Part 1: Introduction
Water legislation is complex even at an individual State level. It becomes increasingly so when all State legislation is also blanketed by Commonwealth legislation.
The need to work collaboratively on water management for rivers and streams that flow across State boundaries was recognised prior to Federation and became a key negotiating principle for New South Wales, Victoria and South Australia.
The Murray Darling Basin Plan is just the latest in a long list of water reform responses that have been introduced since the first River Murray Waters Agreement in 1915. This agreement was the result of years of negotiations following a Royal Commission on the River Murray instigated during the Federation Drought. Interestingly, most key pieces of water reform in the ensuing 100 years followed periods of drought, including the drafting of the Water Act 2007 which occurred during the Millennium Drought.
With every iteration of water reform there are flow-on consequences that impact on the ecology, communities and industries of the Basin. Be it physical, such as changing flow regimes as a result of storage and flow regulating infrastructure, or policy-related, such as volumetric limits on water access licences or the establishment of a water trading regime, these reforms have changed the way we manage and use water.
Participating Nationals members commend the work of the Committee and generally agree with all the report recommendations.
The Nationals members believe the following recommendations will further strengthen inter-jurisdictional delivery of the Basin Plan to maximise environmental outcomes while minimising economic impacts.
List of recommendations
Recommendation 1
The Government should review all recommendations made by previous inquiries into the Basin Plan, both parliamentary and commissioned by previous Commonwealth enquiries, and list actions that have been taken to implement these recommendations.
Recommendation 2
The Basin Officials Committee provide to the Ministerial Council for ratification a methodology to accredit an offset value for complementary measures which have already been identified and approved by Ministerial Council. These measures include, but are not limited to improved fish passage, addressing cold water pollution and undertaking efficiency measures that leave water in the system in the absence of transferred licenced water entitlement.
Recommendation 3
Implement the Productivity Commission’s recommendation 4.2 from the Improving Implementation of the Basin Plan report (2019) 'Basin governments should be open to the possibility of extending the 30 June 2024 deadline for specific supply measures to be operational where an extension would be necessary to allow worthwhile projects to be retained.'
Recommendation 4
Allow Basin States to notify the Authority of altered or new supply measures that meet the objectives of the Water Act and deliver improved environmental and ecological outcomes.
Recommendation 5
Ensure efficiency measures approved by Ministerial Council adhere to the neutral or improved socio-economic outcomes in line with the criteria agreed to by the Murray-Darling Basin Ministerial Council at the December 2018 Council meeting.
Recommendation 6
Using methodology approved by Ministerial Council, establish a mechanism to approve off-farm efficiency designed to operate and to improve environmental outcomes in relation to the Murray Darling Basin that may or may not result in associated transferrable entitlement.
Recommendation 7
Amend efficiency measures policies, programs and associated documents to remove reference to a fixed volume, i.e. 450GL, to more realistically reflect the volume is not fixed and is dependent on many factors.
Recommendation 8
The reconciliation of adjustments to be undertaken in 2024 must be based on real data (such as the SDL Compliance reports) and not on modelled assumptions. There must be no buyback if a supply measure project is incomplete, but water resources are compliant with the SDLs.
The following parts provide context to these recommendations and reflect on evidence given to the Committee.
Part 2: Close the feedback loop
The Committee heard from several witnesses about the feeling of reform fatigue and over consultation with a perceived lack of tangible outcomes (commencing in Chapter 2.32 of the Committee’s report).
The Committee’s report quoted the submission from the NSW Irrigators’ Council that:
Of the (at least) 45 inquiries which have been conducted since implementation of the Basin Plan commenced just seven years ago, the greatest problem is not that information is unavailable, but that the information, findings and subsequent recommendations are not appropriately acted upon.
Rather than initiating further inquiries, The Nationals members seek a review of previous inquiries to report back to the many community organisations, who gave their time to participate in good faith, as to what recommendations have been acted upon and how, what recommendations are still being progressed and what recommendations may never be acted upon and why.
Presenting this information in a single document will also help identify where Governments may have had good intentions but have since been distracted, often by a new inquiry.
Recommendation 1
The Government should review all recommendations made by previous inquiries into the Basin Plan, both parliamentary and commissioned by previous Commonwealth enquiries, and list actions that have been taken to implement these recommendations.
Part 3: Focus on outcomes
At some point between the passage of the Water Act 2007 and the finalisation of the Basin Plan which came into force in November 2012, the focus shifted from sustainability of the river system to volumes of recovery.
The Committee heard that managing the environmental water portfolio has evolved over the years.
