National Water Commission

CHAIR: We now turn to Outcome 4. I call officers from the Murray-Darling Basin Authority together with officers from the department in relation to Program 4.1, Water Reform and officers from the National Water Commission. Dr Dickson, would you like to make an opening statement?

Dr Dickson : No.

CHAIR: Mr Cameron, would you like to make an opening statement?

Mr Cameron : No, thank you.

CHAIR: Just so we get some idea of programming, Senator Joyce will have the call for 40 minutes and then we will move to Senator Birmingham, and there is an agreed list. I have 10 senators seeking the call. We can start with Senator Birmingham.

Senator BIRMINGHAM: I will just take a few minutes at the start and then I will go after Senator Joyce.

CHAIR: Yes, Senator Birmingham.

Senator BIRMINGHAM: Dr Dickson and colleagues, welcome. Dr Dickson, can I get your reaction firstly to allegations made by the South Australian Premier that are reported today that the authority has 'been playing footsies in a patently obvious attempt to bring politics into the development of the basin plan', and in particular allegations about 'deals being done with the Victorian government'. Have any deals been done with the Victorian government?

Dr Dickson : Those claims are absolutely incorrect. We have not done anything cooperatively with Victoria in modelling that 2,100 gigalitre reduction run, which Victoria reported last weekend. We provided them the modelled outputs for the 2,800 run, which is the same as we provided to South Australia. In fact, we provided South Australia the 2,800 run, the 3,200 and the 2,400 run last December, which they used for their analysis for the Goyder report. So, we provide information to any of the states should they want it in terms of the data, but in fact Victoria asked us to run a lower run modelling, and we wrote to them back in February and said we would not do, because we felt that the analysis that we had done had clearly shown that 2,400 itself was not achieving the environmental objectives. So, Victoria then wanted to run it themselves and they commissioned SKM to do that. We provided them the modelled outputs, as I said, and we also provided them with some of the analytical tools they would need to do their work.

Senator BIRMINGHAM: Insofar as you provided information, data or cooperation to Victoria, that was all information, data or cooperation identical to that that had already been provided to South Australia, and in fact there was more data and information provided to South Australia?

Dr Dickson : That is right. We provided those modelled outputs back in December to South Australia.

Senator BIRMINGHAM: So, when Mr Weatherill states in regard to the authority's activities that it is not the behaviour of an independent authority, how does the authority respond to allegations questioning its independence?

Dr Dickson : We reject that we were not acting independently. As I said, we provided the same data to all the states who requested it. When the requests for what we undertake ourselves, which was both a request to do a lower number from Victoria—and we have also had other requests from other stakeholders—it was our decision whether or not we would do that, and we did not have any basis for doing it. That to me is an independent authority.

Senator BIRMINGHAM: So, Mr Weatherill's statement is misleading?

Senator Conroy: Now you are asking the officer to offer an opinion.

Senator BIRMINGHAM: It sounds like a statement of fact, from the evidence the officer has given.

Senator Conroy: I think the South Australian Premier's views are well known and he continues to advocate his position.

Senator BIRMINGHAM: The South Australian Premier has apparently written to Minister Burke. Has that letter been received?

Senator Conroy: I can take that on notice for you.

Senator BIRMINGHAM: Unless any of the officers at the table are able to provide an answer.

Senator Conroy: As I said, I am happy to take that on notice.

Senator BIRMINGHAM: You do not want to let one of the officers at the table provide an answer, Minister?

Senator Conroy: As I said, I have taken it on notice.

CHAIR: Senator Birmingham, the minister has indicated twice it is being taken on notice.

Senator BIRMINGHAM: On what grounds are you taking it on notice?

Senator Conroy: I will find out the information to make sure that we give you a completely accurate answer.

Senator BIRMINGHAM: The question was, 'Has the minister received a letter?'

Senator Conroy: Yes, and I am here representing the minister. I will ask the minister for you.

Senator BIRMINGHAM: On what grounds are you seeking to take this on notice?

Senator Conroy: I am taking it on notice so that I can get you an accurate answer.

Senator BIRMINGHAM: Is the information not available to you?

Senator Conroy: It is certainly not available to me at the moment, but I will take it on notice.

Senator BIRMINGHAM: You have not even asked Dr Grimes.

Senator Conroy: I will take that on notice for you.

Senator BIRMINGHAM: You have not even checked. Will you check in the next half hour?

Senator Conroy: I will see if the minister will come out of question time just to serve you.

Senator BIRMINGHAM: I am pretty sure the minister's staff are quite ready and available to check whether the minister has received a letter.

Senator Conroy: I am guessing he is not going to.

CHAIR: Senator Birmingham, you are rapidly running out of time, so I am going to move on unless you have another question.

Senator BIRMINGHAM: Can I just ask one quick question before we go to Senator Joyce, and that is about the timing of the basin plan. This will probably lead in to Senator Joyce. When will the final plan be provided to the states?

Dr Dickson : We are finalising it just now, in fact this week, and we expect to be providing it next week. I cannot give you a date.

Senator BIRMINGHAM: Next week, Dr Dickson? This is a very short period of time since consultations closed. It is an impressive turnaround in that regard, but—

Dr Dickson : Sorry. I beg your pardon, Senator Birmingham. I did not mean to mislead you. I was talking about the next stage, which is the revised plan to ministers.

Senator BIRMINGHAM: The revised plan to ministers.

Dr Dickson : Yes, and that will be next week.

Senator BIRMINGHAM: I meant in terms of going to the states.

Dr Dickson : Sorry.

Senator BIRMINGHAM: So, the revised draft plan, which is a new draft of the final plan, will go to the state ministers next week?

Dr Dickson : Yes.

Senator BIRMINGHAM: Chair, I will let Senator Joyce pick up from there.

CHAIR: Senator Joyce.

Senator JOYCE: Will the plan that you give to the states be the final plan?

Dr Dickson : The states will receive a revised proposed plan based on the revisions from the consultations including the states' submissions and all the other stakeholders' submissions. They will have that for six weeks for comment and then they, the Commonwealth minister and ministers of the ministerial council will provide that comment back to us at the end of that six-week period for us to consider doing any further consultation we think needed at that point. It will not be a final plan.

Senator JOYCE: It will not be the final plan?

Dr Dickson : No. There are a few more process steps after that.

Senator JOYCE: When are the states going to get a copy of that revised plan?

Dr Dickson : As I advised Senator Birmingham, we are expecting to provide it to the states next week.

Senator JOYCE: Thursday, Friday?

Dr Dickson : I cannot say. We have not settled a date yet.

Senator JOYCE: Next week? When will that plan that you have provided to them become public?

Dr Dickson : Under the act we have to provide the section 43 report, which is the report on our consultation and the changes we are making or not making in response to the consultation. That has to be published before we provide the revised plan to the ministers.

Senator JOYCE: So roughly when do you think that will be?

Dr Dickson : Basically, we will be publishing that report, the revised plan and the report on social and economic implications.

Senator JOYCE: So, roughly?

Dr Dickson : At the same time, roughly. I mean, before and then forward on to the ministers.

Senator JOYCE: What happens if New South Wales and Victoria agree and South Australia does not, or South Australia agrees and New South Wales does not, or South Australia and Queensland agree and Victoria and New South Wales do not? What do we do then?

Dr Dickson : The ministers can either collectively as a ministerial council or individually give us comment and then it is really up for the authority to consider it and to decide whether or not it thinks it should make any changes in response to that or consult on any element that we think is necessary. So, it is a speculation, I guess, of what to do when we have a difference of views there. I guess it will come back to us again.

Senator BIRMINGHAM: Will the revised plan being provided to the state governments be made public?

Dr Dickson : Yes.

Senator JOYCE: What do you do? Obviously, the comments by Mr Weatherill and some of the state water ministers are miles apart. So, what do you do when they do not agree?

Dr Dickson : That is speculation. I agree it is a very challenging issue. This is the issue we faced the whole way through. The submissions and in all of the consultations we went to have demonstrated some of the quite polarised views from many stakeholders on issues.

Senator JOYCE: The question I am asking is: if they do not agree can you still go forward?

Dr Dickson : Yes. The ultimate decision maker on whether or not to adopt the plan is the minister.

Senator JOYCE: So, a week is not very far away. What do you need to do before the release and why can you not give us an exact day for the release?

Dr Dickson : We have not yet finalised it. It is very close. I can say we are very close to finalising it and getting it done, but we have not determined an exact date. We are not going to be doing any press on this at all. It is a different situation than it was at the time we released the plan. We will make things public, but the next step is with ministers. We will be providing it to them and then, in terms of our consultation, we will not be doing any consultation during that period.

Senator JOYCE: Just for the record, if South Australia does not agree you can still continue on without them and get to a final position?

Dr Dickson : The role of the ministerial council is to provide advice. We want, as far as is possible, to get an agreed plan that can be acceptable to all ministers, obviously.

Senator JOYCE: But if what they say becomes their position, you are not going to get agreement, but you can say, 'We will just go over the top of you and do it anyhow'?

Dr Dickson : I am not going to make any speculation. I cannot. Suffice to say we are going to do as much as we can in terms of the proposal going to ministers to having one that can be acceptable to the states.

Senator JOYCE: Is there the power held by the Commonwealth to go on regardless of them?

Dr Dickson : The Commonwealth minister is the minister who adopts the plan. Yes, under the act that is his role. The ministerial council provides advice and comment.

Senator JOYCE: So, they can provide all the advice they want. In the end, if the minister decides to go ahead, that is it; it is the minister's decision?

Dr Dickson : That is how it is written in the act. That is exactly what the situation is.

Senator JOYCE: And that is the same for New South Wales or Victoria?

Dr Dickson : All states and territories.

Senator JOYCE: They have nominated, though, legal challenges. Can you enlighten us to what those legal challenges would be?

Dr Dickson : We have heard there has been a lot of talk and it has been mentioned in quite a few submissions, but we have no idea. We have not seen anything in the documents about what the legal challenge might look like.

Senator JOYCE: Have you got advice on the legal premise of the act and how it stands in relation to the rights of the state?

Dr Dickson : We have not had any form of any challenge that has been put forward, so there is nothing really to seek advice on.

Senator JOYCE: Will the revised plan include revised economic modelling?

Dr Dickson : We have looked at the economic modelling that has been done since the release of the plan and there is some more work that we have undertaken in the authority and externally that basically we are using to inform our further thinking on it. But the modelling itself is not in the plan. That is sort of the underpinning analyses that use in looking at the sustainable level.

Senator JOYCE: Will you be able to show where any socioeconomic modelling that you have had done has affected the previous guide to the draft plan?

Dr Dickson : The previous guide? You mean the draft we released in November?

Senator JOYCE: Yes.

Dr Dickson : We will be reporting on our assessment mostly through the report on the social and economic implications on our current assessment of the social and economic analysis.

Senator JOYCE: So, in that socioeconomic analysis were there areas where on further analysis you saw an unreasonable effect on the town so you changed the plan?

Dr Dickson : I can go through the detail if you like, and I can bring Mr Tony Webster here to go through that detail, if you want to do that.

