explained that there are benefits across the Basin associated with obtaining the additional environmental water:
...one of the issues with the 450GL is that people focus just on the Lower Lakes and Coorong, which of course it is vital for, but the 450GL delivers benefits throughout the system, throughout the flood plains up in the Riverland in South Australia but also to the flood plains up in NSW and Victoria, and that's often overlooked. A lot of the environmental water that's provided through these processes are actually delivering environmental outcomes in NSW and Victoria. As the return flows from that water delivery that ends up making it to South Australia, people often get confused and think water is just being shunted down the tubes straight to South Australia. That's not how it works. It delivers benefits to environments right throughout the system on its way down.
3.53The Wilderness Society SA argued that Australia has international obligations to recover the water and that it should rise above the politics:
[Australia has] international obligations to maintain the health of that Ramsar site of the Lower Murray lakes and the Coorong... A river dies from its mouth up, and, unless we can maintain the health of that estuary region—the Lower Lakes and Coorong...we're failing in our duties here... We've got to rise above the politics of this. I think it's critical that we do everything that we can, recognising that we're a long way behind the eight ball because of all of these different restraints and restrictions that have been put in place by the previous [Australian] government. But we need to act now; there's no doubt about it. I think we need to move very quickly toward the purchase of water.
3.54Professor Wheeler discussed the benefits of using voluntary buybacks compared to subsidised irrigation infrastructure:
The most important thing to remember about buyback versus subsidising irrigation infrastructure is that buyback allows completely adaptable behaviour. Farmers can spend that money on anything they want within the farm, whether it's reinvesting, whether it's paying down debt or whether it's leaving the farm. It is also a way for farmers to leave the farm more gracefully. And in a climate change world we have to enhance adaptability and the ability to leave irrigated farming as well as we can. Irrigation efficiency is basically locking farmers into upgrading very expensive equipment. They're then going to have increased power costs. They have increased incentives to change both their crop and their water use, and we know that it incentivises permanent agriculture a lot more, which in a climate change world can be incredibly damaging for them in the future and allows less adaptation. Those are just some general points.
3.55Professor Wheeler and colleagues also gave evidence that voluntary buybacks are the most cost-effective method of water recovery and community concerns regarding buybacks are not supported by the credible evidence base. These points are discussed further in the sections below.
3.56Others noted the extensive time already provided to implement the Basin Plan. For example, The Wilderness Society argued that:
The bill is overdue... current water management strategies in the Murray-Darling Basin have been ineffective... The purchase of environmental water, so as to reduce the unsustainable amounts currently taken from the river, is essential if we are to have any chance of returning the Murray Darling Basin to health.
3.57Similarly, the Inland Rivers Network submitted that, ‘ecosystems...and the people who depend on the health of these river reaches, have been seriously impacted while waiting far too long for full implementation of the Basin Plan’.
3.58Several submitters argued that the Basin Plan does not return enough water to the system, meaning that full recovery up to the agreed volumes is essential.[64]
3.59Several submitters called for greater urgency towards water recovery and for mandating the delivery of water by the extended 2027 deadline.
3.60The ACF submission argued that ‘until supply measure projects are operational and environmental outcomes proved, the environment must have access to the equivalent volume of water’. Meanwhile, Environmental Justice Australia called for the Commonwealth to ‘immediately withdraw funding for failing or stalled SDLAM projects’ and ‘commence water buybacks in targeted water basins to recover the equivalent amount of environmental water’.
3.61In a similar vein, the Environmental Defenders Office suggested that water recovery for the 450GL should be ‘broken up into progressive annual targets and any shortfalls should be made up through the temporary water market each year. Likewise, The Wilderness Society argued for ‘regular milestones, reporting requirements, and penalties or incentives to guarantee the timely and reliable recovery of water within the next three years’.
3.62For clarity and improved accountability, Mr Beasley suggested that the bill be amended to include ‘a provision guaranteeing the recovery of the 450GL by the end of 2027...[and] that the water be recovered by voluntary purchases of water entitlements in the southern basin’.
3.63Similarly, the South Australian Government argued for legislating recovery of the 450GL via strategic buybacks by the end of 2027:
...the bill does not go far enough to guarantee the recovery of the 450GL. It was the Australian Government's statutory commitment in 2012 to recover the 450GL by 30 June 2024 that secured South Australia's support for the original Basin Plan... there is no mechanism to deal with a scenario where the 450 GL target has not been met by the end of the extended timeframe. Recovery of the full 450GL must be guaranteed by 31 December 2027 and to remove any doubt it should be locked in by a method that is written into legislation... With the time available (should the timeframe be extended) and lack of progress to date, the Australian Government will need to roll-out a strategic purchase program...based on the evidence of expert [Royal Commission] witnesses...buybacks did not have the negative impacts claimed, or at least did not cause the extent of impacts claimed’.
