Chapter 2
Issues raised in evidence
2.1
The committee received a range of views in relation to both the proposed
1500 gigalitre (GL) per year limit on the buyback of surface water, and the
amendment to the Basin Plan 2012 to provide increased flexibility in the
recovery of the 450 GL per year of water through efficiency measures funded
under the Water for the Environment Special Account.
1500 gigalitre per year limit
2.2
Many submitters welcomed the cap on surface water purchases as a means
of providing clarity, certainty and assurance to Basin communities and primary
producers.[1]
However, some submitters raised concerns including a perceived inconsistency
with the Water Act 2007 (Water Act) and the Basin Plan, the impact on
obligations to 'bridge the gap', prioritisation of infrastructure projects,
calculation of the long-term annual average, sunset provisions and compliance
with international obligations. These matters are discussed below.
Certainty for communities
2.3
It was argued by some submitters that there was no requirement for the
1500 GL per year limit to be included in the Water Act. The Australian
Conservation Foundation, Environment Victoria and Environmental Justice
Australia commented that 'the decision to cap buy backs is a policy and
political decision and would not normally be a matter that is included in
legislation'.[2]
The Conservation Council of South Australia added that the Government could
just cease buying water once it had reached the 1500 GL per year level rather
than having a legislated limit which may reduce flexibility, for example in a
time of drought.[3]
2.4
However, for a range of submitters, the certainty for Basin communities
provided by the proposed 1500 GL per year limit was of primary importance.
These submitters noted that the reduction in water available for consumptive
users in the Basin has had an adverse impact on the farming and irrigator
sectors, related industries, and local communities. The New South Wales
Irrigators' Council stated that:
We are now starting to see that the impact of taking
significant volumes of water out of particular districts are, firstly having an
impact on local economies, if not on individual producers and, secondly it is
becoming clear that the costs of running large irrigation schemes are going to
be significantly impacted for remaining irrigators, going forward.[4]
2.5
In addition, the committee received evidence that farmers and
irrigators, though not compulsorily required to sell water to the Commonwealth
for the environment, often felt they had no other option. Mr Mark McKenzie,
Chief Executive Officer of the New South Wales Irrigators' Council explained:
There is no doubt that there has not been any compulsory
acquisition in direct water purchases across the basin. However, I think the
research belies the fact that there were a lot of so-called willing sellers,
who, if they had their druthers, would not have been sellers. We know after the
millennium drought there were a lot of equity problems with irrigated
agriculture operators across the basin, and I am certainly aware...that a lot of
people were under pressure from their banks and financial institutions to sell
down their water holdings to improve their equity position.[5]
2.6
In light of the concerns within communities, the 1500 GL per year limit
was viewed as a positive step to building confidence and certainty. The
Queensland Government, for example, commented that:
A cap on water purchases will provide confidence to Basin
communities that social and economic impacts on regional communities resulting
from water buyback will be partially mitigated as the Basin Plan moves to full
implementation.[6]
2.7
Other submissions also focused on the certainty that will be provided to
farming and irrigator communities in the Basin. The Victorian Farmers
Federation commented that the cap 'will provide a greater level of certainty to
farmers and rural communities, enabling them to get on with their businesses
and lives'.[7]
Similarly, the Australian Dairy Industry Council commented that certainty was
critical for farmers already facing a tough productivity challenge.[8]
2.8
The National Irrigators' Council stated that:
Securing a legislated cap will help to improve business
confidence in the irrigated agriculture sector in the Basin and underpin
greater long term certainty for the social and economic benefit of the
communities that depend on the Basin's water resources.[9]
2.9
Mr Gavin McMahon, Chair, National Irrigators' Council, explained that:
Our communities are looking for a little bit of certainty out
of this process. They are looking for certainty in knowing where the end point
is, how much water our communities will have and that we do not have a big bear
buying water in the marketplace called the government. The government is the
biggest owner of water and it has been the biggest purchaser of water...Putting a
cap on gives us some certainty about the remaining water that will be left for
consumptive purposes and allows businesses to make those investments.[10]
2.10
It was also suggested that a legislated cap will also reassure these
communities that the Government understands the impact of water buybacks. The
submission from the New South Wales Irrigators' Council commented that:
A cap on surface water purchases...will provide clarity,
certainty and assurance to irrigators and Basin communities that the Federal
Government is serious about its commitment to prioritise infrastructure funding
and also acknowledges the social and economic impacts that the removal of large
quantities of productive water from the Basin have caused in Basin communities.[11]
2.11