Senator JOYCE: Just generally, if there was an area like Deniliquin, Dirranbandi or Coleambally where you said, 'This will just completely destitute the town if this goes forward in this form so we have changed the plan'?

Dr Dickson : We have seen all of the reviews. I think there is one major one by Independent Economics. We have had a look at those. I think there might have been another one as well. But really the thing you need to look at is the assumptions they used. People can come up with quite different results, as you know, depending on what assumptions they use. So, we looked at it from the point of view of how their assumptions compared with the range of assumptions we looked at, and a lot of the differences—by far the majority of the differences—are due to differing assumptions.

Senator JOYCE: You would be aware of other economic modelling that has been done and in your equilibrium based modelling there was alternative modelling done by Chris Murphy. Are you aware of that?

Dr Dickson : Yes, I think that is the Independent Economics report I referred to.

Senator JOYCE: In your modelling it is correct, is it not, Ms Dickson, that you presume that the money that people get from the sale of water licences stays in the district?

Dr Dickson : Can I ask Mr Tony Webster to come up? I am not sure if I explained it here before, but we did a range of different scenarios—for example, if it stayed iin the district or if it moved out—and compared a sort of best-case and worst-case scenario, but Mr Webster will probably give you more detail.

Senator JOYCE: Mr Webster, is it the case that the modelling that you do presumes that the wealth or the money from the sale of those water licences stays in the district?

Mr Webster : We undertook quite extensive sensitivity analysis around a whole heap of different assumptions and parameters. One of those was whether buyback proceeds stay within the region or exit the region, specifically whether they have an economic impact or whether they do not have a local economic impact. The analysis was essentially that the effects were fairly minor, particularly in relation to all the other effects that were going on. Probably the main effect that was dominating the results was the $4.8 billion in stimulus spending through Water for the Future on infrastructure investments.

Senator JOYCE: I am not quite sure whether the answer is that you presume that when someone buys the water from a buyback scheme the money stays in the district or it does not stay in the district. Did you do any modelling where it does not stay in the district?

Mr Webster : We have got very detailed socioeconomic analysis available and it shows both cases.

Senator JOYCE: Mr Murphy had a different case. You had 183 jobs lost versus 2,100 jobs lost. Why would we have such vastly different loss of jobs?

Mr Webster : He makes some particular assumptions that—

Senator JOYCE: What is the assumption that he makes?

Mr Webster : There is a couple of assumptions. Probably the first one is that there is a lot of proportionality in the modelling. That means that he does not have the same amount of trade-offs that we see in the modelling that we have commissioned. For example, he assumes that farmers cannot substitute between different factors of production—capital, land, water, labour, for example. He also assumes that people who sell water basically sell all of their water and move out of the district.

Senator JOYCE: Let us match modelling to fact. Let us find a purchase that is substantial and see what happens there. On the Twynam purchase of the water did that money stay in the district? What is it—Ms Harwood is at the back there—$302 million worth of water we purchased? Does that money stay in the district?

Mr Webster : We do not know what Twynam did with their proceeds.

Senator JOYCE: I can help you. They are currently developing an irrigation project in the Sudan in Africa, so it looks like it did not only not stay in the district, it did not even stay in the country.

Mr Webster : Recent analysis from National Water Commission indicates that in the period up to 2010-11, of all those people who sold water 32 per cent actually purchased temporary water—they were still irrigating—and only four per cent sold all of their delivery rights. That means that 96 per cent of all people who sold water up until 2010-11 remained in the district irrigating or had the potential to irrigate.

Senator JOYCE: It is also the volume. So, we have borrowed money from overseas to purchase water so someone can take the money out of the district, out of the country and start developing an irrigation farm in another country. So, we are borrowing money from overseas to subsidise the development of an irrigation farm in Sudan. Does this sound like a sensible approach to policy?

Senator Conroy: You are actually now asking an opinion based on your construct, Senator Joyce.

Senator JOYCE: It is not a construct. It is happening.

Senator Conroy: If you have a question?

Senator JOYCE: Yes. Will the draft basin plan include a revised legislative instrument at all?

Dr Dickson : The revised basin plan is the revised legislative instrument.

Senator JOYCE: So, it will be a revised instrument. Will it have a plain English summary?

Dr Dickson : Not this one. This is a revised plan for the ministers. When there is a final plan that goes in to parliament it will need to have something—some explanatory notes—that would be similar to a plain English summary, but the plain English summary was only required for our original proposed plan that we put forward for consultation.

Senator JOYCE: Just going back to yourself, Mr Webster, how many jobs do you think will be lost in the southwest Murrumbidgee as a result of the basin plan?

Mr Webster : We do not think about it in terms of jobs lost. What the modelling indicates is that there is likely to be fewer jobs by 2019 than there would be otherwise. It is likely that there are more jobs than there are today because of natural growth in the economy.

Senator JOYCE: So, how many fewer jobs will there be because of the basin plan in the southwest Murrumbidgee?

Mr Webster : Again, we have a range of modelling to indicate that. We do not have exactly the same districts as Independent Economics does, but our estimates of places like Murrumbidgee, which is Coleambally, is in the range of 69 jobs less. That is agricultural jobs and flow-on impact. So, 69 fewer by 2019 than there would be otherwise. In Leeton, around 55. And Griffith, about 89. They roughly overlap Independent Economics's areas.

Senator JOYCE: Is that general equilibrium modelling?

Mr Webster : No, that is based on input-output analysis, but we did probably overestimate it compared with what CGE type modelling should come up with. But we did calibrate it to CGE modelling to try to get it a little bit more normalised.

Senator JOYCE: Is that modelling for public consumption? Is that publicly available?

Mr Webster : It is on our website, absolutely.

Senator JOYCE: Did you perform any general equilibrium modelling?

Mr Webster : We did. We did that at a basin scale and we also did it at a catchment scale and we commissioned three independent modellers to do that modelling.

Senator JOYCE: Who are they?

Mr Webster : Monash University, ABARES and the University of Queensland, and we had all three of those models peer reviewed by KPMG to assure the board that it was best available science.

Senator JOYCE: And that is available?

Mr Webster : It is all available on our website, including the peer review.

Senator JOYCE: It has just been over a month since the close of submissions. Have you read all the submissions?

Dr Dickson : I think it has actually been about six weeks. I do not think there is one individual who would have read all of them, but they have all been processed and read. There are large numbers of submissions with a similar theme.

Senator JOYCE: What was that similar theme?

Dr Dickson : There were different sorts. There was a large number of campaign postcards and letters and things like that. There was one on needing a lot more water—for example, 4,000. There were some asking for a lot less water. They were sort of basically campaign literature that all said exactly the same thing.

Senator JOYCE: Seeing as it was six weeks ago, how have you managed to incorporate all of the comments

from the submissions in just one month?

Dr Dickson : In the six weeks we have read all the key submissions. I do not know how many people have been involved in it, but half the authority, it feels like, have been involved in reading and identifying issues. Then they have been summarised, compared and analysed against each of the key issues.

Senator JOYCE: Did you accept any submissions after 16 April?

Dr Dickson : There were a few, yes. They were ones that had previously made arrangements with us to be a little bit late. They had flagged they would be late and that was all fine. There were not very many of that sort. There might have been a couple of others, but we have accepted all of the submissions put to us.

Senator JOYCE: How many times has the board met since the consultation period closed?

Dr Dickson : Just give me a moment. I have those figures. It has been quite a few times. I think there is about eight, but I do not have the full details here. I think there were about eight meetings, but I am not sure exactly. We have been having working groups with the states to work through issues with them, and so we have been continuing on the process we had before we released the plan. So, we have had those state consultations and we have been developing proposals in response to those state issues all along that period. So, through the whole period of the consultation we have been looking at possible changes and taking sort of in-principle decisions until we had the submissions in, and then did a lot further work after that. There are a lot of issues through the consultation period, and particularly with the states, that we were able to identify. Many of the submissions really confirmed those issues that people raised. It was not as if it just started from the time of that submission. We have been doing a lot of work thinking about what responses were needed.

Senator JOYCE: How much have you spent on modelling so far?

Dr Dickson : On which particular modelling?

Senator JOYCE: On all your modelling. How much has the MBA spent on economic modelling so far?

Dr Dickson : I might have to take that on notice. When you say 'so far', from what point? From ever?

Senator JOYCE: Since the process of trying to develop a plan for the Murray-Darling Basin.

Mr Webster : I do not have that figure.

Dr Dickson : We will provide it to you on notice.

Senator JOYCE: Have you met with Mr Chris Murphy, Mr Webster?

Mr Webster : We have, yes.

Senator JOYCE: Do you consider the Independent Economic assessments of 2,100 job losses is a reasonable estimate for the southwest Murrumbidgee?

Mr Webster : It seems high to us.

Senator JOYCE: How many did you estimate were going to be lost?

Mr Webster : As I said, the areas do not overlap. They are not exactly the same areas as the ones I read out.

Senator JOYCE: What did you say?

Mr Webster : Based on estimates done by Arche Consulting for us—they did the input-output analysis— for Murrumbidgee's there were probably 69 fewer than there would be otherwise, 55 for Leeton and 89 for Griffith.

Senator JOYCE: Is that 55 fewer than there would otherwise be?

Mr Webster : That is right.

Senator JOYCE: How much water had come from the district to bring about 55 fewer than there otherwise would be?

Mr Webster : That is approximately a 16 per cent reduction in water for agricultural use.

Senator JOYCE: Sixteen per cent reduction of water and there are only 55 fewer jobs than there would otherwise be. Do you find that highly implausible?

Mr Webster : No, we find that quite plausible. All the modelling was subject to quite rigorous analysis and testing and, as I said, peer reviewed.

Senator JOYCE: The people who did the analysis; did any of them have a history of irrigation in regional areas?

Mr Webster : All of these models are irrigation-specific models.

Senator JOYCE: Did any of the people who were actually doing it, the actual individuals, have experience in irrigation in regional towns?

Mr Webster : I do not know. I have not asked them that question.

Senator JOYCE: Do you think it would probably be an appropriate thing to ask them before you had them start doing modelling for you?

Mr Webster : Our criteria for selecting our modellers are whether they are good economic modellers.

Senator JOYCE: When we are trying to give a sense of confidence to the people in these towns and they say, 'A modeller from the University of Queensland or from Monash have said there will be 55 less jobs than there would otherwise be, even though we are going to take 16 per cent of your water from you,' and they would say that the way they know it works is nothing like that because you take away the water, therefore you take away the grapes, or the cotton, or the rice; therefore we do not need the farm workers, the truck drivers, the pie shops, the chemist shops, and on and on it goes. If you actually talk to someone in that area they would—

Mr Webster : We actually take second round effects into account. The numbers I pointed out do include second round effects. These modellers are perfectly aware of those types of effects.

Senator JOYCE: So they are aware of second round effects. No doubt the academic competencies of these modellers are absolutely present—these people are not fools—but nothing beats the capacity of someone who has actually been on the ground, as they say—experience in the field. You did not say, 'I had better make sure I have got someone who has experience in the field before we start paying,'—and I think it was question 140 in the last one—'$7 million in economic modelling; we better actually make sure that we have someone that actually knows, who has done it.'