Ethical and other reasons to recover the water
3.64Various submitters noted there are other reasons to recover the outstanding water. For example, Mr Beasley highlighted that Australians have a moral obligation to protect the environment and for future generations,[72] and that there are other industries also operating in the Basin which rely on a healthy natural environment:
...post the millennium drought domestic tourists alone made more than 17million trips to the Basin, staying a total of 50 million nights, and generating more than $6.5 billion in revenue. Expenditure from international tourists amounts to about a billion.
3.65Some submitters argued that farmers should be allowed to sell their water entitlements to government for environmental purposes if they so desire. For example, Professor Lin Crase, an economist from the University of South Australia, explained: ‘longer term, some irrigated enterprises will struggle to compete and adapt to global demands... it’s important to recognise their limits and the importance of not locking communities or individuals into a single trajectory’.
Is the 450GL mandatory?
3.66Several submitters opposed recovery of the 450GL at all,[76] while some opposed recovering the 450GL solely from the southern Basin.[77] For example, Cotton Australia questioned whether recovery of the 450GL was mandatory as the requirement was only to ‘recover up to 450GL’, meaning that ‘the only mandated component is to recover the 62GL [the component of the 605GL offset which must be retrieved via efficiency projects as it exceeds the maximum offset of 543GL allowed via the SDLAM] as it is connected to the 605GL’.
3.67The Victorian Farmers Federation argued that recovery of the 450GL should be subject to the socioeconomic parameters:
The Commonwealth Government persistently and cynically misrepresents that the Basin Plan must deliver an additional 450GL of water. Implementing the Basin Plan in full does NOT require the 450GL to be delivered in full. The agreed Plan specifies that 450GL would be recovered if there were no negative socio-economic impacts. Any recovery of the 450GL is subject to the socio-economic test that was developed and agreed unanimously by Basin Ministers in 2018.
3.68Mr Beasley addressed suggestions that recovery of the 450GL may be optional, explaining that the achievement of the 450GL is indeed mandatory and underpins the constitutional validity of the Water Act and the Basin Plan.
Should constraints be addressed before additional water recovery?
3.69Several submitters argued that additional water recovery is pointless without first addressing constraints in the system.[81]
3.70For example, Leeton Shire Council raised concerns that the CEWH ‘is unable to use all its environmental water due to constraints’, therefore ‘[c]hasing more water for the environment now...is neither sensible nor responsible’.
3.71Likewise, the ADIC argued that more water ‘does not necessarily translate into environmental improvements because simply recovering more water does not mean that it can be delivered to where it is needed’.
3.72In its submission, the CEWH addressed these concerns, explaining that, ‘the benefits of water recovery are not contingent upon constraints relaxation. There is value in incremental improvement and every extra megalitre recovered translates to additional environmental outcomes on the ground’.
3.73The CEWH observed that, after more than 15 years' managing Commonwealth environmental water, the evidence shows that even small volumes of water are achieving critical outcomes such as ‘supporting and improving the health and conditions for native fish, waterbirds, vegetation communities and connectivity of the Basin's tributaries, rivers and wetlands’. Furthermore, this water is ‘making a difference across the Basin under both wet and dry conditions’, and that ‘[d]elivering the Basin Plan in full will support healthier and more resilient ecosystems over the long-term’.
3.74The CEWH also addressed concerns that it only uses part of it water each year, explaining that it intentionally only uses 70 per cent of its allocations each year in order to carry over 30 per cent to meet the early demands of the new season the following year before new allocations become available.
3.75The CEWH also responded to assertions that existing constraints in the system impede its ability to effectively use 450GL of water holdings to achieve the specified additional environmental outcomes:
I don't think constraints are a barrier. If there's additional water, if the 450[GL] or up to that amount was to come into the environmental water holdings, we will manage that to achieve outcomes. A key point is that this is not new water or additional water to the system; it's a re-purposing of water…from one use to another—so it's already within the system. It's being managed for a variety of purposes at the present time.
3.76The CEWH also explained that yearly variances impact water availability making it critical to achieve the full 450GL:
...450[GL] is a long-term average annual yield. We won't get that volume of water or that share of water every single year. It will vary according to water availability conditions and how much water is held in storages, where relevant. Annually, water availability is highly variable. In drier times having an additional share of water could be really important in sustaining and building the resilience of the wetlands and the rivers from one drought to the next.
Concerns over flood risk associated with additional water recovery
3.77Some submitters were concerned about increased flood risks associated with additional water recovery. For example, the Murray Regional Strategy Group (MRSG), which comprises industry, Indigenous, and community groups, raised concerns that ‘[i]ncreased environmental water ownership and storage through recovery of the 2750GL has already resulted in elevated flood risks’ and ‘at a cost of billions to taxpayers and business owners.’