Coleambally Irrigation was of a similar view and noted that the cap
'prevents the Commonwealth Government from distancing itself from commitments
it made to the irrigation industry and the communities that depend on the
industry in the name of the Plan'. Coleambally Irrigation went on to suggest
that 'in the absence of a cap, there will be no incentive for Commonwealth and
State Governments to accept the challenges that irrigators have – to use water
in smarter and more efficient ways'.[12]
2.12
The National Farmers' Federation explained that without the cap, the
lack of certainty for farmers and irrigators is endangering the viability of
local communities. Mr Les Gordon, National Farmers' Federation, told the
committee that:
To know that the government is not buying any further water
back does provide a level of certainty...The strength of that really is the
collective — to know that no more water is leaving your district. And most of
these districts do not exist in isolation. They are joint schemes operated by
groups of farmers...Every time you take water out of those, the cost burden of
maintaining what is left falls to those who are still there. So, over time, the
shifting of cost to those who are left increases, because of those who did
leave.[13]
2.13
Dr Christine Kershaw from the National Farmers' Federation went on to
note that with additional certainty, there is likely to be greater investment
which has flow-on effects throughout communities with smaller communities
receiving a larger benefit.[14]
2.14
Similarly, the submission from Murray Irrigation stated that:
A cap on water purchase will not reduce the amount of
entitlement to be recovered from the irrigation industry, it will however
ensure that sufficient entitlement recovery is achieved through investment to
retain regional productivity and contribute to sustaining communities. It
effectively acts as a safety net for those communities.[15]
2.15
The Department of Agriculture also commented on the need for certainty and
stated that:
A legislative cap is important for the certainty it provides
in the system, because it affects the farmers' planning. If they are selling
water, they are losing water. If they are getting efficiency improvements on
their farm, they are getting those efficiencies on their farm for their own
use. If it is off-farm water use efficiency improvements, the environment gets
water but the farmer's potential productivity remains the same. So it is a
certainty in their planning horizons, especially as availability of water
becomes more and more competitive.[16]
2.16
Mr Ian Thompson, Department of Agriculture, also stated that 'it is
critical that an appropriate balance is struck between agricultural production,
the vibrancy and resilience of rural communities, and environmental outcomes,
and that the Basin Plan is delivered with this triple-bottom-line focus'.[17]
Inconsistency with the Water Act
and the Basin Plan
2.17
The committee received a number of submissions detailing concerns that
the 1500 GL per year cap has the potential to severely compromise the
Commonwealth's ability to 'bridge the gap' to the SDLs, and in doing so, would
prove to be inconsistent with the objects of the Water Act.[18]
2.18
EDOs of Australia, for example, noted that the SDLs apply from 1 July
2019. It went on to comment that not all adjustment measures will be completed
by 2019. It was suggested that as a consequence, the Commonwealth will need to
make sure it has enough held (or purchased) water able to meet the SDLs until
all supply measures are operational in 2024. EDOs of Australia went on to
state:
However, the proposed cap (which will remain in place until
2022) may prevent the Commonwealth from purchasing enough water to reduce
Basin-wide diversions by the required amount by mid-2019. This would result in
an inconsistency between the Act and the Plan, ultimately frustrating the
purpose of the latter.[19]
2.19
The Australian Conservation Foundation, Environment Victoria and
Environmental Justice also expressed this concern, and stated that as:
...the Commonwealth is 100% responsible for achieving the SDLs
under the current Basin Plan, if it can't meet them via infrastructure upgrades
or efficiency measures, because for example, they get prohibitively expensive,
or they simply do not deliver the amount of water required, it will not be able
to use buy backs to bridge the gap. The cap could therefore
prevent the SDLs from being achieved.[20]
2.20
However, the committee received assurances from the Department of the
Environment and the Murray-Darling Basin Authority (MDBA) that the amendment
would not create inconsistencies with the objects of the Water Act.
Furthermore, it was stated that the proposed amendment would not abrogate the
Commonwealth's responsibility to achieve the SDLs.
2.21
The Department explained that the 1500 GL per year limit is consistent
with the objects of the Water Act and the Commonwealth is committed to the
return to environmentally sustainable levels of extraction for the Basin's
water resources by bridging the gap to the SDLs through a combination of
infrastructure investment and water purchase. The Department went on to comment
that:
The Bill may affect the means to achieve the objectives but
does not damage these objectives nor the likelihood of achieving these
objectives. The legislated 1500 gigalitre limit deals with how the gap will be
bridged not whether the gap will be bridged.[21]
2.22
The Department of the Environment stated that the Commonwealth's
obligation to comply with the 1500 GL per year limit in no way reduces the
obligation to manage the SDLs, and both obligations are supported by the Water
Act.