Senator Conroy: If you want to question the qualifications of Mr Murphy and all of the eminent economists that have been mentioned, then you are welcome to, Senator Joyce.

Mr Webster : I understand most of these modellers spend significant amounts of time in the field. They undertake work for others, not just us. We have spent significant periods of time out in the field trying to understand local community concerns and local community characteristics to make sure that our modelling accurately represents what is going on.

Senator JOYCE: Who was the main person you were speaking to from Monash University?

Mr Webster : Dr Glyn Wittwer.

Senator JOYCE: Was he a 'climatition', a statistician or an econometrician?

Mr Webster : You could call him an econometrician. He was an economic modeller.

Senator JOYCE: His history has always been in academia? He is a very competent person with a long-term history in academia?

Senator Conroy: We would have to take that on notice. We can get you his CV if you like. In fact you can probably even Google him now. Shall we Google him?

Senator JOYCE: What about any of the others? Did you talk to anyone else? Senator Conroy is being a fool; you get used to that. Did you talk to any person who actually was a farmer?

Mr Webster : We have talked to lots of farmers.

Senator JOYCE: Do you know of one farmer in these modelling teams?

Mr Webster : Farmers do not normally do economic modelling.

Senator JOYCE: You can certainly get their opinion.

Senator Conroy: The bush economics that Senator Joyce practices give him the qualifications to—

Senator JOYCE: So tell me, Minister, in your knowledge of modelling, how do you see the second tier effects in the towns? Do you think the second tier effects—

Senator Conroy: That is why I hire eminent economists like the officers have done, so that I could consider them.

Senator JOYCE: Do you believe the second tier effects in general equilibrium modelling are irrelevant to Deniliquin in the assessment that has been made of a loss of only 55 jobs? Do you believe that is correct?

Senator Conroy: I would not pretend that is correct. I would not pretend that I knew better.

Senator JOYCE: You are sitting in the chair; do you believe it is correct?

Senator Conroy: The chair is actually over there.

Senator JOYCE: No, do you believe it is correct?

Senator Conroy: That would be why I hire eminent economists.

Senator JOYCE: You seem to be proffering a lot of advice, so what is your belief on it?

Senator Conroy: I would hire—

Senator JOYCE: You already have. That is what you have done.

Senator Conroy: I am happy to stand behind their qualifications over yours any day of the week.

Senator JOYCE: If you stand behind them then why do you not just be quiet while they give an answer.

Senator Conroy: If you would like to give your expert opinion as an accountant on the second round effects, feel free.

Senator JOYCE: So you are happy with a second tier, because your modelling does take into account second tier effects—

Senator Conroy: We have established that, yes.

Mr Webster : We asked KPMG to peer review the local modelling, just as we asked them to peer review the CGE modelling. Their view was that it was about the best available. They were worried that it overstated the effects, not understated the effects. That report is available on our website.

Senator JOYCE: I refer you to the chart of historical river flows in the Murray-Darling Basin, including the MDBA's Mythbusting website. The data for 2010-11 seems to record relatively low inflows, given that the Bureau of Meteorology data shows that 2010 was the wettest year on record in terms of rainfall. Why are the river flows in your data half of that from 1974 and well below that of 1956?

Dr Dickson : There is a difference between rainfall and river flow. It has to do with the dryness of the catchments, perhaps. If you want more detail on that—

Senator JOYCE: Does the data that you have used for river flows include the latest wet period?

Dr Dickson : Are you referring to the data we have used for doing the modelling?

Senator JOYCE: Yes.

Dr Dickson : The data we used for doing the modelling includes up to 2009; it does not include those last two years.

Senator JOYCE: It was just before this wet period. When does that data set start?

Dr Dickson : 1895.

Senator JOYCE: That is important because you have the federation drought on one side and the millennium drought on the other. Both the federation and the millennium droughts are included. Why did you not include the record wet periods that are on either side of that?

Dr Dickson : As we have provided to you in various other questions and also on our Mythbusters website, the reason is that the period that we modelled included some of the wettest periods that we have experienced, like 1956 and the wet periods in the seventies. The purpose of running the modelling over a long period was to be able to test it against as many different extremes of climate that the basin serves up.

It was, first, that we did not have the data, and we still do not have the quality checked data for those last two years. More importantly, we felt that there was enough in that time sequence to be able to fully test the outcomes of our SDL modelling.

Senator JOYCE: Seeing as this modelling is to reflect the lives of people in places such as Dirranbandi, Deniliquin and Mildura, have we gone back to these people and told them that we believe that only 55 jobs will be lost—well not lost, but they will not be created beyond what would have been created—with a 16 per cent reduction of water? Have we run that idea past them and seen what they think of that idea?

Mr Webster : We spent a lot of time with the stakeholders prior to the release of the work last November and we have spent a lot of time out in the basin with stakeholders since then as well, going through all of the economic modelling in detail—in fact, not just the economic modelling, but all of the economic context as well.

Senator JOYCE: What was their response?

Mr Webster : Because we talked a lot about everything that was going on in the basin, I think there is an acknowledgement that there are a lot of issues out there, of which the basin plan is just one. A lot of those other issues are causing quite significant pressures in the basin.

Senator JOYCE: There was also modelling done by Sinclair Knight Merz commissioned by the Victorian government. Are you aware of that?

Dr Dickson : Are you talking about the one that was published last weekend?

Senator JOYCE: I am referring to modelling done by Sinclair Knight, commissioned by the Victorian government to analyse the impact of using environmental works and measures to deliver environmental outcomes—

Senator Conroy: Have you met Senator Birmingham from South Australia?

Senator JOYCE: of 2,750 gigalitres but via environmental works and measures. Are you aware of any modelling by Sinclair Knight Merz?

Dr Dickson : I think the majority—

Senator Conroy: Senator Birmingham, are you aware of that?

Dr Dickson : I am just trying to clarify—

Senator Conroy: This routine cannot go on. Senator Birmingham, you are pretending that you are barracking for South Australia and, Senator Joyce, you are pretending that you are barracking for everyone else. There will come a point when you actually have to agree on a position.

CHAIR: Senator Conroy, Senator Joyce has another—

Senator JOYCE: Chair, I am being very disciplined.

Senator Conroy: Senator Birmingham comes in and runs the South Australian line, and Senator Joyce comes in and runs everyone else's line. You are like Laurel and Hardy.

CHAIR: Senator Conroy. Order!

Senator JOYCE: Your NBN is like Laurel and Hardy.

CHAIR: Senator Joyce. Order!

Senator JOYCE: You should worry about the NBN and where you are getting the money from. You should worry about your debts.

CHAIR: Senator Joyce!

Senator JOYCE: You should worry about the fiasco which is your little telephone company.

CHAIR: Senator Joyce, your time is running out.

Senator JOYCE: Your telephone was caught right up in Optus. Do you remember that photo, you clown?

Mr Webster : Can I clarify? Was the question about economic modelling, or was it a question about works and measures modelling?

Senator JOYCE: Have you looked into the process of further works and measures to try to reduce the effect of the actual, so we can keep the volume of agriculture in place, yet incorporate the use of works and measures?

Ms Swirepik : That is probably a question for me. We have tried to look at the prospect of works to be able to meet some of the needs and the environmental objectives that we have determined. At the moment most of the projects are either too far away, like the Menindee Lakes reconfiguration, to be able to deliver that water and know what they would deliver, or with the ones that have been delivered we have assessed at the moment that they may not be seen to reduce the amount of water that is needed, because while they provide some of the environmental outcomes on a local scale they actually do not meet the needs of the broader flood plain. We have acknowledged in our basin plan documentation that we believe that work needs further analysis and that that would be one of the things we would do for the 2015 review.

Senator JOYCE: On your Mythbuster website you have said that adding the latest two years of data would adjust your estimate of long-term average inflows by 32 gigalitres. Why does the MDBA basin plan not use the most up-to-date data?

Ms Swirepik : If I can put those numbers into context, the preliminary estimates that we have of inflows into the basin in 2009-10 are 23,000 gigalitres and 47,000 gigalitres in 2010-11, which changes the mean annual inflow in the basin over the model period from 32,553 to 32,595. In the context of that many thousands of gigalitres, that 32 is actually not a significant figure. It is actually a change of about 0.013 per cent. The reason why we have not put that in the modelling is for a number of reasons: the numbers have not been verified yet, and to include them back into the modelling process would have meant rerunning a year's worth of modelling, effectively.

Given that there was so little change to the long-term average, we do not think that is worth that year delay. On top of that, with the way that the environmental outcomes are achieved in relation to that long-term average the high-flow events do not have an impact on the amount of water that is required because the water that is required for the environment is actually not in the high-flow years but in the medium-flow years.

CHAIR: Senator Joyce, I am going to come back to you. We are now moving to Senator Hanson-Young.

Senator HANSON-YOUNG: I have a question in relation to the modelling that was reported last week in relation to Victoria. The Victorian government has claimed it has done modelling which says that only 2,100 gigalitres need to be returned to the river to save the system. You are of course aware of those reports?

Dr Dickson : Yes.

Senator HANSON-YOUNG: Victoria says that conclusion and modelling were based on the MDBA's own models. Is that the case?

Dr Dickson : Yes. As I answered Senator Birmingham's question earlier, we provided to Victoria the 2,800 gigalitre run plus some analytical tools so they could commission their own work. This is not quite the same, but we also provided modelled outputs to South Australia in December that they used to do their Goyder analysis, and we would provide those modelled outputs to any other state that wanted them as well.

Senator HANSON-YOUNG: I apologise if I was out of the room when you were answering this question to Senator Birmingham. Was that “Big Mod”?

Dr Dickson : I will ask Ms Swirepik to give the details of what we provided.

Ms Swirepik : Yes. Victoria has access to its own copy of the basic modelling suite that the Murray-Darling Basin Authority uses, as does South Australia. In addition, we provided access to them to a tool which we call Pick-a-Box, which is an analytical tool that we use outside of the modelling suite. It helps us to select environmental watering events to reinstate in the sequence. Victoria did not have access to that tool before and we have provided them with access to enable them to undertake their own modelling. Last year when we provided access to South Australia to undertake work for the Goyder Institute we also made available similar access to analytical tools because we provided them with the most up-to-date versions of “Big Mod”, which is the model you just referred to, to ensure that they could actually undertake as relevant work as possible in their Goyder analysis.

Senator HANSON-YOUNG: So you did have to give them access to both of those two tools. You have said that Victoria and South Australia have access. Do any other states?

Ms Swirepik : All the states that are parties around the Murray River have some modelling capacity, I believe, of the Murray River itself because they actually have users on the Murray River.

Senator HANSON-YOUNG: I am talking about lining up with the same models and technologies that the MDBA has been using. Have you shared that out across all of the states, or is it just that people have their own independent modelling?

Ms Swirepik : There are probably two answers there. At an officer level, all of the model improvements that we have tried to make to be able to model the basin plan have been discussed through with the different jurisdictions to make sure that where we were making changes to their own models we were being as accurate as possible to reflect the situation. So, at an officer level there might have been access on an ongoing sense in discussion of any model improvements. In particular, since we finished the basin plan modelling run we have provided access, on request, to two states, which were South Australia first, who requested access to the updated suite of models and to the three modelling runs so that they can undertake their work for the Goyder Institute, and also now to Victoria over the last two months, who have asked if they could run what they see as their own package of an alternative basin plan scenario of the 2,100 held environmental water plus works and measures.