3.78Mr Beasley’s submission directly addressed concerns regarding flooding and constraints:
It is sometimes contended that until constraints are addressed, a 3200GL plan [comprised of the original 2750GL target plus the 450GL additional environmental water component] would cause flooding and damage, and hence there is no point in recovering the extra 450GL until all issues relating to constraints are addressed. This is a fallacious argument, advanced only by those who fail to comprehend the reality of the current Basin Plan and water recovery pursuant to it. The Basin Plan is not a 3200GL water recovery plan. Nor is it a 2800GL Plan, or a 2750GL, or 2670GL plan. It is a 2079 GL plan. Adding 450GL to that does not make it a 3200GL plan in relation to which constraints might (or might not) cause a delivery issue for planned environmental water flows. Even accepting against all the evidence that supply measures work perfectly and account for an equivalency of 605GL, that water is not added to the environment. It simply does not have to be recovered. Even with an extra 450GL of environmental water, the Basin Plan would be one in which about 2500GL of real water has been recovered for the environment. There is no evidence that constraints become an issue for any plan less than 2800GL...The tired argument that there should be no recovery of this extra environmental water until there is progress on or achievement of constraints measures should be finally rejected now.
Suggested alternatives to buybacks
3.79Some submitters argued that there are viable alternatives which should be explored before the use of buybacks. For example, ADIC explained that consultation with DCCEEW had led to ‘a list of projects that could potentially deliver over 1000GL of water to meet the Basin Plan targets and could do so without significant negative social or economic impacts on local communities’, arguing these should be investigated before buybacks are considered.
3.80However, when questioned on this list of potential projects, the NationalFarmers’ Federation advised that these projects would have to be assessed first:
By no means are we saying there are a thousand gigalitres of projects that you can start tomorrow or in five years’ time. They've got to go through an assessment process. Some of them will stack up; others won't.
3.81Farming and irrigator groups submitted that governments should be focusing on complementary measures instead of buybacks,[95] and that ‘delivery of the plan has identified that a substantive suite of complementary measures is required to underpin environmental outcomes’. Cotton Australia explained that complementary measures would ‘leverage the existing pool of environmental water, such as enhanced fish passage, improved riparian zones, reduced cold water pollution, fish screening of pump sites, and the eradication of European Carp’, and deliver clear and measurable environmental outcomes.
3.82Similarly, the National Irrigators’ Council called for development of a basin‑wide toolkit to ‘allow the immediate investment in complementary measures’ which would ‘deliver equivalent and/or improved environmental outcomes to a specified volume of water and account towards the additional 450GL’.
3.83DCCEEW advised that complementary measures that do not deliver entitlement cannot contribute to the 450GL target and were therefore unable to be considered.
3.84Rather than use permanent buybacks, Cotton Australia suggested that a framework be designed to allow the CEWH to purchase temporary water as needed for environmental events. Indeed, the joint submission from Professors Sarah Wheeler, Quentin Grafton, John Quiggin and Jeff Connor also supported allowing temporary purchases through longer-term lease arrangements (albeit, this was to supplement permanent buybacks).
3.85The ADIC suggested that rather than focusing on volumes of water, there should be a focus on measuring the environmental outcomes to determine progress and the success of the Basin Plan.
3.86The NSW Government submission stated that it ‘will continue to advocate for water recovery through other means, including investment in infrastructure and water efficiency projects’.[103]
Buybacks are the cheapest and most efficient method of recovery
3.87Several submitters, including DAFF, academics, and environmental groups, gave evidence that buybacks are the most economical, effective, and efficient way to recover the water volumes required by the Basin Plan.[104]
3.88The DAFF submission explained why buybacks were the simplest and least expensive method of recovering water for the environment:
Buybacks are less costly for a given recovery requirement compared to alternatives... Compared to buybacks, on-farm infrastructure programs are more expensive per megalitre (ML) of water recovered (including administrative costs) and take longer to implement... [ABARES found that] farms participating in on-farm infrastructure programs achieved higher productivity as a result. Participating farmers also increased their water use. This increase in water use arises because participating farmers can generate higher returns for each ML of water used, increasing their willingness to pay and their total water demand. This ‘rebound effect’ means that on-farm efficiency projects increase allocation prices more than buybacks. ABARES estimates show that the water allocation price effect of on-farm irrigation infrastructure projects was around double that of buybacks, per ML of water recovered.
