Dissenting Report by Labor Senators
1.1
Labor Senators do not see merit in the National Water Commission
(Abolition) Bill 2014 and oppose it.
1.2
Few agencies have been more successful at expert analysis and ongoing
stakeholder engagement over such a long period of time as the National Water
Commission (NWC).
1.3
The vast majority of the 32 public submissions to the inquiry support
maintaining the NWC and its funding; yet most of the report is devoted to three
submissions accepting the abolition of the NWC as long as its functions are
satisfactorily continued.
1.4
One of the latter submissions was made by the National Farmers’
Federation (NFF), whose position was made very clear during the public hearing,
when Ms Jacqueline Knowles, Manager of Natural Resources Policy for the NFF,
responded to the following question from the Committee Chair:
CHAIR: In 2002 during his second reading speech on the
amendment bill 2012, Senator Birmingham said that the National Water
Commission's role in holding the states and the Commonwealth to account for
actually delivering on water reforms was critical. Do you agree with that
statement?
Ms Knowles: I think the role is critical, yes, which is why
we have called for it to be retained as part of the process of the winding up
of the National Water Commission. When you look at our list of what roles are
important, that assessment and audit function and making sure that states and
territories do not mark their own homework was No. 1 for us.[1]
1.5
Labor Senators note the imperative placed by all stakeholders on the
NWC's monitoring of the progress of National Water Initiative (NWI)
implementation and accelerating the implementation of the NWI consistent with
the Government's 'National Plan for Water Security'.
1.6
However, Labor Senators forecast that stakeholders like the NFF will be
extremely frustrated if, as is probable, the Government modifies these formal
assessment tasks into a far less rigorous procedure of voluntary self-reporting
by the Commonwealth, states and territories, merely coordinated by the
Productivity Commission.
1.7
Most submissions dismiss the Government's claim that dispersing
responsibility for the administration of the NWC's responsibilities between the
Productivity Commission, the Department of the Environment and the Australian
Bureau of Agricultural and Resource Economics and Sciences (ABARES) would
deliver on par with the effective and constructive contribution of the NWC to
water reform priorities in Australia.
1.8
The proposed abolition of the NWC would also remove the current
independent nature of oversight, analysis and advice as delivered by the NWC.
1.9
The Environmental Farmers Network was also clear about the need for independence
from Government of a national water body:
An independent body with a professional approach and an
untrammelled long term view is seen as invaluable in transcending the pressures
of short term election cycles and in rationally assessing options and policy
directions.[2]
1.10
Professor Richard Kingsford, the Director of the Centre for Ecosystem
Science at University of New South Wales said in his testimony:
I think that one of the great strengths of the National Water
Commission has been that it has been at arm's length from government. Not only
that: it has had expertise in the fact that the water commission is at the top,
representing the different water sectors. That was very important in
criticising, often, the way water was managed in the states and by the
Commonwealth. My biggest concern, which I have articulated in my submission, is
the opportunity for shifting responsibility across different parts of
government if we do not have this function at arm's length of government, as it
was for the National Water Commission.[3]
1.11
Labor Senators note that the Minister's second reading speech advised
that the Government's primary rationales for abolishing the NWC was because
there has been considerable progress in national water reform and for an
expected saving of $20.9 million over the forward estimates.
1.12
Labor Senators note that 'considerable progress' does not mean all
necessary water reforms in Australia have been achieved, or even partially
completed. Labor Senators agree with Senator Birmingham's comments that the NWC
is integral to getting water reform right in this country and that it must see
through the unfinished National Water Initiative, see through the unfinished
Murray-Darling Basin reform and hold governments to account to get sustainable
management of Australia's water resources in a way that is market driven and
that ensures that finite water is used for the best possible purchase at the
best possible value and causes, be they in rural communities or in urban
infrastructure.
1.13
Labor Senators also note that the abolition of the NWC for a saving of
$20.9 million over four years should be considered against the value of
the corporate knowledge, subject expertise and universally acknowledged and
accepted independence of the NWC.