Senator HANSON-YOUNG: Would you argue that the MDBA is the body that has the fullest suite of most superior modelling?

Ms Swirepik : Yes. No other state has a linked suite of models across the basin, and certainly in the Murray we keep the central version of the model, if you like. So where we make improvements then we foster that back out so the states can use a common model with us.

Senator HANSON-YOUNG: I just want to be clear. With the modelling tools that you lent to Victoria, was that everything that you think they would have needed to come up with a comprehensive conclusion?

Ms Swirepik : No. We do not have a licensing right to give them, for instance, the New South Wales models. What they did, because they had a short amount of time to undertake their analysis to support their own basin plan view, was take our 2,800 run and they scaled down things like the Murrumbidgee inflow because they did not have the time or the model to re-run the Murrumbidgee model and link it back into the centralised River Murray modelling. They made a number of assumptions which they made clear in this report that has been published by SKM about how they adapted the 2,800 run to actually test their own hypotheses, if you like, so those are verified in there. We made available the things that we could without actually having to stop our own work program, as my chief executive said when you were not in the room. We have had lots of request for additional modelling and we have said no to all of them because to do a completely linked run takes quite a lot of time and we have our own modelling priorities to undertake to finish the basin plan. There was a specific request from Victoria to model that for them and we confirmed in writing back to them that we would not model that for them, so then their follow-up was to ask for access to the tools.

Senator BIRMINGHAM: How do those gaps in the specific assumptions and information that Victoria had for their modelling activity compare with the gaps in specific information and assumptions in the SA modelling? It is a directly comparable question.

CHAIR: Senator Birmingham, you should actually seek leave because Senator Hanson-Young has limited time.

Senator HANSON-YOUNG: I am happy for this response to be answered.

Ms Swirepik : I am not sure I understand the nature of your question. In the South Australian case they literally took our modelling runs and then they did their own processing of those. They made some of their assumptions on salinity outcomes, and that is why their reported results are slightly different to our reported results. In Victoria, they tried to mimic our process as much as possible, but because they could not run the full suite of linked models, they did things like scaling down the Murrumbidgee inflow. They also took water that we were putting towards achieving base flows and put it towards the targeted higher flows, which are the ones that are reported in their modelling report. And they changed the sequence of events that was being drawn upon to deliver environmental watering. So, whilst the assumptions are close to ours they are not exactly the same as ours.

Senator HANSON-YOUNG: Peter Walsh is reported as saying that the 2,100 gigalitre figure would be enough to meet the needs of the Lower Lakes in the Coorong. Does the MDBA believe that is correct?

Ms Swirepik : I understand from looking at the exact words that he used that he said 'they would largely meet the needs', so they are acknowledging—

Senator HANSON-YOUNG: It sounds like such a politician, doesn't it?

Ms Swirepik : That is a matter of opinion which I will not express. Even in our own modelling runs there are small departures from what might be seen as the desirable needs in the Lower Lakes, and being able to address those depends on the socioeconomic, triple bottom line analysis. What the Victorian analysis shows is that you are a little bit of a step further away. For instance, you would have Lower Lake levels that would be slightly lower for slightly longer periods of time and the maximum event would go from two months to five months of undesirable salinity outcomes. I believe the minister is quoted as saying it will largely meet the needs of the Lower Lakes. This is the whole balancing act about how much risk you are prepared to take.

Senator HANSON-YOUNG: My concern with that, even if it is a qualified statement, is that you are saying that they have not been able to use the most up-to-date superior modelling anyway. There are a whole lot of assumptions built into that, so that claim of 2,100 gigalitres is not something that you would be willing to stand by?

Ms Swirepik : We have not verified their modelling run. They have not provided that to us. We gave them the tools and they have undertaken an assessment. It has not been formally provided to the authority. We have been provided with it by the department. The first time we saw it was in this write-up. We have not verified it, and it is very difficult for us on the amount of information that is published in this SKM report to validate their outcomes, if you like, because things like base flows are not reported against even though they have acknowledged that they changed the way that we had sequenced them.

Senator HANSON-YOUNG: In relation to the modelling that the authority is doing, you have said that you have had requests to model other figures. I know that a number of groups have asked for the 4,000 gigalitre figure to be modelled and even above that, but particularly that 4,000 gigalitre has been a specific request. You have said that you have not agreed to any requests. I just want to clarify that is right? You did say that before?

Ms Swirepik : Any external request.

Senator HANSON-YOUNG: Do you mean external to government?

Ms Swirepik : There are priorities that are emerging from the ongoing discussions that authority members have with the public and that we have with jurisdictions where we know, for instance, that people want more modelling into the works and measures that Senator Joyce had raised. There are all sorts of questions out there that you can explore with the modelling. Most of those we had put into the suite of looking at the 2015 review to try to reduce some of the uncertainties around those matters. The thing that we are focusing on at the moment is a baseline modelling run in the event of an SDL adjustment mechanism being agreed by jurisdictions. We are trying to make sure that we have the best modelling that we can undertake to support the basin plan.

Senator HANSON-YOUNG: Just to clarify, you still have not modelled the 4,000 gigalitre figure, whether that has been requested by government or externally?

Ms Swirepik : No.

Senator HANSON-YOUNG: There are no plans to do that?

Ms Swirepik : If you were going to model a run like that it would need to be done in conjunction with looking at the possibility of removing some of the constraints because if you put 4,000 gigalitres in the system now you will still not achieve the environmental outcomes if you are operating under the old rules. I would see that as part of a broader modelling package.

Senator HANSON-YOUNG: Have you started that process?

Ms Swirepik : We have started a process where we are looking at constraints with the jurisdictions, and have identified and agreed with them on what some of those key constraints are in the southern system; but those issues will take many years to work through.

Senator HANSON-YOUNG: You have not started to model: if we remove this particular constraint we could add extra gigalitres?

Ms Swirepik : Not on top of the basin plan modelling run, which is our primary run at the moment. There was some exploration in leading up—

Senator HANSON-YOUNG: Just to clarify, is that primary run still the 2,750?

Ms Swirepik : It was the 2,800 run that was reported in our—

Senator HANSON-YOUNG: That has not changed?

Ms Swirepik : That has not changed.

Senator HANSON-YOUNG: All the work that you are doing at the moment has not changed that 2,800?

Ms Swirepik : No.

ACTING CHAIR ( Senator Fisher ): Senator Hanson-Young, you have a couple more minutes.

Senator HANSON-YOUNG: I would like some clarification on the money that will or will not be spent on continued buybacks, as outlined in the budget two weeks ago. There seems to be some confusion as to what is carryover and what will not be spent until 2016. Can we have a clarification around that?

Mr Parker : This is a similar question to that asked by Senator Birmingham in the opening session yesterday, so I will ask Ms Harwood to comment.

Ms Harwood : You are asking how much is available for water purchase in the budget papers; is that right?

Senator HANSON-YOUNG: Yes. Is it that no money will be spent until 2016 on buybacks except for this brought forward $40 million?

Ms Harwood : No, that is not the case.

Senator HANSON-YOUNG: Can you please clarify?

Ms Harwood : The place to find the budget for water purchase is page 101 of the portfolio budget submission. Basically that lists the capital appropriations to the department. Nearly all of that money is funds in bill No. 2 for the purchase of water entitlements. There is the appropriation amount, the amount that is being appropriated to that bill, and then there is an estimated expense line and that is the line that we work to in terms of water purchase. So for next year the estimated expense on restoring the balance is $139 million.

Senator BIRMINGHAM: Did I hear Ms Swirepik respond to Senator Hanson-Young that this final plan to be released next week is still at the 2,750 figure under the overall SDL variation?

Dr Dickson : As I said, we have not yet finalised. Through looking at all of the submissions and all of the consultations we have not seen any sort of change from the polarised views about how much water should be recovered. They remain pretty much the same. People can agree on some things, like having some basin plan and getting it resolved, but in terms of the amount of water it is just as different as it was in the beginning, and probably has been for some time. The fact is that we have looked at the new social and economic reports that have come out and analysed those. We have looked at any new science, certainly for surface water. We have the excellent Goyder report, which basically reported on our outputs and had very similar conclusions that we had, certainly about some of the Riverland sites, but in fact did not bring anything new or different about the science that we would need to reconsider the position. As I said, it has not been finalised but we are expecting to pretty much come out with the surface water—

Senator BIRMINGHAM: Are there any variations between SDLs?

Dr Dickson : No. They are concerned about the amount of water being taken out. They talk about that in a general term, rather than specific SDLs. The biggest issue for irrigators throughout the whole period has been many of them wanting to have the downstream proportion, the shared proportion, divided up between the catchments, or between the states. That was more an issue than the individual SDLs.

Senator BIRMINGHAM: Has the authority formed a final position on that debate about the downstream component versus the catchment components?

Dr Dickson : Our requirement under the act is that we are always looking at trying to minimise social and economic impacts and our view is that the market based approach does that. It means where there is not any particular scientific rationale for why you would need to get water from one place or another, which is effectively the in-catchment areas, then putting in an artificial mandatory requirement to have it come out of a particular catchment when it could come out from others does not necessarily allow the most economically efficient outcome and, therefore, is probably at a higher cost. However, this has been such an issue of concern about certainty. We recognise that it is probably one that ministerial council will want to consider and discuss further.

Senator BIRMINGHAM: Barring any dramatic change of heart from the authority over the coming few days, nobody will be surprised next week when they see the document about any particular changes in any aspect of the surface water SDLs?

Dr Dickson : That is correct.

Senator BIRMINGHAM: I am going to try to move through things quickly, given the time constraints. Have you completed the report on public submissions that the authority needs to publish?

Dr Dickson : We are pretty close to finalising it.

Senator BIRMINGHAM: Will that be published before the final report goes to the states?

Dr Dickson : Yes, it has to be.

Senator BIRMINGHAM: Will it be published or finalised before the final report is finalised?

Dr Dickson : They will probably be finalised together. They are all being worked on at the same time.

Senator BIRMINGHAM: Similarly, the report on the likely socioeconomic implications of any reductions in water availability as a result of the proposed long-term average SDLs, will that be finished and going to the states at the same time?

Dr Dickson : It will.

Senator BIRMINGHAM: Has CSIRO's submission of their final report analysing the proposed basin plan been completed?

Dr Dickson : I am not quite sure which report you are talking about?

Senator BIRMINGHAM: I am quoting from answer to Question on Notice No. 138, a question from Senator Joyce. It says:

CSIRO is expected to submit the final report to the A uthority before the proposed final Basin P lan is provided to M inisterial C ouncil for consideration.

Dr Dickson : I can check that, but I think you must be referring to the CSIRO's multiple benefits report, which was released—

Senator BIRMINGHAM: Yes, it is the multiple benefits report.

Dr Dickson : That was made public about six weeks ago. It was released before the end of the consultation period, so it was a couple of weeks ahead of that.