Ms Swirepik, Commonwealth Environmental Water Holder, Department of Agriculture, Water and the Environment, gave the following evidence:
In the coming years, we look forward to getting even better outcomes and environmental benefits through actions such as alleviation of constraints to delivery in many of the catchments in the basin and further implementations of measures that will allow for the most efficient use of our water.
In their submission to the inquiry, the Commonwealth Environmental Water Holder wrote:
The CEWO also trials innovative approaches, manages risks and fosters an environment that enables adaptive management.
The Committee also heard from stakeholders that there are alternative means to achieve environmental outcomes.
Mr Rob Massina, President of the Ricegrowers' Association of Australia said in his opening statement:
Future implementation should also look for other opportunities to improve basin health, while maintaining its productive capacity. To this end, the RGA has long advocated for the implementation of complementary measures.
Mr Jim Cush, Chair, NSW Irrigators Council, said:
We need to see a renewed focus on complementary measures to achieve positive environmental outcomes without harming communities. We must recognise the importance of SDLAMs – sustainable diversion limit adjustment mechanisms – to both protecting communities and achieving environmental outcomes from the water recovered for the environment, and the flexibility and adaptability to get this done right through the opportunity for new and improved projects.
Ms Natalie Akers, Policy Adviser, Victorian Farmers’ Federation, highlighted the need for creative approaches stating:
….and we need to look at other options for improving environmental health. That means dedicating additional resources to complementary measures and projects.
The Nationals members are concerned the focus of implementing the Basin Plan across jurisdictions has strayed from the legislated requirement of identifying a Sustainable Diversion Limit and is now determined to be the estimated volume of water recovery needed to reduce water diversions based on estimated baseline diversions calculated in 2009.
The Nationals members contend that this shift of focus has also strayed from the objectives of the Water Act 2007 (refer to Figure 1). The objects make it clear the intention is to achieve improved environmental and ecological outcomes.
Figure 1 – Objects of the Water Act 2007
Source: Water Act 2007 (emphasis added)
This shift of focus means that people have concentrated only on recovering a volume of licenced entitlement, rather than improving ecological outcomes. It has also meant some efficiency projects are rejected because there is no associated transferrable entitlement, despite the project itself meaning less water would be diverted from the rivers or streams. Or a project that enables fish passage across a reach is not considered to be contributing to Basin Plan targets despite providing vital connectivity for fish across streams.
Recommendation 2
The Basin Officials Committee provide to the Ministerial Council for ratification a methodology to accredit an offset value for complementary measures which have already been identified and approved by Ministerial Council. These measures include, but are not limited to, improved fish passage, addressing cold water pollution and undertaking efficiency measures that leave water in the system in the absence of transferred licenced water entitlement.
Part 4: Sustainable Diversion Limit Adjustment Mechanism
The Committee received evidence that of the 36 supply projects that were notified to the MDBA by the 2017 deadline, at least 6 highly complex projects are at risk of not being completed by the required deadline of 2024.
This same risk was identified by the Productivity Commission in their review of the Basin Plan Implementation report of 2019.
The Nationals agree with the position of Productivity Commission Commissioner, Dr Jane Doolan that States should develop business cases with credible timeframes and milestones whereby extensions could be granted if progress was being made.
The Nationals note that this position is also consistent with positions taken at Ministerial Council by both Victorian and New South Wales Ministers. It is, however, important for the States to clearly identify what can be done by the deadline and work towards achieving that as well as items that need more time and consultation.
For example, NSW Minister for Water, Property and Housing, the Hon Melinda Pavey MP, in her evidence to the Committee said:
We need the Senate, the Government, the Federal Government to understand and face the reality of these very clear time frames that we simply cannot meet. We need to deliver environmental, social and economic outcomes, and to do this in a way that is acceptable to New South Wales communities will mean changes have to be made to time frames and notified SDLAM and constraint projects.
Recommendation 3
Implement the Productivity Commission’s recommendation 4.2 from the Improving Implementation of the Basin Plan report (2019) 'Basin governments should be open to the possibility of extending the 30 June 2024 deadline for specific supply measures to be operational where an extension would be necessary to allow worthwhile projects to be retained'.
There is also concern that existing projects need to be amended in response to community consultation and new knowledge, but inflexibility of the process does not enable this to occur, as identified by the Committee in the report (starting at paragraph 8.17).
This is particularly true for issues such as constraints management where modelled scenarios are unlikely to be negotiated in the short term, but by managing water through and around constraints differently to original modelling assumptions, better ecological outcomes can be achieved.