3.89DAFF advised that ABARES modelling also identified that buybacks have less impact on water pricing than infrastructure projects:
ABARES has modelled the effects of past water recovery on water allocation prices in the southern MDB. Water recovery to date is estimated to have increased water allocation prices by an average of $72/ML. This increase encompassed the impacts from all forms of recovery including the indirect effects on demand from on-farm irrigation infrastructure projects. If the water recovered with on-farm programs had instead been recovered through buybacks, average water allocation prices would increase by less, at an average of $63/ML.
3.90Similarly, the joint submission from Professor Wheeler and colleagues noted that various studies had determined that ‘[v]oluntary buybacks are the most cost-effective form of water recovery’.
3.91Professor Wheeler and colleagues unpacked this further, explaining that:
As at 31 August 2022, recovering water through irrigation infrastructure has cost Australian taxpayers at least 3.1 times more per ML than buying water back from willing irrigators... Although costs of both forms of acquiring water to deliver the Basin Plan have increased over time, irrigation infrastructure subsidies cost ($/ML) are trending upwards at a much faster rate. Strategic buyback purchases have also been shown to be much more costly than voluntary water recovery methods. Current water infrastructure projects put forward by states indicate very large costs per volume of water recovered.
3.92Professor Lin Crase gave similar evidence:
Unequivocally, the most cost effective and fairest way to recover water for river systems is through voluntary water purchases... infrastructure projects are very expensive, relative to voluntary purchase of entitlements from willing sellers. The hydraulics of some projects is also very poorly developed, which partly explains why so little water has been delivered against their targeted savings. The idea that water is ‘wasted’...is naïve in the extreme...There is extensive evidence in Australia and from around the world that ‘water saving infrastructure’ seldom delivers more water for the environment. Credible agencies have been writing about this misnomer for decades...
3.93Likewise, the submission from Mr Richard Beasley, the Commissioner for River Murray SA, pointed out that efficiency schemes are expensive and uncertain:
...there exists decades of peer reviewed and defensible science that suggests water recovery through efficiency schemes may in fact be an inefficient, uncertain, and unduly expensive means of recovering water for the environment... Apart from issues of “return flow”…recovery of water from efficiency measures is at least three times more expensive to taxpayers than voluntary purchases.
3.94The joint submission from Professor Wheeler and colleagues further suggested that there may be unintended consequences associated with infrastructure projects which serve to increase the cost of efficiency approaches further:
...many infrastructure subsidy approaches intended to increase water use efficiency create a reduction of return flows...When the actual water recovered from such projects net of lost return flow is considered, the cost premium for infrastructure relative to water recovery by buybacks is much greater.
3.95Professor Quentin Grafton used an analogy to compare the options available to recover the shortfalls:
If I were to use an analogy...it's like going into a used car lot. Let's say you wanted to travel from Melbourne to Sydney. One car over here is three times the price and it's a lemon. The salesman's saying: 'Buy this. It's three to four times more expensive and, by the way, it's not going to get you to Sydney.' The alternative is a Ferrari; it's a cheaper price and it will get you there. Why wouldn't we do it? That's the bottom line. That's the analogy that I would give in this context. And it's not out of some modelling context; it's out of observed facts over the last so many years.
Buyback concerns are not supported by credible evidence
3.96The evidence from Professor Wheeler and colleagues addressed specific concerns regarding buybacks, explaining that these concerns are not supported by the credible evidence base.[113]
3.97Their submission noted that several consultancy studies had fuelled buyback concerns by claiming that ‘there will be large farm exit, job losses and substantial reductions in production from water buybacks’. However, research for the MDBA had established a ranking method to judge the quality of water economic studies conducted in the basin and found that most consultancy studies ‘are ranked as low quality in terms of their research rigour and methods, many make assumptions or create scenarios that are inconsistent with real world adaptive adjustments of farms’.
3.98Professor Wheeler and colleagues explained that the belief that water recovery had decimated local communities is misguided:
Many studies assume that a 1% decrease in water extractions leads to an equal 1% decrease in irrigated hectares, which subsequently results in an equal 1% decrease in irrigation production which in turn leads to 1% loss of regional economic value and jobs. These assumptions are not supported by any credible evidence. Farmers make multiple adjustments when voluntarily selling water entitlements such that the net farm impact ranges from 1/10 to 1/3 of a 1% production reduction for a 1% reduction in available water.
3.99The academics’ submission further pointed out that high-quality basin economic studies had identified several positives associated with buybacks:
Buyback can have positive local economy impacts, when proceeds are spent locally, and when farmers re-invest in their businesses with proceeds... Not all farmers who sold water entitlements left farming, decreased irrigated production, some irrigators increased their value of irrigated production, and some farmers invested more to produce more in dryland enterprises... Climatic, socio-economic, and demographic factors can be much more important than the volumes of water entitlements in a region when determining household and regional economy socio-economic outcomes... Healthy rural communities depend on many other factors than water extracted for irrigation.[116]
3.100These arguments were echoed in Mr Beasley’s submission, which noted that credible research did not support community concerns and that ‘much of this was dealt with by Commissioner Walker SC [in 2019] in his Royal Commission report’ into the Murray-Darling Basin.