Senator BIRMINGHAM: We have touched on surface water SDLs. Groundwater SDLs has been another significant topic of commentary in submissions. It has also been a topic on which the minister, himself, has voiced an opinion expressing concern about the approach to the treatment of groundwater SDLs. Has the authority heeded those concerns of the minister and many others, and are there more substantial changes to those groundwater SDLs that we can expect in the final plan?

Dr Dickson : Certainly groundwater, as you have identified, has been a really significant issue. There has been a lot of misunderstandings and misconceptions about it. It is a very complex area. There have also been a lot of concerns about whether or not the assessments we made were conservative enough. We still had a few people saying they were too conservative. You will always get a different view on just about every other issue. On this one we did not have too many submissions from scientists, so we sought the advice of basically the key groundwater experts in Australia to look at the whole thing, but also to get their view particularly on the level of knowledge of some of these very large areas which were pretty uncertain and what sort of risk factors should be used in assessing groundwater. We held a forum a couple of weeks ago with those experts and we received some very good advice from them. As a result of that, as I said, we have not quite finalised it yet, but we are intending to make some changes on groundwater.

Senator BIRMINGHAM: So the surface water SDLs we can expect to look pretty much the same, but you expect to make some changes to the groundwater SDLs. Will those changes be downward movements?

Dr Dickson : Yes, most likely. The advice we received was that, given the uncertainty of the knowledge in some of these systems, even though some of the potential impacts with surface water were many decades into the future, with the state of knowledge it was probably better to be more cautious. In essence, that was the view.

Senator BIRMINGHAM: Is there a capacity under the act for the authority to easily vary those groundwater SDLs? I understand that you are shooting in the dark a little bit. You have expert opinion, but equally you are starting, in some cases, from a zero benchmark in terms of current use and attempting to get to an SDL in a relatively short period of time compared to the whole process overall and the history of surface water data and so on that is available to you. Is there a capacity for you to have some flexibility about groundwater SDLs?

Dr Dickson : We have flexibility across the board. In the first instance we were proposing through the 2015 review to revisit whatever new information might come to light there. There is also the capacity for states, if they do a lot more of their own analysis and work on particular areas, if they want to bring new information forward on areas that are unknown at the moment, to look at those. The plan, itself, has at least a 10-year and potentially even a five-year review cycle, and that is where we take that into account.

Senator BIRMINGHAM: Perhaps we can come to the nub of it. In answer to a different question that Senator Joyce asked, No. 166, the authority states:

Any substantive amendment to the Basin Plan would be in the form of a legislative instrument which could be disallowed by the Parliament. Such a proposed amendment would also be subject to public consultation, as for the Basin Plan.

So, in effect, the same process that you have just gone through, except for the guide that was obviously a voluntary action of questionable benefit. In the authority's opinion, what is a substantive amendment? Would changing the SDL for one catchment be a substantive amendment?

Dr Dickson : We have sought a lot of advice on this because it has been a big issue for a number of people through the consultation period and also it has come up in quite a few submissions, including a couple of state submissions, where they are wanting to have the potential to explore opportunities for more efficiencies or changes, but at that same time not having to have the amendment process, which is through parliament. A substantive amendment would be a change to the SDL. Basically the minor amendments are just matters of fact, fixing up a border or changing a baseline diversion limit, which is possible. It is small factual corrections. Those sorts of big amendments like changing an SDL would not be seen as minor under the current act.

Senator BIRMINGHAM: So changing an SDL for any catchment or any groundwater source would be a substantive amendment that would trigger the entire process again?

Dr Dickson : Yes.

Senator BIRMINGHAM: Is that a flaw in the act? From your communications with state governments, in particular but others as well about the groundwater problem, but perhaps even more so with surface water, does it restrict the flexibility of the authority to be able to deal with these matters?

Dr Dickson : It restricts the flexibility of the authority, but at the time the act was put forward parliament made the decision to have it that way. The purpose of the act at the time was to have it so that the authority did not make any discretionary changes of that sort.

Senator BIRMINGHAM: So the proposed 2015 review takes the form of an entire review for the legislative purposes of the act that has to go through a draft basin plan, or a proposed basin plan, public consultation and the like?

Dr Dickson : We would only go through with the amendment. It would not necessarily be the whole box and dice. The proposal we have to have an SDL adjustment would be the amendment, but it would be based on a whole range of inputs of new knowledge or environmental works and measures, all of those types of opportunities that people are seeking to explore. It would need to go through the same process, as set out in the act, of consultation and going to the ministerial council, backwards and forwards, until it gets to parliament; that is correct.

Senator BIRMINGHAM: Is it correct that the review process advocated by the authority is for the SDL review of the basin plan in 2015 but to review the environmental watering plan and salinity management plan in 2017?

Dr Dickson : That is what we are proposing. It is to have it as an SDL adjustment review, not a review of the whole plan. The review of salinity, water quality and environmental water is the five-year review that is required in the act. Assuming it comes into play in 2012, it is five years from then.

Senator BIRMINGHAM: Those are statutory reviews. Is there a capacity to bring them forward and do them in sync with the SDL review? Would there be some benefit in conducting those changes simultaneously?

Dr Dickson : There could be. By that period you would have had a lot more experience with implementing the environmental water plan and salinity management plan. Certainly there could be benefit in having some of that input to go into an SDL adjustment review, because that may affect the reconsideration of the SDLs at that point. That is a possibility.

Senator BIRMINGHAM: Professor Mike Young has made a submission and, indeed, addressed the issue publicly in Adelaide, suggesting that the tenure of water recovered under this process will actually be less secure than environmental water available today. Has the authority looked at those submissions of Professor Young and considered their validity or otherwise?

Dr Dickson : Yes, we have. There seems to be some misunderstandings from Professor Young on how the system is going to work. The held environmental water that is purchased has as much security as the irrigation entitlements that were purchased, so there is not any diminution of its security.

Senator BIRMINGHAM: Has the authority and/or department met with Professor Young?

Dr Dickson : I have in the past.

Senator BIRMINGHAM: In the last few weeks?

Dr Dickson : No.

Senator BIRMINGHAM: Are there any meetings scheduled?

Dr Dickson : I think he is in the UK.

Mr Parker : No to both questions.

Senator BIRMINGHAM: The minister offered a meeting at a public forum that both the minister and I spoke at in Adelaide in response to a question from Professor Young, so I will suggest that if a request has not been made, it would be good as the minister thought there would be some benefit in having all of those with their technical understandings around the same table to clarify these apparent technical differences of interpretation.

I would like to turn to the situation around Lake Albert and steer off the plan just briefly. It is utterly unacceptable at present that Lake Albert still has the salinity levels that it has this long into a very high flow period. What is the authority's current understanding of those salinity levels and what can be done to urgently bring them down?

Mr Dreverman : Lake Albert is the last part of the basin to recover from the extremes of drought because it is a lake that does not have a through flow. It is only connected to the Murray system through a narrow channel, through what is called the Narrung Narrows back to Lake Alexandrina. So for its refreshing it requires storm events mainly to create wind driven currents through this very long, narrow channel. We always knew that, when we got to the end of the drought, because there had been such an accumulation of salt in Lake Albert through the drought it would take some time to recover. It is recovering a little bit slower than we would have liked. We have been operating Lake Alexandrina up and down to try to push water in and then lower Lake Alexandrina to draw water out. The salinity has dropped to about 4,500 EC, which is still too salty for landholders to use for productive irrigation purposes and stock watering.

Part of the drought response was to connect that peninsula with a pipeline. The pipeline comes from Tailem Bend, I think, but certainly further up the Murray, so they have access to potable water, but it has not recovered for large scale irrigation use just yet.

Senator BIRMINGHAM: Is the authority or the department aware of any requests for feasibility or EIS into possibly connecting Lake Albert with the Coorong, providing a potential for a flow through, or a through flow, as you put it, Mr Dreverman?

Mr Dreverman : That possibility has been looked at on a number of occasions, so it has been looked at previously. A number of mainly local landholders have put together a five-point plan; that is one of the five points that they have circulated widely to various agencies in Canberra, but also extensively through the South Australian water industry. We do not have funding for that project at this stage and I am not aware whether any other agencies have agreed to fund any such studies. It is not in our corporate plan and we can only do what is in our corporate plan.

Senator BIRMINGHAM: Has the department looked at the merits in funding such an EIS into a connector, and is anybody aware as to whether one has ever actually been done before? There may have been proposals before, but has an EIS ever been done?

Mr Slatyer : The government, to our knowledge, has not received any formal request for such a study to be undertaken. The most recent time that the comprehensive solutions for that part of the system were reviewed under our auspices was through the long-term plan for the Lower Lakes, which was issued by South Australia a couple of years ago. It discussed a range of possible treatments for the Lake Albert area, but since then there has not been a formal request made to the department, to my knowledge.

Senator BIRMINGHAM: What do you define as a formal request?

Mr Slatyer : A proposal that we undertake or fund any particular analysis to look at a connecting pipeline or channel.

Senator BIRMINGHAM: So a letter to the minister from a local group would constitute a formal request?

Mr Slatyer : No. The formal request that would normally come in seeking funding support would be through the state government, which would have to facilitate and make happen such a project.

Senator BIRMINGHAM: That is an important distinction. So, for it to be treated as a formal request it would need to come from the state government?

Mr Slatyer : I was using the word 'formal' in that context, but of course if there was a written request from any other entity, then that would also be considered.

Senator BIRMINGHAM: A connector from Lake Albert to the Coorong and provided that flow through would, of course, subject to environmental assessments as to its impact on the Coorong, in terms of water quality in Lake Albert have the potential to provide higher water quality in Lake Albert, regardless of the volumes flowing past and well into the lakes, would it not, because it provided that flow through?

Mr Dreverman : Yes. From an engineering perspective it would work to change the water quality in Lake Albert, but at the same time it introduces into the Coorong highly turbid river water at a place that is not accustomed to receiving that. The ecological challenges and impacts of that have not been assessed.

Senator JOYCE: Did the MDBA receive legal advice from the Office of International Law?

Mr James : We received advice from the Office of International Law prior to last year's proposed basin plan being put out. We are getting advice from the AG's Department in relation to the plan that we are bringing out next week, but we have not received that yet.

Senator JOYCE: How many pages of legal advice was there?

Mr James : I would have to take that on notice.

Senator JOYCE: Has the MDBA received specific legal advice on whether the draft plan complies with the Water Act?

Mr James : In terms of the plan that we intend to release next week, we are getting advice from the AG's Department on that, but we have not received that advice yet.

Senator JOYCE: So you have not received that advice yet?

Mr James : Not yet, no.

Senator JOYCE: Would it not be a good idea to get that advice before you release it?

Mr James : I agree, yes.

Dr Dickson : That is the intention.

Senator JOYCE: So you are going to have that advice before you release it?

Mr James : That is correct.

Dr Dickson : We are going to have that advice before we sign off on the final—

Senator JOYCE: What has been released to the states is happening without the legal advice?

Dr Dickson : No. We will have the legal advice before we finally sign off on this next revised plan.

Senator JOYCE: Which is next week.

Mr James : The legal advice is imminent.

Senator JOYCE: It would have to be imminent. It would have to happen in the next day or so.