1.14
Indeed, the Australian Conservation Foundation (ACF) noted in its
submission that:
...the potential budget savings from the proposed closure (of
the NWC) over forward estimates are extremely small. In fact they represent
less than 0.0001 per cent of government expenditure over the relevant period.[4]
1.15
Stormwater Queensland agreed with this assessment, saying in its
submission:
The proposed cost savings associated with abolishing the NWC
is estimated at $20.9 million over the next four years. We believe the economic
costs of abolishing the NWC, in terms of inefficient water management, are likely
to far outweigh that cost.[5]
1.16
The NWC has been very successful delivering comprehensive, respected and
expert audits of water reform implementations progress by stakeholders;
analysing and critiquing the activities of the parties to the National Water
Initiative in implementing the NWI; how well the objectives of the NWI are
being achieved; and where there has been progress, including the value arising
from that progress as well as identified impediments and the likely costs of
failure to implement.
1.17
As noted in the report, many submitters maintained that the NWC's
independence was in fact central to its transparency and efficiency. In varying
degrees, these submitters also pointed to the NWC's ability to deploy
specialised skills, experience and expertise skills and expertise, including
staff and board members with research, technical and managerial skills and
experience in water and legislative reform sectors.
1.18
Among other submitters, Dr Stuart Khan at the University of New South
Wales was clear about the impact of the NWC on water reform in Australia:
Throughout the last decade, the oversight of the National
Water Commission ensured the implementations of advances in many of the
objectives laid out in the NWI. Water trading capacity has improved
agricultural productivity for many rural Australians. Formal allocation of
water to the environment has revived the long-term survival prospects for
wetlands and other ecosystems. Major urban water supplies have been bolstered,
drastically reducing the likelihood of water restrictions being imposed for
most Australians in the coming decades. Drought-plagued States of the USA, such
as California, Colorado and Arizona, now point to Australia’s NWI as a successful
example of cooperation to achieve more sustainable water management.[6]
1.19
This was seconded by Mr Jonathan McKeown, the Chief Executive Officer of
the Australian Water Association in his testimony at the public hearing:
I think it has done a phenomenal task over the most
extraordinary landscape of controversy in the period that it has existed...I
think what we have actually seen driven and very well formulated by the work of
the National Water Commission is nothing short of probably Australia's most fundamental
reform process in the last 100 years.[7]
1.20
While almost all of the submitters agreed that considerable progress had
been made, most were definitive that the job of water reform in Australia was
not finished and the NWC was critical to ongoing progress. Professor
Kingsford's testimony again:
My concern is that given there is a lot more to be done in
terms of the National Water Initiative, particularly the implementation of the
Murray-Darling Basin Plan, the transfer of that function into the Productivity
Commission might mean that there is a loss of engagement and accountability of
the states and what they are doing. That is my biggest concern about the
National Water Initiative.[8]
1.21
The Inland Rivers Network (IRN) noted in their submission that:
IRN considers that the important role of the NWC in assisting
in the implementation of the NWI and providing advice to COAG on national water
reform has not been completed because not all of the reforms in relation to
environmental outcomes have yet been achieved.[9]
1.22
The Global Water Leaders Group stated in their submission that:
It appears to be a retrogressive act likely to set back
Australia’s ability to manage its water future, and extinguish a beacon of
excellence to which the rest of the world looked for inspiration. Although it
is arguably true that the Commission has successfully addressed many of the
issues which accompanied the Millennium Drought, there is still considerable
work to be done. In fact there is a strong argument in favour of extending the
mandate of the Commission to include economic regulation. This is another area
where Australia has potential to lead the world (other countries have been late
to recognise the inherent conflict of interest in having utilities set their
own tariffs and determine their own levels of service). However, it is clear
that economic regulation of Australia’s water sector will never be effective
without the involvement of the Water Commission.[10]
1.23
In its submission the Australian Conservation Foundation was explicit
about its concerns:
In addition to the overarching framework of the NWI, water
reform in the Murray-Darling Basin under the Basin Plan is only just beginning
to take shape, with the full effect of the plan not expected until 2019.
