Chapter 2 - Issues
2.1
The majority of amendments contained in the bill are supported by
relevant industry organisations, and several stakeholder groups indicated that
they did not have any concerns with the bill. However, some submitters did recommend
various modifications to enhance the bill, particularly emphasising the need
for further transparency and public consultation.
Annual annuity contributions
2.2
Submitters welcomed the concept of annual annuity contributions, but did
suggest that measures to ensure transparency should be provided for in the
bill. Stakeholders would be more comfortable if the assessments and any other
documents which formed the basis for calculating annuity contributions were
available to the public. Likewise, stakeholders would take confidence if River Murray
Water was required to report regularly and comprehensively on its performance,
against specific business management benchmarks.[1]
2.3
The NSW Irrigators' Council also proposed a regular review of annuity
contribution levels and any consequent reserve levels to ensure any
accumulation of reserve funds would remain minimal.[2]
2.4
The Ricegrowers' Association of Australia Inc. (RGA) queried how the annuity
concept might affect the Ministerial Council's agreement of May 2006 to
maintain jurisdiction contributions at 2006–07 levels for the following four
years. The RGA was particularly concerned that if the annuity is set lower than
the current contribution levels, or is decreased below these levels over time,
contracting governments will be required to continue paying at the current
level, thereby providing additional funds to the Commission. There is further
concern that in some states this cost may be borne by irrigators, as Commission
costs are handled differently by various states.[3]
2.5
The RGA also voiced their concern that the annuity initiative may be
front-end loaded due to the difficulties in predicting long-term expenditure.[4]
Recovery of water business costs
2.6
The provision allowing the Ministerial Council to recover water business
costs from contracting governments raised various concerns about the
consequences of such a measure, particularly the potential impact this may have
on irrigators in different states. Submitters advised that cost recovery should
be consistent across all jurisdictions, and that the cost implications of these
amendments for each jurisdiction should be made available so that the impact on
stakeholders in different states is clear. This was an issue of particular
importance as the majority of submitters noted that River Murray Water costs
are handled very differently between states.[5]
2.7
Concerns were also raised about the process by which the Ministerial
Council will determine cost proportions for each contracting government, and
submitters recommended that the fee-for-service pricing concept be strengthened
and clarified in the bill.[6]
2.8
Submitters supported a five-yearly review of the cost proportions, but believe
that reviews should be conducted independently and should allow for public
consultation.[7]
Responsibility for River Murray Water structures
2.9
The provision granting the Ministerial Council the authority to
reallocate responsibility for the construction, operation, maintenance and
works relating to River Murray Water structures was supported by submitters.
However, they believe the bill should foster competition and should ensure the
market testing of these services, thereby reducing the costs of construction
and maintenance and encouraging efficient service delivery.[8]
Committee comments
2.10
The committee considers that concerns raised during this inquiry
regarding the need for transparency and accountability in relation to annuity
contributions and cost recovery should be given further consideration. The
committee notes that the Commission is required to report annually to the Ministerial
Council and that this report is publicly available.[9]
The committee considers that it would enhance existing reporting arrangements
if the following information were incorporated into that annual report:
- the basis for calculating annuity contributions and cost recovery
proportions;
- any reviews of these contributions and proportions; and
- a more comprehensive report on River Murray Water's financial
management and business operations.
2.11
The committee also considers that any reviews which take place should be
conducted independently and incorporate public consultation processes.
2.12
Notwithstanding these comments, the committee notes that the Prime
Minister's announcement on 25 January 2007 regarding national water management will
impact on the operation of this bill. Therefore, the committee recommends that
this bill not be proceeded with.
Recommendation
2.13
The committee recommends that the Murray-Darling Basin Amendment Bill
2006 not be proceeded with.
Senator the Hon. Bill Heffernan
Chair
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