Dr Dickson : Yes.

Senator JOYCE: What happens if it tells you that it is not compliant?

Mr James : That is a matter for the authority to consider. That is a judgment that they will have to consider.

Senator JOYCE: To consider as in: what is the point of putting this out because it is not compliant?

Dr Dickson : We would need to have a look at the advice, but if it was not compliant with the Water Act then we would need to revisit the proposal.

Senator JOYCE: Panic?

Dr Dickson : No. We would need to revisit our proposal.

Senator BIRMINGHAM: When is the authority's next meeting scheduled?

Dr Dickson : It is meeting tomorrow.

Senator JOYCE: This thing could hit the deck. If it is not compliant, there is no point in proceeding any further, is there?

Dr Dickson : I would be very surprised if it was going to propose any surprises because we have been working with the AGS through the whole period, over the last several weeks, in doing the proposed revisions to the plan, so because we have been involved with them the whole way through we are not expecting any surprises, but until you get it, of course—

Senator JOYCE: What was the nature of the advice that you sought? Was it just for Ramsar, for the Water Act or what was it for?

Dr Dickson : The advice was across broad compliance with the act.

Senator JOYCE: A broad compliance with the act?

Dr Dickson : Yes.

Senator JOYCE: I asked a question last estimates as to whether the MDBA had sought legal advice on whether they had the requirements of the Water Act to include an environmental watering plan. Your response was that the authority received all appropriate external legal advice prior to the release of the draft basin plan.That is not really an answer, so I will ask the question again: has the MDBA sought legal advice on whether they had the requirements of the Water Act to include an environmental watering plan?

Dr Dickson : My answer would be the same. This is in relation to the plan that we have put out for consultation?

Senator JOYCE: Yes.

Dr Dickson : We had advice from the AGS across all elements, including the environmental watering plan and the salinity plan—all elements of the basin plan. They gave us advice across the board.

Senator JOYCE: Have you been in consultation with the Attorney-General's Department about whether the plans comply?

Mr James : As Dr Dickson said, we have been in close liaison with the Australian Government Solicitor for a long period and they will be providing the advice in terms of the consistency or otherwise of the plan with the act.

Senator JOYCE: So all the state bodies will have access to that legal advice as well?

Dr Dickson : No. That is just legal advice to us.

Senator JOYCE: Just to you?

Dr Dickson : Yes.

Senator JOYCE: Will you give a summary of it to the state bodies?

Dr Dickson : No. We do provide a copy to the department.

Senator JOYCE: Will the state bodies know whether the plan is compliant or not?

Dr Dickson : They can get their own legal advice.

Senator JOYCE: So what we know will stay just with you?

Dr Dickson : Yes. That is how you treat legal advice. We do not share it.

Senator JOYCE: So if you get legal advice that is not compliant, you can just keep that to yourself?

Dr Dickson : The legal advice that is provided to us is privileged legal information; we do not share it.

Senator JOYCE: So the answer is yes, if you got legal advice that it is not compliant, you could just keep it to yourself?

Dr Dickson : We would not release any advice to outside parties.

Senator JOYCE: That is interesting. When you are modelling for water—I am sort of switching back here—with the amounts of water that you require, do you require it at a certain point or from anywhere along the system? For instance, in my area, the Lower Balonne-Condamine, can you get that water from anywhere, or do you have to get it from certain areas?

Mr James : It kind of varies around the place, but in general it is safe to say that there is no particular requirement of a precise location where water must be recovered from. It is reasonably open.

Senator JOYCE: As an example—I know you are aware of it because we have had this discussion before—the Lower Balonne-Condamine wants an extra 100 gigs and I think we are looking at the Narran Lakes and the Culgoa floodplains, so is it 100 gigs measured from a certain gauging station or 100 gigs from anywhere in the system? How do we come to that idea of 100 gigs? Where is it measured at, or is it just 100 gigs that you bought?

Mr James : The way it is expressed in the plan is 100 gigs from within that particular catchment, so we do not specify where.

Senator JOYCE: So if you buy 100 gigs from St George, and I hope you do not, then that will do the job?

Mr James : That is the way the plan is currently structured. That is correct.

Senator JOYCE: Even though you have a water and asset that is hundreds of kilometres away from that—the water will probably never get there. Doesn't that seem a little bit ridiculous?

Mr James : One of the things we are intending to do in the 2015 review is to work with the Queensland and New South Wales governments and in groups such as the ones you know about. To go into that question in more detail, we are interested to look at whether there is more precision about the location where water can be sourced from. Perhaps that means that overall there is less water that needs to be recovered. We are quite open and, I guess, keen to work with people to look into those issues more closely.

Senator JOYCE: Are we buying this water for the purpose of environmental assets? Or are we buying it for the sake of buying it?

Mr James : It is to return water to the system, not just at particular assets.

Senator JOYCE: Just anywhere?

Mr James : But also to the river system more generally.

Senator JOYCE: So when we nominate these 2,442 assets we could just buy the water anywhere and it will somehow get there.

Mr James : Those sites are all linked in some shape or form. Water flows downhill.

Senator JOYCE: I am glad we have cleared that one up. I am working on this naive belief that if you nominate sites you would actually want to get water to those sites. But if you just buy water from anywhere, that is not the case, because you have absorption, evaporation and a whole range of things that happen between where you buy the water from and where you want to get the water to. If you just buy it from anywhere it is not going to get there, is it?

Mr James : That is actually quite a complicated question. In the more regulated parts of the system it matters less where you recover the water from, because through management of storages and so on there are degrees of freedom in terms of how to deliver water to particular sites.

Senator JOYCE: So, I can buy the water that you want for the Lower Lakes from Bourke, and that will do the job. All sorted?

Senator Conroy: Do you want to ask and answer your own questions at the same time?

Senator JOYCE: The question I am asking is quite obvious.

Senator Conroy: You asked and answered your own question.

Senator JOYCE: You have to buy it from a certain area to get it to a certain site and there has to be a strong link between the two?

Mr James : That is correct.

Senator JOYCE: So, it is not a case that you can just buy the water anywhere. You have to buy it specifically for that site.

Mr James : I think behind your question is—

Senator Conroy: Never try and second-guess him. He is very tricky.

Mr James : The basin plan is not only about key sites. It is about the water that flows between sites. It is about protecting the system as a whole, not just, in a sense, cherry picking particular sites.

Senator JOYCE: So, I can just buy the water anywhere?

Mr James : At the moment, the way the plan is written, we have not specified where the water must come from.

Senator JOYCE: When we need to buy 100 gigs from the Lower Balonne-Condamine, they can buy that from Surat?

Ms Swirepik : No.

Senator JOYCE: No? Minister, what is happening here?

Ms Swirepik : It is not quite as black and white as that. In parts of the system, as my colleague has indicated, there is a high level of connectivity. In other parts, as you understand, there is much less connectivity. You cannot source water from the north of the basin without tremendous losses and expect that to get down to the south.

Senator JOYCE: I imagine you might be measuring it at a gauging station. That would probably be the place where you measure water, a water gauging station?

Ms Swirepik : Yes.

Senator JOYCE: I thought so. To get 100 gigs of water past the gauging station, the further upstream I go the more water I have to buy.

Ms Swirepik : Potentially, yes, in a lot of the catchments.

Senator JOYCE: So, that would mean that even though you might nominate 100 gigs to be purchased from the system you might be buying 300 gigs and going upstream to buy it.

Ms Swirepik : In theory, yes. That uncertainty was identified in our hydrologic modelling report, particularly for the catchment that you initially asked about. The response to that, as my colleague outlined, is that we would be working with the Queensland government to try to narrow down that uncertainty. Some modelling was undertaken in-house to look at the difference between providing water to the Lower Balonne flood plain and to the Narran Lakes, dependent on where you actually recovered the water from in the catchment.

Senator JOYCE: Mr James, that makes a huge difference to the socioeconomic effect, because if you start buying a lot of water upstream, people look at the plan and think they have 100 gigs that is going to come out—900 gigs minus 100 gigs; you could probably wear that. And if you start buying 300 gigs and you buy it from a town such as St George, which only uses 430, we all go broke.

Ms Swirepik : The plan has an outline that it might buy 100 or 300. There is a specific in-catchment number for the Condamine.

Senator JOYCE: Do you have your grey area, your X factor as well?

Ms Swirepik : We have X factors across the basin in modelling a lot of the outcomes.

Senator JOYCE: When do the X factors become real numbers?

Ms Swirepik : As the implementation occurs and we understand all of the reality of what is happening through the plan.

Senator JOYCE: A startling reality in some instances. In the modelling that has been done have you taken into account that this water might come from Dirranbandi, in my area, or from St George. If it comes from St George there is going to be a vastly greater socioeconomic effect. The further upstream you go, the greater the socioeconomic effect, because you need more water. How did you put that into your modelling?

Mr James : Those sorts of things have not been modelled—or not to a significant extent. As I mentioned, this would be a piece of work that we would like to do as part of the 2015 review.

Senator JOYCE: It would have been handy if you had had someone with on-the-ground experience. You probably could have put this into the modelling, and they might have actually suggested it to you. I believe that this was actually brought up by one of those pieces of regional bucolic kitsch, who actually did say, 'The further upstream you go, the worse the result is going to be on the socioeconomic effect.'

Senator Conroy: I am not sure if that was a question, a statement or a stream of consciousness. Do you have a question?

Senator JOYCE: If you had paid more attention, you would probably know.

Senator Conroy: I was listening to every word you said. Do you have a question?

Senator JOYCE: How are you going to pay back the money for your NBN? Where are you actually going to store this water that you are buying? Where are you going to keep it?

Mr James : Sorry, which water are you talking about?

Senator JOYCE: The 2,750 gigs or even more. In this instance we have just shown that the further upstream you go the more you have to buy. You might be buying vastly more than 2,750. Where does this water actually get stored?

Dr Dickson : Could I just clarify this. The amount of in-catchment, as Ms Swirepik said, is 100 gigalitres for the Condamine-Balonne. It is not going to be 300 gigalitres; it will be 100. What we are planning to explore—and we have already had quite a few discussions, as Mr James has said, with the Lower Balonne working group and Queensland, in particular—is how you might be able to recover water more efficiently. As you rightly said, the further upstream you go the losses are so much that it does not make it feasible to reach the objectives you are after. There have already been some preliminary discussions on that. It is not a simple matter. We will do this additional work over the next three years that we are working with Queensland on. We have an officer in MDBA who is stationed in Queensland specifically to work on that particular issue, as well as the broader northern basin issues we intend to pursue.

Senator JOYCE: I understand that. But as you would understand from my position, your statement, which I believe is correct, is completely different from what Mr James told me at the start—that I could just buy it from anywhere.

Mr Parker : Some of the questions that you have been directing to the authority also have a mapping across to the department's responsibilities in terms of recovering water for those environmental purposes.

Senator JOYCE: Anytime you think you—

Mr Parker : I am happy to volunteer some information that may be of interest to you.

Senator JOYCE: If you can break into where the minister is, I would be only too happy to hear from you. We have still got to go through this process. You have water stored in Copeton Dam at the moment, have you not?