3.101Indeed, Mr Beasley’s evidence summarised the findings of quality peer‑reviewed studies which determined that:
there is no proportional relationship between a reduction in water use and a reduction in agricultural production;
buying water is by many factors cheaper to government and taxpayers than the alternatives;
the money obtained from sales of water entitlements in the past was almost always spent locally;
a majority of farmers/irrigators sold only a partial entitlement, kept their delivery rights, and remained in farming/irrigation;
resulting reductions and debt meant people had more money to spend locally;
the economic impacts in rural and regional Australia from things like technological change and mechanisation (alone), increased urbanisation, changes in soil condition, and fluctuations in commodity prices are far greater than any impact of the Basin Plan; and
water entitlement purchases are a more certain means of recovering water.
3.102To mitigate the risk of future low-quality studies resulting in erroneous conclusions which could potentially impact national decision-making, ProfessorWheeler and colleagues called for the development of a standard for economic evidence used in water policy to protect the public interest.
3.103The joint submission from Professor Wheeler and colleagues also addressed concerns that buybacks cause regional decline, explaining that population trends (where smaller communities in outer regional and remote basin communities are declining while larger populations in inner regional areas are growing) pre-date water reform.
3.104DAFF officials advised that buybacks would not impact the cost of food in Australia:
In general, our view is that, with the types of water recovery we're talking about here, it's pretty hard to see them having major impacts on food prices, just because, overall in Australia, we produce so much agricultural produce, and the [water recovery] quantities we're talking about here are relatively small. And we tend to export a lot of our production as well. So any impacts [of additional water recoveries] on the price of food in Australia are likely to be very small, in our view.
3.105Professor Wheeler and colleagues also warned that studies had found there are several unintended negative consequences arising from the use of on-farm water recovery infrastructure programs, such as:
reduced return flows;
the rebound effect (which causes a subsequent increase in extractions);
increased usage of allocations; and
inequity between subsidies.
3.106 In light of this, Professor Wheeler and colleagues argued that, if on-farm programs must be used, then evaluation of past programs to inform future programs should be undertaken.
Suggested protections
3.107Some submitters called for additional protections and information should a significant buyback program occur.
3.108For example, the NSW Government suggested that any future buyback program should ‘include limitations on the volume of buybacks per year and a pause and review period to assess program outcomes and impacts’. It also suggested that an opportunity to revisit the amount of funding available should the impacts be greater than anticipated.
3.109Certain large water users also called for the government to publicly release and follow a strategic approach to purchases, and for advance notification on how much water will be taken, how it will be taken, when, and from where.
3.110Separately, the National Irrigators’ Council called for an appropriate impact analysis as the bill ‘is a significant change to the original Basin Plan’.
Decoupling the 450GL from the southern basin
3.111Some submitters were concerned that the bill seeks to disconnect the 450GL from the southern basin.
3.112The SA Government noted that, while the amendments are required to allow the WESA to be used for buybacks and community assistance packages, this flexibility should be restricted to the specific outcomes intended by the Basin Plan and recovered solely from the southern basin:
The proposed amendments to the objects for the WESA and efficiency measures appears to have the consequence of broadening the Australian Government's discretion over the location of where it can recover the 450GL... The expansion of the objects...are required to support the broader use of WESA funds to purchase water entitlements to recover the 450GL and to support community transition packages. However, amending the objects to support additional recovery mechanisms should be tempered or accompanied by unambiguous clarification that the 450GL should directly contribute to Schedule 5 outcomes [the specific outcomes originally intended to be achieved with the additional environmental water] and be recovered from the southern connected Basin, consistent with modelling on which the Basin Plan was based.
3.113Mr Beasley argued that this ‘change is unnecessary and inappropriate...To relate the 450GL to the objects of the Act instead of...[specific] objectives is an imprudent attempt to dilute what this water seeks to achieve environmentally’.
3.114Likewise, the National Irrigators’ Council did not support ‘the legal decoupling of the 450GL from the objectives it was designed to achieve’ as this ‘undermines the intent of the additional 450GL of water which was modelled to deliver specific environmental outcomes which are expected by stakeholders’.
3.115Mr Beasley argued that presumptions that water for the 450GL can be purchased from the northern rather than the southern basin are not supported by science:
...it is almost impossible to achieve positive environmental outcomes in the south from water recovered in the northern basin...there is no credible or peer reviewed science that even suggests that the enhanced environmental outcomes...can be achieved by recovering water in the north.