The Commonwealth's statutory obligation to manage the
reduction to the sustainable diversion limit is set out at section 75 of the
Water Act. Section 75 provides that the Basin Plan must specify the
Commonwealth's share of reduction in the long term average sustainable
diversion limit. In turn, subsection 6.13(6) of the Basin Plan provides that
the Commonwealth's share of the reduction is 100 per cent. Section 76
of the Water Act provides that if the Basin Plan specifies the Commonwealth's
share of the sustainable diversion limit reduction, then the Commonwealth must
manage its share. The amendment does
not change the relevant sections of the Water Act or the Basin Plan.[22]
2.23
Ms Mary Colreavy, Department of the Environment, explained to the
committee that:
Once the amendment becomes legislation then [the
Commonwealth] will be required to meet the SDL adjustment—so we will need to
fulfil that commitment—as well as comply with the 1500 GL limit. Both of these
commitments will exist in law.[23]
2.24
Ms Colreavy went on to add that:
The act makes it clear that the Commonwealth is responsible
for meeting the SDLs and 100 per cent of the responsibility lies with the
Commonwealth, and that responsibility is maintained despite the 1500 GL limit
on purchasing.[24]
2.25
The Department of the Environment also addressed concerns that the
1500 GL per year may stop the Commonwealth from meeting the obligation to
bridge the gap. The Department stated that it was 'very confident' that the
Commonwealth will be able to fully bridge the gap without engaging the 1500 GL
per year limit. It went on to note that:
As at 31 July 2015, 1952.9 gigalitres (71%) in long
term average annual yield terms has been contracted to recover towards the
overall 2750 gigalitre sustainable diversion limit reduction under the
Basin Plan. This leaves a remaining recovery task of around 797 gigalitres. Of
the total 1952.9 gigalitres recovered to date, 1164.6 gigalitres has been
purchased, leaving 335.4 gigalitres 'headroom' before the 1500 gigalitre limit
would be reached.[25]
2.26
Mr Tony Slatyer, Department of the Environment, commented further that
there had been better than initially expected outcomes from infrastructure
programs and the likely outcomes from the SDL adjustment mechanisms supply
measures.[26]
The Department therefore considered that:
...the more likely scenario is that the gap will be fully
bridged through the combination of the supply measures, which have the effect
of reducing the gap; the infrastructure work that is in train and any further
purchase that will be within the 1,500 gigalitre cap and that we will not, in
fact, reach that cap.[27]
Stocktake Report on SDL Adjustment
Mechanism
2.27
The Basin Plan includes an adjustment mechanism which provides for
flexibility in the size of the SDL reduction through supply measures, which are
projects that are capable of delivering Basin Plan environmental outcomes with
less water.
2.28
On 29 May 2015, the Murray-Darling Basin Ministerial Council agreed to
commission an independent stocktake of projects which will be considered under
the SDL Adjustment Mechanism in 2016. The Stocktake Report on SDL Adjustment
Mechanism (Stocktake Report) was released on 27 August 2015. The Stocktake
Report found that a supply contribution of about 500 GL per year is plausible,
and that an additional contribution is feasible.[28]
2.29
Basin Ministers agreed that it is reasonable to continue to work towards
a supply contribution of up to 650 GL per year. Should an SDL contribution of
between 500 and 650 GL per year be achieved when the Adjustment Mechanism
operates next year, the remaining gap to be bridged would be between 147 and
297 GL per year. This amount falls well short of the 335.4 GL per year which
would trigger the 1500 GL per year limit proposed under this amendment.[29]
2.30
The Department of the Environment commented that the Stocktake Report
provides further assurance that the Basin Plan gap can be bridged without reaching
the 1500 GL per year limit.[30]
Prioritisation of infrastructure
projects
2.31
A number of submitters argued that water buybacks are the most cost-effective
method of recovering water for the environment. For example, the Nature
Conservation Council of NSW commented that 'the most efficient and equitable
method of recovering water for the environment (while compensating water
licence holders) is through a voluntary buy-back of entitlements'.[31]
The view was supported by the Conservation Council of South Australia. Dr Adam
Webster stated that 'water buybacks are an incredibly efficient measure' and
pointed to a study by the University of South Australia which found that the
cost of water-saving infrastructure, between 2009 and 2012, was about three
times more expensive than water buybacks. In addition, he argued that over time
once inefficient systems have been upgraded, returns from infrastructure investment
will diminish.[32]
2.32
EDOs of Australia referred to a 2010 study undertaken by the
Productivity Commission, Market Mechanisms for Recovering Water in the
Murray-Darling Basin, Productivity Commission Research Report, which stated
that:
...the Australian Government may pay up to four times as much
for recovering water through infrastructure upgrades than through water
purchases. In other words, a premium of up to $7500 ML may be paid for