In the intervening period there are a number of key
milestones against which states and the Commonwealth will need to be held to
account by an independent body with sufficient water expertise, such as the
National Water Commission. These include progress against the recovery and
delivery of environmental water, addressing constraints and adjustments to
sustainable diversion limits within the Basin.[11]
National water reform, as envisaged under the National Water
Initiative is a long term journey. While progress has been made, there is still
a long way to go, particularly within the context of changes to the use of
water resources in northern Australia.
The closure of the NWC would deliver minimal budget savings,
but would effectively erode the foundation and institutional support of the
National Water Initiative.[12]
1.24
The NWC also has a key role in providing water sector knowledge
leadership, investing in studies or research where knowledge gaps were
identified on topics relevant to policy makers or implementers, and the
development of tools to assist the delivery of technical tasks and generating
discussion amongst stakeholders through publications and round-table
discussions of water reform matters outside the various policy agendas,
enabling pertinent research and information to be drawn together and focused
onto pressing policy issues. In many respects this role is critical to
non-government stakeholders because it provides the only forum to be kept
informed and abreast of the issues, to access essential information and to
participate in public discussion of the issues.
1.25
The submissions from the Australian Water Association, the Water
Services Association of Australia, Konfluence and Watervale Systems were
unequivocal about the need for leadership:
We note the Bill abolishes the National Water Commission,
while transferring only two statutory functions to the PC. As outlined above,
there remains an imperative for a national water body that is independent from
agencies and can provide strong leadership by supporting water reform for the
benefit of Australia’s economic and environmental future.[13]
1.26
In his testimony before the Senators, Mr Adam Lovell, the Executive
Director of the Water Services Association of Australia was frank:
The potential closure of the National Water Commission along
with the abolition of the COAG standing council this year means that water
management is, almost inconceivably, left with no focus at the national level.
From an industry managing more than $120 billion worth of assets—at least in an
urban sense—and $15 billion in turnover, it seems almost unbelievable that
governments, both federal and state, would not see a need for national
leadership.[14]
1.27
However, the Government's report has chosen to highlight its arguments
claiming that the work being done by the NWC is no longer necessary, creates
duplication, could be done just as stringently by other agencies such as the
Productivity Commission, the Department of the Environment and ABRARES, even
though the Government will considerably weaken these requirements.
1.28
Labor Senators note the submission and testimony of National Irrigators'
Council Chief Executive Officer Tom Chesson, who noted that reporting
requirements in the irrigation sector were duplicative, onerous and could be
partly relieved by the abolition of the NWC:
Firstly, that is one less organisation that we have to report
to, and, for irrigation infrastructure operators, that reporting requirement is
quite onerous. We already report to some of these other bodies, and again we
would stress that that 'single portal, many uses' model really needs to be
developed. As I said before, a lot of the data is the same—they are after the
same information but in different formats and different computer programs. So,
if the Commonwealth could get its act together on that, that would take out a
lot of the issues and dramas that we have.[15]
1.29
Labor Senators note that issues around multiple reporting systems and
formats; and published analysis of the information gathered through these
reporting frameworks, can be achieved without the abolition of the NWC.
1.30
Labor Senators agree with the submissions pointing out that the
Productivity Commission isn't currently equipped under its enabling legislation
nor its staffing profile to deliver the kind of collaboration and stakeholder
engagement needed on this unimaginably important social, environmental and
industrial issue.
1.31
The Yawuru Native Title Holders Aboriginal Corporation made a critical
point in its submission to the effect that:
The proposed changes transfer the role of auditing the Basin
Plan and water resource plans to the Productivity Commission in a general way.