3.116The NFF also raised concerns, noting that the ‘WESA is currently tied to specified environmental outcomes. The bill removes this by delinking water recovery (prioritised buybacks) from environmental outcomes’. The NFF argued that this effectively throws the environment ‘under the same bus as vulnerable communities and food security’.
3.117The NSW Government was conversely ‘supportive of recovery towards the 450GL target coming from across the northern and southern Murray-Darling Basin, and from all basin jurisdictions’.
3.118Likewise, the Victorian Government suggested prioritising and better protecting environmental water in the northern basin and allowing WESA funding to target the Darling, which would have positive flow-on impacts in the southern basin.
3.119To aid certainty, Mr Beasley suggested that the bill be amended to include a provision that buybacks towards the 450GL should be undertaken solely in the southern basin.
3.120In response to a request for clarification from the committee, DCCEEW advised that the bill does not change the objective of the part of the Water Act 2007 which provides for the WESA and what it can be used for. DCCEEW explained that the amendments ‘specify that the Minister must be satisfied that the entitlements will contribute to enhancing environmental outcomes under s 86AA of the Water Act [which outlines the specific objectives to be achieved by the additional environmental water], including the outcomes set out in Schedule 5 of the Basin Plan [which are the same objectives as s 86AA’. Furthermore, ‘[w]here the water is recovered from will be based on advice from the CEWH and the MDBA to meet the objectives of the Part [2AA]’, and that ‘[w]ater recovery will be based on an overall assessment of value for money, informed by minimising socio-economic impacts on communities, environmental utility, and water market price’.
Community adjustment packages
3.121Some submitters were critical of the proposed community adjustment packages, arguing that:
historically, these programs have proven difficult to implement effectively;
there is a lack of clarity on the current program which is causing anxiety for industry and families;
information on what will trigger a package, how they will be implemented, audited and managed should be provided;
future assistance programs should require communities to demonstrate that they were impacted by water acquisition and be proximate to the purchase area, and for the assistance to be made into projects that produce and maintain jobs for the long-term; and that
community assistance programs have historically been ‘dismal failures’, ‘tokenistic’, and ‘done little or nothing to offset the impacts of buybacks’.
3.122The Central Irrigation Trust argued that assistance programs are ‘essential’ but highlighted the shortcomings of previous programs:
...irrigation districts running collaborative schemes, such as those run by Irrigation Infrastructure Operators, have limited options to adjust... The irrigation districts of the Riverland have developed in a pre-determined footprint around the design and capacity of the piped irrigation delivery systems with small property sizes. These differences reflect the need for differences in adjustment programs throughout the basin... Learnings must come from the 2009-10 small block exit program in the Riverland...[which] was a flawed adjustment model [that left] stranded land and infrastructure.
3.123Other submitters welcomed the announcement of community support packages, and suggested that this inquiry ‘look beyond simply the bill itself to consider other measures that other sectors can do that can support rural communities in this time of change’.
3.124Several witnesses expressed support for community assistance packages. For example, Mr Beasley stated:
If there are any proven substantial negative outcomes from the recovery of water, the governments should step in and have adjustment compensation measures. I've always thought that. But, having said that, the Water Act Basin Plan is a massive environmental economic reform. It's going to have positives and it's going to have negatives; it's for government to manage that...
3.125Lifeblood Alliance stressed that Australians need to acknowledge there are declining resources and that more will need to be achieved with less water:
...what it requires is for everybody to acknowledge that the water supplies are limited, that we can't just keep on looking for further sources of water or even how to keep all the water that has been allocated now. We have to face up to the need to do better with less. Not just this version of the plan but the next version of the plan has to tackle climate change as well, which will mean even less water... We need built into policies across the board that this is a land of declining water supplies. We need to live with that, we need to adjust and we need assistance to help people adjust.
3.126Professor Wheeler and colleagues called for more research to better inform the design ofstructural adjustment programs, noting that ‘water is only one contributor to regional economies’.
3.127The bill provides for a third WESA review to be undertaken by 30September2025. On 18 October 2023, the House of Representatives passed an amendment to the bill to ensure that the independent review of the WESA be required to consider the effectiveness of payments made to address any socioeconomic impacts of voluntary water purchases using WESA funds.
Over recovered water
3.128Some surface water may have been ‘over recovered’ in SDL resource units across the basin. That is, water recovery may have exceeded the targets required.