recovering water through infrastructure upgrades...[33]
2.33
EDOs of Australia also argued that there are environmental advantages of
purchasing water entitlements as irrigation upgrades do not necessarily mimic
environmental outcomes associated with purchasing water.[34]
2.34
The Goulburn Valley Environment Group commented that irrigators are
electing to fund their own on-farm efficiency upgrades and retain water saving
for permanent sale or trade. With water prices continuing to increase, it was
argued that there will be a reduction in irrigator support for efficiency
projects and an increase in the cost to the taxpayer of returning water to the
environment.[35]
2.35
The potential for increased costs to undermine the Government's aims was
also raised by the Gippsland Environmental Group which stated:
Increased demand for infrastructure upgrades or efficiency
measures driven by the proposed cap on buybacks will potentially make the cost
of works too expensive and/or deliver far less water than anticipated such that
it will be impossible for the Commonwealth to obtain the additional water to
achieve the SDLs.[36]
2.36
Similarly, the Alexandrina Council commented that the costs of
infrastructure projects has been significantly more than purchasing water
entitlements from willing sellers. In addition, it was argued that recovering
water through infrastructure projects becomes more expensive as 'the
low-hanging fruit in terms of achieving efficiency gains has already been
picked'.[37]
2.37
However, other submitters did not support reliance on buybacks with
Cotton Australia commenting that 'while in the short-term direct "buyback"
may appear to be the cheapest option to "bridge-the-gap", it comes at
a very significant cost to communities'. However, positive contribution is
being made by on-farm and off-farm irrigation efficiency schemes.[38]
Murray Irrigation added:
On the other hand buyback in simplistic terms appears to
provide the most value for money but is in fact the most detrimental to
communities because it does not implement measures to maintain productivity in
a region. So while an individual is compensated for the reduction in water
(through sale of entitlement) the community is not compensated for the flow-on
impacts of the sale.[39]
2.38
Murray Irrigation concluded that the legislation 'provides a safety net
for irrigation businesses and communities by ensuring water recovery efforts
are focussed on the more economically sustainable infrastructure and investment
venture'.[40]
2.39
The Australian Dairy Industry Council pointed to case studies which show
that water buybacks have greater localised social and economic impacts on
irrigation dependent communities than investment in water efficiency projects.
The Council commented that a 2012 study of dairy farms with irrigation
modernisation projects found that buybacks cost the Commonwealth around $2000
per megalitre (ML), but are associated with reduced regional farm productivity.
As a consequence, regional economic activity is reduced by around $4300 for
every megalitre purchased by the Government. Farm upgrades cost the Commonwealth
about $3700 per ML for the environment's share of water savings. However,
upgrades also delivered $9800 per ML worth of increased farm
productivity (annualised capital value). Using this water to increase
production generates additional regional economic activity worth $6200 per
ML.[41]
2.40
Support for investment directed to upgrading and modernising irrigation
systems was provided by the National Irrigators' Council which stated:
This investment provides short and long term benefits for
communities. Short term local stimulus occurs through the construction phase of
projects. Water savings from infrastructure projects are shared, and result in
water being retained on farm; this contributes to direct employment in
irrigated agriculture, fewer job losses on farms and opens opportunities for
important downstream processing industries. This employment supports the social
and economic underpinnings of many communities in the Basin.[42]
2.41
The Victorian Farmers Federation also submitted that the prioritisation
of infrastructure over water buybacks has significant benefits, not just for
individual farmers, but for the entire food supply chain. The Federation stated
that:
The benefits of investing in infrastructure go far beyond
recovering the water. With more efficient delivery systems and on-farm use then
farmers need less water to grow the same volume of produce — the food we all
eat...[It] also has positive impacts on the supply chain. Where farmers are able
to maintain their productivity this helps to protect on-farm employment and
jobs in milk factories, wineries, fruit and nut processing plants as well as
sustaining jobs in transport and marketing. Keeping job in small and medium
sized towns is critical to the economic and social survival of regional
communities.[43]
2.42
Mr Slatyer, Department of the Environment, noted that the Basin Plan was
'enacted on the basis of a policy undertaken that there would be at least
600 gigalitres of waster recovered from infrastructure' and that this 'was
part of the triple-bottom-line settlement of the plan'.[44]
Mr Slatyer agreed that infrastructure is generally more costly than just
purchasing water on the market. He explained that:
The government has a policy of seeking infrastructure-based
water at what we call the market multiple—that is, the additional cost over and
above the value of the water of no more than 2.5...Typically it is a lower
multiple than that.[45]
2.43
However, due to the amounts of water likely to be recovered through
supply measures, as detailed in the Stocktake Report:
The department considers there is sufficient funding to
bridge the gap to the sustainable diversion limits while limiting water
purchase to 1500 gigalitres and prioritising water recovery through
infrastructure investment.[46]
2.44
Mr Slatyer also commented that communities were more supportive of
infrastructure programs:
The type of water recovery which most concerns have been
raised about is this open market process, where the Commonwealth will just
acquire water from whoever is willing to sell it. In response to that, we are
preferencing infrastructure based recovery and the record shows that for the
last several years our infrastructure recovery has exceeded our purchase
recovery. Our experience is that those sorts of programs are much more welcome
and appreciated in the communities.[47]
2.45
Finally, Mr David Parker, Department of the Environment, reminded the
committee that the argument for purchasing all the water required for the
environment had not been supported by successive governments. He added:
It is not an argument that we would advise on as policy
advisers. In fact the balance here between infrastructure recovery and
purchases is, in effect, part of a social compact that goes all the way back to
the original conception of the reform—and that is that some recovery would be
done through infrastructure and some would be done through purchase. That
actually is a critical balance. We have never been in a place of wanting to
upset that balance.[48]
Duration of 1500 GL per year limit
2.46
The committee received a number of submissions which raised concern that
the inclusion of a time limit on the proposed cap would cause uncertainty for
irrigator and farming communities. The New South Wales Irrigators' Council
noted that the cap only remains in place until the review of the Basin Plan
2012. It stated that 'such a sunset clause does not provide the certainty and
assurances to irrigators and Basin communities that this limit will be a hard
cap which will permanently be enshrined into the Water Act...and the Basin
Plan 2012'.[49]
2.47 The Murray Darling Association submitted a similar view and stated that
the time limit on the cap 'will essentially negate any certainty otherwise
provided under the amendment'. The Association concluded:
It is essential that the cap remains in place in perpetuity,
ensuring an ongoing commitment to incentivise the development of more efficient
approaches to environmental watering and to protect communities from
unnecessary hardship created by the removal of productive water out of
productive agriculture.[50]
2.48
The Department of the Environment responded to these concerns by
explaining that:
...the limit will cease when the Basin Plan is first reviewed
under section 50 of the Water Act. Expiry at this time will provide
certainty that the limit will be in place for the duration of the current Basin
Plan.[51]
2.2
The Department also indicated that, while the first review of the Basin
Plan is currently scheduled to occur in 2022, it was recommended by the Water
Act Review that this be deferred until 2026 to provide more time to consider
the outcomes of the Basin Plan. This is particularly important as the SDLs will
not be finally reconciled until 2024.[52]
Long-term annual average
calculation
2.49
In addition to concerns regarding the operation of the cap, a number of
submissions raised concerns that the bill does not clearly define 'long-term
annual average quantity of water'.[53]
EDOs of Australia noted:
..neither the Bill nor the Act define [long-term annual
average]. According to the Department of Environment, the current method
involves 'using the Department's estimates of long term annual average yields,
as advised in the Murray-Darling Basin Ministers' Communiqué of 4 November 2011'.[54]
2.50
As the method of calculation is not prescribed in legislation, nor
explicitly stated in the Communiqué,
EDOs of Australia argued that:
Should the Commonwealth exercise its discretion and use a
different method to calculate the [long-term annual average] of water, the
current recovery figure...and the remaining (unpurchased) quantity of water could
potentially change. This is problematic insofar as it creates uncertainty, and
may be prejudicial to the environment.[55]
2.51
The Department of the Environment explained that 'long-term annual
average' has a plain English meaning under the Water Act and that introducing a
technical term would add unnecessary complexity.[56]
2.52
The Department also explained that it:
...calculates the amount of water taken or accessed under
purchased entitlements as Long Term Average Annual Yield (LTAAY) volumes at the
time of purchase. The term LTAAY is used to translate entitlement volumes into
long term diversion limit equivalents. It identifies the long term annual
average volume of water permitted to be taken for consumptive use under a water
access entitlement. Currently all LTAAY figures published by the Department are