The change can only be robust, independent and transparent if the Productivity
Commission engages people of the appropriate level of knowledge, training and
experience to conduct the assessments.
The National Water Commission already has those people and
the appropriate frameworks in place and has built up the appropriate systems
and expertise. To abandon that organisational knowledge would be a false
economy.[16]
1.32
The submission of the Australian Conservation Foundation concurs:
The PC's mandate, as outlined under Section 6 of the
Productivity Commission Act 1998, is wholly focussed on industry, industry
development and productivity outcomes (Appendix 1). This legislative mandate
requires substantial revision to refocus the commission on broader matters as
they relate to water reform, including the significant environmental, social
and cultural aspects of water reform. ACF has previously advocated for an
expansion of the Productivity Commission’s mission, scope and mandate to
include environmental sustainability as core to its functions. Such a move
would involve amending parts of the Productivity Commission Act 1998 to embed
sustainability and social considerations, specifically incorporating
sustainability and triple bottom line considerations under Section 6 of the Act
and renaming the commission the Productivity and Sustainability Commission.
In the absence of changes to the Productivity Commission Act
1998 it is completely inappropriate for the key functions of the NWC to be
housed within the PC.[17]
1.33
The Australian Conservation Foundation left no room for doubt in its
submission:
To abolish the National Water Commission (NWC) and give
responsibility of water management to the Productivity Commission would be a
short-sighted and backward step, particularly in the absence of substantial
changes to the mandate and operation of the Productivity Commission. It would
likely result in another wave of conflicts over water due to the absence of
what all sides regard as a well-respected expert independent body.[18]
1.34
The National Farmers’ Federation (NFF), while generally supportive of
the abolition of the NWC, acknowledged the importance of maintaining the
ongoing stakeholder engagement functions of the NWC. In its submission it
called for amendments to ensure the Productivity Commission established a
stakeholder reference group to consult with the water sector.[19]
1.35
Labor Senators note that the Government has given no indication that it
will address the weaknesses in the Productivity Commission's legislation to
better equip it to carry out its new responsibilities somewhat effectively.
1.36
Australia's society, climate and reliance on water demands devoted,
collaborative, whole-of-government and leading edge management of Australia's
most valuable economic, societal and environmental resource.
1.37
Without an independent agency, not only is there a risk of inefficient
management and thus the prospect of increased bills but a significant and
entirely unnecessary threat of jurisdictional and stakeholder backsliding on
water reform and the multi-party support that has been a hallmark of the NWI is
in jeopardy of breaking down.
1.38
This risk has already become manifest, according to the submissions from
the Australian Water Association, the Water Services Association of Australia,
Konfluence and Watervale Systems:
Unfortunately we are already seeing backsliding from States
in relation to implementing the National Water Initiative:
-
Increasing politicised pricing determinations with rates of
return that will not encourage private sector investment,
-
In many growing regional centres the transition to upper bound
pricing is slow to non-existent, and
-
Poor governance arrangements, for example some governments have
not moved towards upper-bound pricing for utilities which is a clause
stipulated in NWI[20]
1.39
Labor Senators maintain, along with the vast majority of submissions
that a national, coordinated approach to water reform is needed to deliver on
the National Water Initiative, give frank and fearless advice to Governments of
all persuasions across jurisdictions, engage Australians and promote the need
for and benefits of, ongoing water reform, ensure plans are made to secure
Australia’s economic future, improve vital economic regulation across the water
sector, facilitate increased private sector investment, improve the robustness
of urban water planning, and ensure the water sector maintains, and improves,
its performance over the long-term.
1.40
The rationale presented to justify the abolition of the NWC lacks
rigour. The NWC has been very effective promoting and progressing water reform
and preparing Australia for the impacts of climate change and it still has much
critical work left to do.
Recommendation
1.41
Labor Senators recommend that the Bill not proceed.
Senator Anne Urquhart Senator
the Hon Lisa Singh
Deputy Chair Senator
for Tasmania
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