3.129As previously observed by the Productivity Commission in its 2018 review of the Basin Plan, ‘over recovery’ cannot be confirmed until after the MDBA’s reconciliation has occurred and the contribution of supply projects is known. An additional issue identified was that there is no formal process in place to address any over recovery. As a result, the Productivity Commission recommended that the MDBA determine the extent and location of over recovery, and, where over recovery has occurred, that water be returned to consumptive uses in accordance with SDLs. The Productivity Commission cautioned against transferring over recovered water to the efficiency measures program where the water cannot meaningfully contribute to the specific environmental objectives outlined in the Basin Plan.
3.130Some stakeholders have long argued that significant over recovery has occurred in the Gwydir and Macquarie catchments in the northern basin.
3.131In evidence to this inquiry, Cotton Australia expressed frustration that the Australian Government had previously committed to return any over recovered water to the consumptive pool, yet the bill before the committee would allow over recovered water to instead be counted towards the 450GL target.
3.132The National Irrigators’ Council was also concerned, suggesting that the Commonwealth directly engage with communities regarding the reallocation of over recovered water to other Basin Plan programs.
The introduction of Held Environmental Water entitlements
3.133Several submitters expressed confusion or concern regarding Held Environmental Water entitlements or ‘HEW’ stipulated in the bill.[153]
3.134The National Irrigators’ Council submitted that it did ‘not understand why the amendments are required to enable the creation of a new category of water, when the Water Act 2007 in section 108, already recognizes water purchased under the programs to be defined as Commonwealth Environmental Water Holding’. The National Irrigators’ Council suggested maintaining the existing definition of Commonwealth Environmental Water consistently in legislation (thus removing language changes referring to HEW in the bill).
3.135The Ricegrowers’ Association of Australia (RGA) noted that, ‘the bill attempts to get rid of efficiency measures altogether, and replace them with something new, called Held Environmental Water, or HEW’, arguing that the government does not explain ‘where efficiency measures end and HEW begins’. The RGA suggested that all references to HEW be removed from the bill.
3.136In response to a request for clarification, DCCEEW explained that a new category of ‘additional HEW entitlement’ was required to be introduced to account for other types of water recovery other than the water saved from efficiency measures:
‘HEW’ is an existing defined term under the Water Act and refers to water that is made available to achieve environmental outcomes. Under current settings, all efficiency measures result in the Commonwealth acquiring water entitlements, which the Commonwealth holds as held environmental water. The bill does not change this. The bill creates a new enabling framework to increase the water recovery options that are available to meet the 450GL target. It does this by inserting a new category called an ‘additional HEW entitlement’. The requirements for ‘additional HEW entitlements’ are different to the requirements for efficiency measures. ‘Additional HEW entitlements’ could include:
Domestic and stock rights that can be turned into entitlements usable by the CEWH
Any water recovered over the Bridging the Gap target
Efficiency Measures such as saving evaporation, transmission seepage that allow recovery of a portion of the entitlement.
Calls for audit of water recovery
3.137The inquiry received calls for an assessment of water accounts to review the reliability of water recovered.
3.138For example, the ACT Government was concerned that the ‘new additional HEW entitlements, supply and efficiency measures proposed within the bill will be based on contested modelled information that does not appear to reflect a real return of water for the investment’. As such, the ACT Government urged the committee to consider additional amendments to the bill to improve transparency in water resource information. It also argued for an assurance of reported water recovery consistent with previous considerations by the Senate Select Committee on the Multijurisdictional Management and Execution of the Murray Darling Basin Plan which recommended an independent basin-wide audit of the processes and systems underlying water accounts to identify whether the accounts enable a holistic view of the reality of water in the Murray-Darling Basin.
3.139The ACT Government argued for commencing the audit as soon as possible to inform future decisions:
I think one of the significant challenges for all of the governments involved in this project is a loss of public confidence around the delivery of the Basin Plan. And better transparency, better monitoring and better accountability will go a long way to restoring that public confidence...for all the parties, having that greater level of transparency and a shared understanding of the facts, the state of play, is actually really important...one of the things we've been focused on is getting better auditing of the state of the basin...now is the time to start. It's going to take a bit of time to get it set up to work through. Once you've done it once, it's also replicable, so you can think about where you'd need to do it again in the future. But the work will also be beginning soon on the next plan because, as this legislation proposes, even if we extend by a couple of years, we're into the zone where we need to start thinking about the next plan as well. That kind of work would inform future policy considerations.
3.140The Wentworth Group of Concerned Scientists expressed its concern at the discontinuation of basin-auditing:
We have proposed that there be much more rigorous accounting of where the environmental water is going and why and that there be something akin to a sustainable rivers audit reinstated so that all stakeholders can see year by year and have confidence that we're actually delivering and so that we don't have to rely on poor old Professor Kingsford, on his stomach-churning flights around the Murray-Darling Basin to provide us with the sole independent, reliable data on whether we're getting there or not.