Recommendation 4
Allow Basin States to notify the Authority of altered or new supply measures that meet the objectives of the Water Act 2007 and deliver improved environmental and ecological outcomes.
The Committee also heard about the economic impact of water buybacks on irrigation communities. While some participants argued that buybacks are a “cheaper” alternative than engineering works, witnesses living in Basin communities highlighted the impact on towns and industries.
Mr Leahy, Water Council Chairman, Victoria Farmers’ Federation said in his opening statement:
... any effort to recover water through buybacks kills our region, and our region runs a long way. Agriculture cannot afford to lose any more water; we simply will not have the water to grow the food the nation needs to create wealth for our younger generations and jobs, which government seem to think is really important…[and]…[T]he number of irrigators with water to sell has fallen, reducing the debt to the market back to the local irrigators. To give some context: buybacks hurt rural communities as there is less water to spread with the costs, as I said. This ultimately pushes up the price of water, threatening the viability of the region.
Ms Helen Vaughan, Deputy Secretary Water and Catchments, Department of Environment, Land, Water and Planning, Victoria, said in evidence:
The Victorian government doesn’t support buybacks, I’ll be very clear about that…
We agreed that the socioeconomic criteria that help deliver on the legislated part of the Basin Plan indicate projects to be delivered in a neutral or positive socioeconomic way. That is why we’re very clear that the socioeconomic criteria need to be applied. Buybacks, because of their ad hoc nature, can lead to those socioeconomic impacts.
New South Wales Minister Pavey, said in her evidence, the issues and the concerns within NSW communities are shared with Victoria.
Ms Akers from the VFF said:
I understand the government has promised that it is not going to pursue buybacks. We would argue that we want that stronger. We would rather that it is legislated that you do not pursue buybacks.
[F]uture buybacks would be devastating to the region – absolutely devastating. If you want to kill off industries and if you want to lose jobs, buybacks are a sure way to go about doing that. You are ultimately reducing the consumptive pool. We’ve just come out of COVID. We’ve seen how important agriculture is in driving the economy and creating jobs.
Mr Birrell, Chief Executive Officer, Committee for Greater Shepparton and Member of the Goulburn-Murray Irrigation District Water Leadership Forum, told the Committee:
As far as we’re concerned, this means that there can be no more on-farm programs or buybacks in the southern connected basin.
In his opening statement, Mr Massina said:
Future implementation must involve no additional water recovery through buybacks.
Specifically, these groups raised concerns about the risk of pursuing an extra 450 gigalitres from on-farm use.
Ms Akers said in relation to providing water security to farmers:
The prospect of the 450 does not do that”, and that “…we thought there would be a socioeconomic test attached to that 450. We didn’t think it could be achieved, because there’s no way that you could get another 450 gigs and not have a negative impact on those communities. Therefore, if the 450 is going to be achieved by buybacks, you are killing jobs and you are killing rural communities.
Similarly, Mrs Jan Beer, Representative, Upper Goulburn River Catchment Association, supported Ms Akers, saying:
Under the current Basin Plan format, the constraints for 450 gigalitres place our nation’s good security at risk, and you’ve heard this from a number of people today…. Delivering the 450 will be problematic.
Recommendation 5
Ensure efficiency measures approved by Ministerial Council adhere to the neutral or improved socio-economic outcomes in line with the criteria agreed to by the Murray-Darling Basin Ministerial Council at the December 2018 council meeting.
In evidence to the Committee, Minister Pavey said:
Similarly, we welcome the Commonwealth government’s commitment to stop any more water purchases or recovery, particularly around the 450 gigalitres.
Mr Birrell said in relation to the 450 gigalitres of efficiency measures:
As far as we’re concerned, this means that there can be no more on-farm programs or buybacks in the southern connected basin. That’s the theoretical position in relation to the 450. There’s a practical reality, too, which is that it physically cannot be delivered.
The Federal Department of Agriculture, Water and the Environment clarified during questioning at Budget Estimates in October 2020 that the 450 gigalitre ‘number’ is ‘not set in stone’, with Mr Metcalfe, Secretary of the Department, also explaining:
There’s also a requirement under the 450 that it be undertaken with a neutral or positive socioeconomic benefit so that it’s not just extracting water but actually there is a test associated with it.
When asked more directly by NSW Senator, Perin Davey:
My layman's reading of that is that the 450 number is not set in stone. It is what you can get through efficiency contributions while not having a negative impact on the social and economic standing of a community. Would that be the correct interpretation?
Mr Metcalfe was succinct in his answer of 'Yes'.