Dr Dickson : Perhaps Mr Parker could answer that question.

Senator Conroy: That is right. There is a little bit of information that might actually be useful for you rather than listening to yourself talk and answering your own questions.

Senator JOYCE: You just keep working out how you are going to pay back the $50 billion for your ridiculous telephone company.

Senator Conroy: You might allow the officer to finish the answer he was giving you.

Senator JOYCE: Once you work out how to run your ridiculous telephone—

Senator Conroy: If you would stop talking you might get an answer.

Senator JOYCE: So, we currently have water in Copeton Dam?

Mr Parker : I was going to volunteer to let the committee know through Ms Harwood, to the extent that we have already acquired water in the Condamine-Balonne, how that has been acquired and the issue of location.

Ms Harwood : For the tenders we have run so far in the Condamine-Balonne each parcel of water offered to us is modelled with the assistance of Queensland DERM as to the yield to the environmental assets identified, so basically the Culgoa floodplain and Narran Lakes. In making choices about which water we buy we value water closer to the environmental assets higher, in simple terms. Each parcel offered is modelled in terms of the environmental watering benefit that will yield for the key environmental assets. It is not just any water that we buy. We differentiate in favour of water that is closer to the environmental assets.

Senator JOYCE: How do you determine the strategic priority of that water you are purchasing? How are you actually going to do it in a place such as the Lower Balonne-Condamine? There has been water for sale from Cubbie Station. There has been water for sale from Ballan. Where are you positioned with all of that? Have you purchased any?

Ms Harwood : Basically, we get offers from various places in the system. Each of them is modelled by Queensland DERM to assist us in seeing how much water would arrive at the environmental assets if those entitlements were transferred to environmental use. That essentially is used to tune our assessment of the value of the offers. So, if a yield from a license is greater, we will value it greater than if it is a long way away from an environmental asset and DERM has modelled it as having a low yield to those assets.

Senator JOYCE: How much water has been offered to you for sale in the Lower Balonne-Condamine?

Ms Harwood : I would have to take the offer figure on notice. We have purchased a certain amount from the tenders we have run. I am not sure whether I will have the offer figures with me here. I can tell you how much we have acquired.

Senator JOYCE: I do not want to know the personal details. I just want to know the amount. I do not want the personal details of who has actually put in an offer, because obviously that would be in-confidence.

Ms Harwood : What I have with me is the amount we have actually recovered that is under contract.

Senator JOYCE: About five?

CHAIR: I just want to draw to your attention that it is two minutes until the break.

Senator JOYCE: Okay.

Ms Harwood : The secured entitlement purchases in terms of average annual yield is 21.735 gigalitres.

Senator JOYCE: What are you going to do when you get to a point where the environmental asset has been fully watered and you have water in the dam, and the dam has a limited capacity? What are you actually going to do with that water? Are you going to sell it back to the market?

Ms Harwood : Some of these are flow entitlements. When the river is at a certain height the person holding the license has a right to pump.

Senator JOYCE: Yes, they are harvesting licences.

Ms Harwood : They are harvest licences.

Senator JOYCE: But the actual allocation?

Ms Harwood : They are not stored in a dam as such. It means that that water is not taken out of the river if the entitlement is converted to environmental use.

Senator JOYCE: That is one of the conjectures. You have bought some very high flow entitlements, which possibly in some instances will never be used. You have managed to buy them. What are you going to do with your allocation? Where are you actually going to store this water?

Ms Harwood : For most of these entitlements it is not water that is stored in a dam per se. It is harvest rights in an unregulated system.

Senator JOYCE: You actually do have water stored in dams. I can assure you of that.

Ms Harwood : Elsewhere in the system we do. I can ask the Commonwealth Environmental Water Holder to handle it.

Mr Robinson : You are correct. We are also now outcome 6 in the department, so we will be on later. We are holding water in the dams at the moment in the regulated parts of the system. The water entitlements that are purchased as part of the holdings are the same as other water entitlements and they come with the same carryover rights. After two wet seasons, we think our use and therefore our carryover is approximately the same as irrigators and so we will be carrying over water at the end of the year.

Senator JOYCE: Does this mean that you will—

CHAIR: Order! We have now come to the break. We will adjourn until 4 pm and this group will continue questions.

Proceedings suspended from 15:45 to 16:00

Mr S layter : While we are waiting, could I clarify an answer I gave to an earlier question, please.

CHAIR: Yes, of course.

Mr S layter : Senator Birmingham asked about formal submissions that have been made to the government about the Lake Albert works that would connect Lake Albert to the Coorong. I said I was not aware of anything from the general public on that matter, but there was a letter from the Meningie Narrung Lakes Irrigators Association to the minister with a five-point plan with suggested works, and one of those points included the connecting work to the Coorong. So for clarification I would like to put on the record that the department does have a copy of that representation.

CHAIR: Good. Thank you, Mr Slayter.

Senator XENOPHON: Could I put this to Dr Dickson at the MDBA. In a recent committee hearing in Mildura I raised concerns in relation to the way baseline diversion limits have been calculated. These concerns have been flagged to me by various groups in the Riverland and irrigators including Central Irrigation Trust. It is their understanding that when a baseline cap was introduced in 1995 the levels in New South Wales and Victoria were based on the level of extraction due to a lack of metering. In contrast, with South Australian meters, a decision was made to cap usage at 90 per cent of entitlements, and at that time actual usage was about 82 per cent of entitlements. However, it has been put to me that in setting the baseline diversion limits it appears the authority has shifted the starting point to actual use as opposed to entitlements. Can the authority comment whether that concern is correct or not?

Dr Dickson : I might ask Dr McLeod to answer that question.

Dr McLeod : Both the cap and the baseline diversion limits are based on levels of use. There are different measures. Part of your question went to the way that use was being quantified, whether through meters or through estimation. Nonetheless, the cap in 1995 in New South Wales, Victoria and South Australia was about trying to estimate the 1993-94 levels of development being used, and likewise we are doing the same with baseline diversion limits. We are trying to look at the level of use that the current arrangements provide for.

In the case of South Australia, the baseline diversion limit reflects the settlement of a cap that allowed for increases in activation of the entitlement in South Australia from around 80 per cent to 90 per cent. That was a decision made at the time of the cap, which we have continued through the process of estimating the baseline diversion limit in South Australia.

Senator XENOPHON: Are you saying those concerns are not valid?

Dr McLeod : There appears to be misunderstanding in relation to that. We are happy to take on notice further advice in relation to that.

Senator XENOPHON: If you could. Dr Dickson, what contribution do you expect South Australia to make after end valley targets are met? As I understand it, South Australia has to reach a target of 101 gigalitres and then there is a further 971 gigalitres net savings that need to be made based on the draft plan from the southern connected basin.

Dr Dickson : On our current proposal we have that as a market based approach, and so the amount of South Australian irrigators who wish to sell some or all of their entitlement would be the additional amount that South Australia would do. As I mentioned in an earlier session, the issue of whether or not you attribute part of that shared reduction to individual catchments or states has been a big issue through the whole consultation. We are still considering the position, but our view is that a market-based approach is the best way. So that means, to answer your question, I cannot give you a definitive answer. It all depends on whether or not there are any irrigators who want to sell.

Senator XENOPHON: We have still got very limited time. To what extent do you say that the market-based approach will be skewed by virtue of the fact that the water efficiency program is giving irrigators, mainly in the eastern states, the opportunity to make water efficiency savings to get a grant, and they can keep half the water and the other half goes back to the environment? To what extent does the authority consider that in the policy framework in the context of those irrigators who have already reached efficiency targets?

Dr Dickson : I understand your question, but I guess the answer is that we do not make a consideration of difference in efficiency. Many districts claim that they are very efficient and so it is not really a judgement we can make on efficiency.

Senator XENOPHON: No, but you can establish how efficient an area is and when it became efficient, can't you? That is a matter of fact, isn't it?

Dr Dickson : You could presumably do that. But I guess, as to how you might rank efficiencies, that is not really our job. It is more to look at what is a sustainable level of extraction rather than who is the most efficient.

Senator XENOPHON: Finally—because I can see Ms Harwood is here and I had a couple of questions for her in relation to efficiency programs—I know that Mr Knowles, your chair, says that and everyone says they are more efficient. The fact is that you are capable of establishing how efficient an area is and when they became efficient. That is a matter for historical record, isn't it?

Dr Dickson : I guess it is a possible thing we could do, but I guess, firstly, it is not what we need to do, which is establish the sustainable level. Secondly, I would be really surprised if we could come up with a ranking of efficiency that we would have everyone in the basin agree with.

Senator XENOPHON: But you can see the importance in terms of issues of equity?

Dr Dickson : I can understand people's views in this, but I think the reality of trying to achieve an efficiency ranking that everyone agreed to is pretty slim.

ACTING CHAIR ( Senator Fisher ): In the interests of equity, Senator Xenophon, are you about to wrap up?

Senator XENOPHON: No, I had a couple of questions to ask.

ACTING CHAIR: Ask them quickly, please.

Senator XENOPHON: Ms Harwood, I notice there has been an expansion of the on-farm efficiency program. Could you please provide an indication of how much of this funding has previously been allocated to South Australian applicants and what percentage of total funding that would be. I am happy for you to take that on notice.

Ms Harwood : There are two tranches of funding for irrigation infrastructure works in South Australia. One is through the private irrigation infrastructure program, which is unique to South Australia, and that money is only available in South Australia. Some $14.4 million has been approved for projects under that. Under the On-Farm Irrigation Efficiency Program, so far $15 million has been awarded to delivery partners in South Australia for projects there. So that is a total of about $30 million for irrigation efficiency funding. Relevant to your previous query, there is still good interest in South Australia from South Australian irrigators in doing upgrades to improve their irrigation efficiency.

Senator XENOPHON: Finally, I will put some questions on notice about an almond grower who has approached me about some disturbing delays in payments, but perhaps I will put that in writing to the minister. Minister Burke has recently verbally indicated in a meeting at the Adelaide Town Hall that there are some issues that need to be addressed in relation to the eligibility criteria for this program, and I have raised this concern on behalf of South Australian irrigators. Can the department indicate whether this issue is being addressed? The minister has acknowledged that there is a difficulty in accessing those funds.

Ms Harwood : There are ongoing discussions with the South Australian government about how the remaining funds available for state priority projects in South Australia will be used. Part of that funding is currently committed or allocated to the private irrigation infrastructure program. The South Australian government is looking at options for how it considers the remaining state priority project funds should be spent, and so there are discussions on that matter as to what sorts of programs would work best.

Senator XENOPHON: These discussions have been going on for how long?

Ms Harwood : They are ongoing. There is a recent new proposal from the South Australian government for a project called the Water Industry Alliance. The Water Industry Alliance has put forward a concept of a program that is under discussion.

Senator XENOPHON: Chair, I take it you are shutting me down now. Is that the case?

ACTING CHAIR: I shall take your invitation, yes, Senator Xenophon.

Senator XENOPHON: No, it is not an invitation. Is there any more time?

ACTING CHAIR: I shall, yes. I am on my instructions from the real chair, thank you.