3.141The Wentworth Group suggested implementing a regular audit to assess the use of water:
In terms of your specific question about auditing: I think there should be an audit at least every five years but in the same way we had an independent audit group assess the Murray-Darling Basin Commission use of water. I believe we need more of that transparency within the governance structures currently operating.
3.142As part of a $22 million package to update Murray-Darling Basin science, the October 2022–23 Budget included funding to reinstate the Sustainable Rivers Audit to track and report on the health of basin rivers. This will inform the 2026 Basin Plan Review.
3.143As mentioned in Chapter 2, on 18 October 2023, the House of Representatives passed amendments to the bill, one of which requires the Secretary of the Department of Climate Change, Energy, the Environment and Water (DCCEEW) to prepare an annual report (for the five financial years 2023–24 to 2027-28) on the activities undertaken for the purpose of making progress towards increasing the volume of the basin water resources that is available forenvironmental use by 450GL. If these amendments were to be passed by the Senate, this could assist to improve accountability mechanisms including future audits.
Productivity Commission Interim Report findings
3.144As mentioned in Chapter 2, the Productivity Commission assessed the effectiveness of the implementation of the Basin Plan and WRPs in its October 2023 interim report and suggested that the Australian Government take greater responsibility for implementing the plan.
3.145The Commission observed that Commonwealth funding agreements have failed to drive effective project implementation by basin states, accountability is weak, project implementation costs are increasing, and there is rising uncertainty in basin communities. Among other things, the interim report called for better public reporting and assurance mechanisms as well as a renewed water recovery approach which includes buybacks.
Committee view
Voluntary buybacks
3.146The committee acknowledges the diverging views on the bill’s proposals regarding voluntary buybacks. Concerns regarding buybacks were raised in evidence and the committee appreciates this is a sensitive topic for many, particularly those areas that rely heavily on irrigated agriculture. However, the committee agrees with submitters’ who put the contrary view that over a decade has passed since legislating agreed water recovery targets, and there is now an urgent need to recover the agreed volumes of water for the environment. The need for action is particularly pressing as the Basin is coming off three wet years, where storage levels are likely to be high, and transitioning to what is likely to be several dry years with the onset of El Niño.
3.147The committee accepts that buybacks have an impact on communities but views some of the concerns regarding buybacks as overinflated and not supported by the high-quality evidence base. The committee notes evidence that voluntary buybacks have proven to be the most reliable and cost-effective and efficient form of water recovery, with water recovered via irrigation infrastructure costing Australian taxpayers at least 3.1 times more per megalitre.
3.148The committee supports the expanded use of voluntary buybacks from willing sellers as an effective way to contribute to the achievement of the Basin Plan. The Australian Government should exercise caution in the manner in which it approaches buybacks to minimise any negative impact and allow the market and communities sufficient time to adjust.
Community adjustment assistance
3.149The committee notes that the Australian Government has committed to providing community adjustment assistance where needed. The committee supports the Productivity Commission’s suggestion to couple the water recovery program with a monitoring program to assess the broader community impacts of water recovery and help target and design effective structural adjustment assistance. The committee suggests that further information on future community adjustment assistance packages could alleviate some concerns in the community. Noting evidence regarding historical structural adjustment programs, the committee agrees that stricter eligibility parameters could also be implemented to ensure assistance reaches those communities who need it most.
3.150The committee recommends that the Australian Government provide public information on how lessons from previous community assistance programs will inform the current package, as well as information on what will trigger a community assistance package and how these will be implemented.
3.151The committee recommends that the Australian Government implement appropriate eligibility parameters for community assistance packages by requiring communities to demonstrate how they were impacted by water acquisition, be proximate to the purchase area, and for the assistance to be directed into projects that produce and maintain jobs for the long-term.
Transparency
3.152The committee acknowledges concerns regarding the transparency of water resource information and the reliability of both actual and reported water across the basin. The committee heard calls for a regular, independent audit of real and reported water to be conducted and agrees an independent audit mechanism would improve accountability of basin governments and serve to improve public confidence in the management of the basin.
3.153The committee notes the Government’s reinstatement of the Sustainable Rivers Audit to track and report on the health of basin rivers that will inform the 2026 Basin Plan Review.
3.154The committee also notes the amendments passed by the House of Representatives which require annual reporting on progress towards increasing the volume of the basin water resources that is available for environmental use by 450GL, the Commonwealth’s water recovery target in relation to SDL resource units, and projects that relate to adjustment of long-term average SDLs. However, accountability and transparency could be further strengthened by implementing system to allow public, real-time tracking of water recovery.
3.155The committee recommends increasing accountability and transparency for all water recovery through a public, real-time tracking mechanism.
Next chapter
3.156The following chapter considers concerns raised by submitters in relation to compliance arrangements.