In March 2020 the first review of the Water for the Environment Special Account was released, and it found that the 450GL allocated to be recovered through efficiency measures will not be recovered by 2024. It also found that based on current water market prices and the current program’s funding formula, that the Special Account could not cover the cost to recover 450GL by 2024.
Many other reports have found the same including the Independent Assessment of Social and Economic Conditions in the Murray Darling Basin which found:
Growing recognition that, under current policy settings, the overall target for water recovery of 2,750 GL per year plus 450 GL per year of efficiency measures cannot be achieved by 2024, and also cannot be achieved within the funds available through the Water for Environment Special Account.
Given the recovery of 450GL of transferrable entitlements is not supported by many of the irrigation communities from whence the water would need to come, and the acknowledgement by at least two Government commissioned reviews that the volume in entitlements cannot be achieved within the budget or timeframe, Nationals’ members agree with the Government focus on off-farm efficiencies.
Furthermore, we are of the view that the continued focus on the stated volume of 450GL belies the fact that Basin Plan always intended participation to be voluntary and have neutral social and economic impacts and therefore never guaranteed a volume. Therefore, the program must focus on outcomes and not entitlement volume.
Recommendation 6
Using methodology approved by Ministerial Council, establish a mechanism to approve off-farm efficiency designed to deliver improved environmental outcomes in relation to the Murray Darling Basin that may or may not result in associated transferrable entitlement.
Recommendation 7
Amend efficiency measures policies, programs and associated documents to remove reference to a fixed volume, i.e. 450GL, to more realistically reflect that the volume is not fixed and is dependent on many factors.
Part 5: SDL Compliance
Core to the success of the Basin Plan is the operation of Water Resource areas to operate within the identified Sustainable Diversion Limit (SDL); that is, water source diversions or extractions must not exceed the identified SDL averaged over the long term.
Due to Australia’s variable climate, and the various water products across the Basin, the actual permitted level of take in any given year is adjusted in accordance with inflows, climate conditions and other relevant factors. According to the MDBA:
The MDBA reviews permitted and actual take and the cumulative balance to check that water use remains within the limits set by the Basin Plan in both the short and long-term.
Measurement of SDL Compliance commenced in the water year 2019-2020 with the first report released in August 2021. This report found that 97 percent of water take in the Basin was compliant, even in the absence of complete SDLAM projects.
While every effort should be made by all State Governments to improve water management to achieve better environmental and ecological outcomes, the SDL compliance reports, based on real data, are a better measure of the Basin Plan achieving the objective of setting a sustainable level of take rather than a modelled version based on estimates and assumptions whether a supply measure project is complete.
Recommendation 8
The reconciliation of adjustments to be undertaken in 2024 must be based on real data (such as the SDL Compliance reports) and not on modelled assumptions. There must be no buyback if a supply measure project is incomplete, but water resources are compliant with the SDLs.
Part 6: Conclusion
The Basin Plan was drafted during a time of extreme drought and was immediately followed by severe flooding in the southern connected system.
This Committee was instigated again during a time of extreme drought and now, as we report, we are seeing the Murray Darling Basin storages at almost 90 per cent capacity and rising, flows to South Australia exceeding entitlement and as of Tuesday 21 September 2021, almost 51GL per week flowing out to sea.
This shows the variability of our climate, with all predictions that the extreme events will increase and so-called 'normal years' will become increasingly abnormal.
The Basin Plan, as required by the Water Act 2007, identifies the sustainable level of take for farmers, towns and other water users. It correctly establishes a compliance regime that acknowledges the fickleness of the Australian climate and establishes a method to ensure water resources are not over-extracted.
In order to achieve these SDLs a bi-partisan policy approach to 'bridge the gap' between the SDLs and the estimated baseline diversions was implemented. This policy approach is to be commended but the resulting sums have meant the focus has shifted and success is now judged as whether a set amount of licenced entitlement has been acquired.
In the meantime, operators, environmental water managers and even the State jurisdictions have recognised it is not that simple.
The Ministerial Council have agreed to measures that will improve the implementation of the Basin Plan, including complementary measures and a social-economic neutrality test, and yet there is still bickering about recovery numbers, particularly at a jurisdictional level.
The real test must be whether water users are operating within the set SDL and whether the system, including infrastructure, operational management and environmental water is being managed to maximise ecological outcomes.
It is high time all jurisdictions agreed to focus on outcomes not numbers.
30 September 2021
Senator Perin Davey
Senator for New South Wales
Committee Member
On behalf of The Nationals' participating members