calculated using the long-term diversion limit equivalent factors agreed to by
the Ministerial Council in November 2011 for all catchments throughout the
Basin.[57]
Compliance with international
obligations
2.53
There were also concerns raised that in addition to jeopardising
compliance with the objects of the Water Act, the cap would endanger compliance
with international obligations under the Ramsar Convention (Convention on
Wetlands) and the Convention on Biological Diversity. EDOs of Australia stated
that:
...there is considerable doubt as to whether the obligations
contained in the Ramsar Convention and the Convention on Biological Diversity
will be properly implemented under a 2,750 GL scenario...As such, it is possible
that this Bill will further undermine Australia's capacity to meet its
obligations under these Conventions, in particular the Ramsar Convention.[58]
2.54
The Murray Lower Darlings Indigenous Nations similarly expressed concern
that:
...in hindering the achievement of the Water Act objects, this
Bill also undermines our members' rights and obligations to manage cultural and
environmental assets, including Ramsar listed wetlands within native title
lands and National Parks under Joint Management.[59]
2.55
Mr Slatyer, Department of the Environment, denied that the amendment
would affect compliance with international obligations. He stated that the
Department:
...would particularly take issue with the contention that we
would in some way be backing off our international responsibilities...We take our
responsibilities under the Ramsar Convention very seriously and we will
continue to fully observe those.[60]
Additional 450 gigalitres per year for the environment through efficiency
measures
2.56
As has already been outlined in chapter 1, the Water Amendment Bill 2015
proposes to amend the Basin Plan to extend the scope of efficiency projects
able to be funded under the Water for the Environment Special Account. The
following discussion canvasses the implications of this change and concerns
raised in evidence in relation to demand for efficiency measure projects and
the timing of the recovery an additional 450 GL per year.
Benefits of increased flexibility
provisions
2.57
The Department of the Environment explained that for a number of years
it has provided funding for off-farm irrigation infrastructure projects, and
has been monitoring the outcomes of these projects. The Department stated that
this monitoring has shown good outcomes for irrigation infrastructure operators
and more broadly, for irrigators in those regions.[61]
2.58
The Department considered that the inclusion of off-farm water use
efficiency projects has an array of benefits including improved water delivery
systems and greater control at the farm gate which can lead to crop diversity,
increased rotations and, in some cases greater yields. The Department also
noted that the use of off-farm projects would not detract from the capacity of
irrigators to access funding for on-farm irrigation efficiency.[62]
2.59
The inclusion of off-farm projects would enable the development of
integrated projects where off-farm irrigation networks are upgraded to operate
more efficiently at lower water volumes, while on-farm networks are upgraded to
operate effectively with those lower water volumes while maintaining farm
production.[63]
2.60
The Department of the Environment informed the committee that:
There are a number of studies that have found social and
economic benefits are derived from on and off farm irrigation efficiency
projects. These studies have found that socio-economic benefits derive as much
from the improved infrastructure and capacity to manage the irrigation
infrastructure more effectively as from the benefits of any water retained by
an irrigator. Hence efficiency measures projects will continue to benefit
irrigation production even when all the saved water is returned to the
environment.[64]
2.61
In addition, the Department noted that the broadening of the types of
efficiency projects has two distinct advantages:
-
it enables the Commonwealth to equitably deliver programmes across
the Basin rather than relying on individual states to bring forward separate
proposals; and
-
it provides for a consistent approach to delivering these
programmes as well as collecting information that will enable the social and
economic benefits from the projects to be recognised through the MDBA's
evaluation of the effectiveness and impacts of the Basin Plan.[65]
2.62
The Department of Agriculture also pointed to benefits of increased
flexibility for recovery with projects providing savings for the environment
without having an impact on farm allocations. Mr Ian Thompson, Department of
Agriculture, went on to state that 'any given farmer can have broadly the same
allocation on the farm but it requires less public water to be used because we
have got efficiency of getting it there'.[66]
Response to increased flexibility
2.63
Water recovered through projects funded by the Water for the Environment
Special Account will be recovered in addition to water recovered for the
purpose of bridging the gap. This means that any water recovered under these
projects will not be counted towards the proposed 1500 GL per year limit.
2.64
The committee received a range of views in relation to the provisions.
Dr Christine Kershaw, National Farmers' Federation, stated that the
Federation:
...support amendments to the Murray-Darling Basin Plan that
provide more flexibility in the recovery of up to 450 gigalitres of water for
the environment through efficiency measures funded under the Water for the
Environment Special Account, without caveat.[67]
2.65
The Riverina and Murray Regional Organisation of Councils also supported
the increase in flexibility to recovery the 450 GL per year and stated that
'this is seen as a good and common sense provision'.[68]
2.66
Other submitters reiterated their long-standing view that the additional
450 GL per year for the environment should not be recovered unless the
2750 GL per year target is met first. For example, Cotton Australia commented
that it believed that 'no case has been made that demonstrates the need for
this water to be acquired'. However, it went on to comment that, if the 450 GL
per year had to be acquired, 'it must only be acquired in a manner that results
in no negative social or economic outcomes'.[69]
2.67
The National Irrigators' Council stated that it has long supported the
use of infrastructure and efficiency works over other water recovery methods as
mechanisms of least harm to communities. However, the Council described the 450
GL per year as:
...a gigantic amount of water. That still has to come out—it is
collected after the Basin Plan—and again, that will have significant impact on the
communities.[70]
2.68
The Council went on to state that it was opposed to recovering the
additional 450 GL per year until the 2750 GL per year is met.[71]
The Department of the Environment responded and stated that:
Efficiency measure projects are due to roll out from 2015–16
starting with pilot projects. The timely rollout of these projects will support
the effective operation of the adjustment mechanism...The Bill does not change
this specific element of the Basin Plan...The [Murray-Darling Basin Ministerial
Council] Communique also records the Commonwealth's commitment to consult with
the states to ensure its efficiency measures programme complements state-led
activities to bridge the gap.[72]
2.69
However, despite expressing opposition to the recovery of an additional
450 GL per year, submitters offered support for the increased flexibility
as detailed by the bill. For example, the National Irrigators' Council
commented:
The [National Irrigators' Council] supports the investment
directed to upgrading and modernising irrigation systems producing some of the
most efficient systems in the world. This investment provides short and long
term benefits for communities. Short term local stimulus occurs through the
construction phrase of projects. Water savings from infrastructure projects are
shared, and result in water being retained on farm; this contributes to direct
employment in irrigated agriculture, fewer job losses on farms and opens
opportunities for important downstream processing industries. This employment
supports the social and economic underpinnings of many communities in the
Basin.[73]
2.70
An additional matter raised by the New South Wales Irrigators' Council
was the inclusion of the words 'up to' 450 GL per year to provide flexibility.
It stated:
...'up to' must be included to provide some degree of
flexibility to the federal government in their target and also ensure that
projects under the 450 gigalitres provides value for money. In addition we hold
the strong view that the 2750 gigalitre target must be achieved before any
attempts are made for the 450 gigalitres of water.[74]
2.71
The Australian Dairy Industry Council also recommended that the words
'up to' be inserted and commented that:
Our concern is that this does not, legally speaking, provide
any flexibility to reduce the volume recovered in the face of negative
socio-economic impacts. Rather, the Act tends to suggest any impacts will be
addressed after all the water has been recovered.[75]
2.72
The Department of the Environment responded to the New South Wales
Irrigators' Council's suggestion by explaining that:
The delivery of an additional 450 gigalitres with neutral or
improved social and economic outcomes was included in the Water Act as part of
settling of the sustainable diversion limit adjustment mechanism in the Basin
Plan...This arrangement was a specific element of the inter-jurisdictional policy
settlement of the Basin Plan. The Bill does not re-open that settlement.[76]
2.73
The Victorian Farmers Federation also supported the amendment to enable
the funding available to be used for off-farm projects, but commented that it
was concerned about the impact on funding for on-farm programs.[77]
Concerns regarding demand for
efficiency measure projects
2.74
The committee received submissions detailing concern that there is a
reduced demand for funding for efficiency programs, and that this will affect
the Commonwealth's ability to recover water for the environment. For example,
the Australian Conservation Foundation, Environment Victoria and Environmental
Justice Australia stated that:
Future programs funded by the Special Account will require
irrigators to surrender all water savings to the Commonwealth. While this is
highly desirable from environmental and value for money perspectives, we
understand from irrigators that demand for such programs is likely to be much
lower than under current arrangements. Due to the rising value of water, demand
for government funded efficiency programs is already falling as it becomes more
cost-effective for irrigators to fund their own efficiency projects.[78]
2.75
However, the Department of the Environment provided evidence that there
is sufficient demand to deliver 450 GL per year through efficiency measures. The
Department stated:
For example, the On Farm Infrastructure Efficiency Programme
(OFIEP) has been substantially over-subscribed in each of its five rounds. In
the most recent round, where $125 million was the proposed amount of funding,
applications were over four times the proposed amount.[79]
2.76
The Department has also undertaken consultation with industry members
regarding interest in funding for efficiency projects and informed the
committee that:
Industry participants have expressed the view that irrigation
efficiency upgrades are now of general industry interest. The OFIEP programme has
proven increasingly popular over its 8 year (to date) life with increased
participation and value for money.[80]
Indigenous concerns
2.77
The focus on infrastructure investment and efficiency upgrades was
criticised by the Murray Lower Darling Rivers Indigenous Nations. It was stated
that infrastructure investments and efficiency upgrades often entail
significant disturbance and impacts on Aboriginal cultural heritage and
important cultural landscapes. The Murray Lower Darling Rivers Indigenous
Nations explained that:
Our members have noted a number of instances of direct
impacts on cultural heritage sites as a result of irrigation infrastructure
upgrades and developments, including disturbance of burial sites. The large and
dense historical Indigenous populations of the central Murray region in
particular, mean that there is a high concentration of heritage sites, often
located in close proximity to water-courses. Construction, excavation and
earth-moving activities undertaken as part of the infrastructure upgrades are
highly likely to impact on cultural heritage sites. Experience with the
development of environmental works and measures in NSW, for example in the
Koondrook/Perricoota forest, has demonstrated the significant time delays and
increased costs associated with management of cultural heritage.[81]
2.78
Mr Darren Perry, Murray Lower Darling Rivers Indigenous Nations,
commented that there was a lack of resources to address Indigenous concerns in
project plans and concluded that 'the fact that they are under-resourced
suggests to me that adequate weight has not been given to the concerns relating
to the cultural heritage issues around these major projects'.[82]
2.79
Both the Department of the Environment and the MDBA responded to these
concerns and noted that the proponents of projects must address all relevant
state and Commonwealth requirements including Indigenous heritage concerns. Dr
Dickson, MDBA, stated that:
...all projects have to go through a very thorough approval
process before they can be submitted for the other jurisdictions to agree to,
and part of that is making sure they have worked through all the Aboriginal
heritage requirements.[83]
2.80
Mr Alan Dreverman, MDBA, outlined to the committee the work undertaken
by the MDBA with Indigenous communities and concluded that:
My view is that we certainly have worked very diligently with
Aboriginal people to respect their cultural heritage and to make sure they are
very actively involved in the development of the works...it is a very, very
strong commitment, and it is not just for the Murray-Darling. We work with
major state constructing authorities, and each of them has processes in place
to make sure there is total respect.[84]
Committee view
2.81
The committee considers that the inclusion of the 1500 GL per year limit
in the Water Act will be of significant benefit to farming and irrigator
communities in the Murray-Darling Basin. It is integral in delivering the
triple bottom line outcomes of the Basin Plan, that is, social, economic and
environmental benefits.
2.82
The limit will provide clarity and flexibility, and allow for certainty
in future planning and investment opportunities by farmers and irrigators. The
committee notes the view of some environmental groups that amendment to the
Water Act to include the 1500 GL per year limit was not required to achieve the
Government's aims. However, the well-being and future of Basin communities
requires certainty, and the committee considers that the best way to achieve
this is by legislating a water buyback limit.
2.83
The committee is of the view that the amendment does not compromise the
Commonwealth's ability to bridge the gap. While environmental groups raised
concerns that the cap may compromise the achievement of the SDL, the committee
considers that there is no evidence to support this view. The committee notes that
the proposed amendments do not remove the Commonwealth's obligation to bridge
the gap to the SDL. Rather, the proposed amendments go to how the gap is
bridged; not whether the gap will be bridged.
2.84
In addition, the committee notes that the recently released Stocktake
Report supports the view that the 2570 GL per year target will be achieved
without the 1500 GL per year limit being triggered. The Stocktake Report
noted that enhanced environmental outcomes can be delivered through the
efficiency measure program and in consultation with Basin States, industry and
community groups.
2.85
The committee supports the Government's prioritisation of infrastructure
projects. Evidence was received that these projects are delivering positive
outcomes for both farmers and the environment and are less disruptive for Basin
communities.
2.86
In relation to the proposed amendments to extend the scope of efficiency
projects that can be funded under the Water for the Environment Special
Account, the committee strongly supports this change. The committee is of the
view that the increased flexibility provided by this amendment will give
greater certainty to Basin communities. The committee further notes that this
will improve the environmental outcomes under the Basin Plan through the recovery
of additional water for the environment, in line with the requirement to
achieve neutral or beneficial socio-economic outcomes.
2.87
The inclusion of off-farm efficiency projects will ensure that water can
be recovered for the environment without affecting farmers' ability to access
water for consumptive use. This means that productivity and economic well-being
in farming communities is assured while environmental outcomes are being
achieved.
2.88
Finally, the committee acknowledges the concerns of Indigenous Basin
communities. The committee considers that it is essential the Commonwealth
continues to engage with Indigenous representatives as implementation of the
Basin Plan occurs.
Recommendation 1
2.89
The Committee recommends that the Water Amendment Bill 2015 be
passed.
Senator Anne
Ruston
Chair
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