Senator McKENZIE: I appreciate the committee's indulgence. I am on a similarly strict time line. I refer to a quote from Mr Craig Knowles at an MDBA consultation meeting in Swan Hill on 22 February this year. I would like to table a full copy of the quote, because time will not permit me to read the whole thing out, but essentially Mr Knowles said, 'If we take 30 per cent of your water out of this community, it will have a damaging, severe, devastating effect,' and that they had asked the government not to do it this way. He also said, 'We want there to be a shift into an investment in infrastructure and investment—into those sorts of programs.' I want to know if Mr Knowles's statement was an acknowledgment that Victoria has already contributed enough water to the Basin Plan through the buyback.

Dr Dickson : I am just having a quick read of the quote. I think Mr Knowles's statement is very similar to the statements he has made around the basin, which are about the importance of maximising the investment in infrastructure as that is the type of water recovery that actually puts money into communities rather than reducing the water available to communities. So that statement reflects that broad position that the authority has had for some time.

Senator McKENZIE: Could you explain how investment in on-farm efficiency systems improvement, environmental works and measures are individually accounted for in the total system diversion reduction of 2,750 gigs.

Dr Dickson : What was the question?

Senator McKENZIE: How the investment on those on-farm efficiency systems improvements is individually accounted for within that number.

Dr Dickson : That number is the estimated additional water for environment since 2009. Since that time there has been a lot of recovery, which we reported in the proposed plan, and there has been more since. A large amount of that recovery has been through purchasing, and also a very substantial amount now is from infrastructure recovery. We have reported and we will report the up-to-date figures on how much has already been recovered, and there will be a detailed table which will explain where those recoveries have come from.

Senator McKENZIE: I think there is a lot of debate around who has met their end-of-valley targets already and who has not, but in terms of the budget—and I will put some questions on notice around that—how are the recent budget deferrals of the $941 million affecting the rollout of those environmental efficiency programs?

Dr Dickson : That is a question for the department.

Senator McKENZIE: The budget defers some spend—the $941 million. Just how will that actually affect the rollout of the environmental efficiency programs?

Ms Harwood : Firstly, I am not sure where that $941 million figure came from. I cannot find a way of arriving at it from the actual changes reflected in the portfolio budget statement. But, yes, with some moneys for the Sustainable Rural Water Use and Infrastructure program there has been some movement of funds. That is more a reflection of delays in program rollout due to a lot of wet weather—so wet weather delays in actual construction—and approval processes for some projects, but it does not affect the actual delivery of all the works we have under contract and coming in under contract. So there is sufficient budget there in the SRWUIP fund to deliver all the projects that we have scheduled and contracted and that are coming in and being negotiated at present.

The additional funds for on-farm are included in that SRWUIP appropriation, as are the additional funds for the strategic subsystem retirement. The ratio of funding for infrastructure to buyback is now much in favour of infrastructure; that is, the amount of funds available next year for expenditure on infrastructure is, I think, more than three times—I can take it on notice to confirm it—what is available for purchase of water direct.

Senator McKENZIE: When you are looking to purchase water, you did make a comment earlier around purchasing water closer to the environmental assets you are wanting to water. I am just wondering if a similar criterion was around the security value, I guess, of the water as you purchase it, if you had a criteria around if you are buying high-security or low-security water.

Ms Harwood : The comment I was making was in relation to the Condamine-Balonne. In the southern connected system the water is much more fungible; that is, a gigalitre of water purchased in the southern connected system can be used year to year on different assets. The locality of the purchase is less relevant than it is in an unregulated system. Sorry, what was the second half of your question? The reliability. We look to buy a balanced portfolio of entitlements across the spectrum of reliability, from high security, general security and low security. In each of the systems there is a different balance of the actual entitlement base.

Senator McKENZIE: Sorry, I will stop you there, Ms Harwood—only because of time and because I am conscious other people are in the queue. I know what you have done in the past but, in terms of the buybacks ratio going forward, do you have a security sort of rate and criteria that you are using on how you value the water, in terms of your purchase? I will put it in a question on notice. It will be fine.

Ms Harwood : We would continue to look to acquire a portfolio that reflects a balance of reliabilities of water security against those licences.

Senator WATERS: Thank you, folks, for your evidence. I hope we have the right folk at the table. I am going to ask about groundwater impacts of coal seam gas and then about Ramsar wetlands.

Dr Dickson : Acting Chair, while you are waiting, could I just correct a statement I made earlier, or rather give you the correct figures for the numbers of authority meetings that we have had? Since the closing of consultation on 16 April we have had four meetings. One of those meetings was a two-day meeting.

ACTING CHAIR: Thank you.

Senator WATERS: On coal seam gas, the Queensland Water Commission has just—I think it was last week—released its draft underground water impact report for the Surat Cumulative Management Area. Are you generally familiar with that report? 'Generally' is probably sufficient. As you would know, then, it goes to cumulative bore draw-down levels and other groundwater impacts and it predicts that in some cases in good food-producing land bores will drop by at least 150 metres and will take the rest of the century to even recover by half. The question that I am interested in is that it reaches a conclusion about the cumulative impacts on groundwater which is actually different from the conclusion reached by Arrow Energy in their environmental impact statement seeking federal approval under the EPBC Act. Again, on the cumulative impacts of coal seam gas on groundwater in the Surat. Is the department aware of that discrepancy and can you explain it?

Mr Parker : We will have to take that question on notice. The specifics of what is in the Arrow environmental impact assessment we would need to refer to the part of the department that does the EPBC process.

Senator WATERS: That is fine. It is a tricky question. The flow-on question, which you might also need to take on notice, is: which information will the Commonwealth rely on? Will it rely on a Queensland government statutory body assessment which says cumulative impacts will be so much or will it rely on that Arrow EIS, which in fact says cumulative impacts will be worse—counterintuitively, given that it is a proponent-driven document? That is my question: which will the Commonwealth rely on when it is doing its various assessments? If I may ask a supplementary question, will those documents be referred to the new independent CSG committee once it is established, assuming the bill passes, to examine? Sorry, Dr Grimes; you have got something?

Dr Grimes : I was just going to say that we would rely on the best possible information that was available at the time. We would obviously have to make an assessment of what we considered to be the best possible information, and of course we would be relying also on advice from the Independent Expert Scientific Committee in future matters that are being considered.

Senator McKENZIE: Thank you. Perhaps in that question on notice reply you could outline how you identify which is the best information, the criteria and parameters.

Dr Grimes : I am happy to take that on notice.

Senator WATERS: I want to move now to Ramsar, and I am conscious of the time. I alluded to this the other day, so I am hoping you have had some notice of it now. Has the Ramsar secretariat contacted the federal government over its failures to report adverse changes to any listed Ramsar wetlands, particularly to the Gippsland Lakes in Victoria—or to any other Ramsar sites, for that matter?

Mr Slatyer : In regard to the Gippsland Lakes, the Ramsar secretariat did pass on to us a notification by a third party of changes in the character of that lake system. That is the normal procedure: that is, whenever a third party approaches the Ramsar secretariat directly with a proposition that there has been a change in ecological character, the secretariat then refers that to the department. In the case of the Gippsland Lakes system we then go through a process to establish the validity, I suppose, of that claim. With that particular claim we have undertaken an assessment which is currently with the Victorian Department of Sustainability and Environment for checking and confirming that the conclusions and information in that report are okay with them. As soon as we have their feedback we will finalise that report and submit it to the Ramsar secretariat.

Senator WATERS: Will that report be public?

Mr Slatyer : Yes, it will be public as soon as it is submitted to the secretariat.

Senator WATERS: Could you possibly also take on notice and table for us if the Ramsar secretariat added any matters of substance when they referred to you that third-party information that had been sent to them.

Mr Slatyer : I will take that on notice.

Senator WATERS: Thank you. I am pleased to hear that you did act on those concerns and have now undertaken some study, so I will await the further details when they are made public. I am interested in just two final questions, if I may. My apologies that I have been talking about this all day, but I will continue to do so. When the approvals bilaterals roll through according to the March 2013 deadline, can you confirm for me that the responsibility for Ramsar wetlands approvals and projects that might significantly affect them will then lie with the states rather than the federal government?

Dr Grimes : Again, I think this goes back to the evidence that I gave previously. The Commonwealth and the states will be working together on developing the implementation arrangements for the approval bilaterals.

Senator WATERS: Lastly, has the government sought any advice on its international obligations in terms of Ramsar and whether it is appropriate and lawful and not in breach of our international obligations to defer that responsibility to the states if in fact that deferral does eventuate?

Dr Grimes : Again, governments will be very mindful of meeting our international conventions and any arrangements that are established, so that is work that still needs to be done.

Senator WATERS: I do not want to run into the same roadblock as we did earlier today, but are you able to give me some more information about the nature of any advice that has been provided on that point?

Dr Grimes : No, we have not provided very specific advice on that very specific point, but there are a whole range of issues that will need to be worked through with the states on the framework for the bilateral agreements.

Senator WATERS: Thank you very much. That is it for me, thank you.

CHAIR: Mr Cameron, you gave a speech on Wednesday, 9 May to Ozwater'12. You indicate there:

Internationally, Australia is viewed as a leader in water management. This is a perspective that is not often appreciated within the country, but the reforms and institutions that govern water management are among the most advanced in the world.

Can you just tease that out a little bit for us as to why we are at the forefront.

Mr Cameron : That particular set of sentences was a quote from Professor John Briscoe from Harvard University, who is an observer of the Australian environment.

CHAIR: Well, tease that out.

Mr Cameron : His comments do reflect a view internationally that the water management arrangements that we have in Australia, particularly those embodied in the National Water Initiative, represent an internationally better-practice model for management of water in a sustainable way, particularly governance across jurisdictional boundaries and for delivering benefits for economic, social and environmental outcomes. I think my colleagues at the table would also have, as the National Water Commission does, received delegations from a number of countries and around the world on an ongoing basis who have sought to learn from the Australian environment.

Those comments, I think, reflect the view of the commission itself, which was made in our 2011 biennial assessment, that the National Water Initiative is a solid framework for good water management. It is one that has had consistent support from governments across the states and territories and the Commonwealth since it was made in 2004. What we have seen from the implementation of the NWI, although it is incomplete and not as advanced as one might hope in some areas, is that our water management arrangements are more sustainable, more efficient and more effective than they have been in times past.

CHAIR: You also indicate in this speech, which was very interesting:

Water supply and use in our cities and towns have become more efficient and sustainable because of actions taken under the National Water Initiative. Major capital investments have also improved the security of water supply in Australia's urban centres by bringing online additional supply options.

Could you just, again, tease that out for us as to where the efficiencies and the sustainability are coming from.

Mr Cameron : I think there are a number of factors. As your quotes from me indicated, it relates to some of the key commitments in the National Water Initiative and in fact some of the commitments that have been agreed by governments through COAG prior to the NWI being put in place in 2004. Fundamentally, what we have seen is improved institutional arrangements for water management in urban areas; the separation of supply policy and regulation in most jurisdictions, which provides for clearer statutory and governance management for water; and improved planning. Again, there are areas where there have been weaknesses in our planning arrangements and to some degree those weaknesses still exist and were exposed during the drought, but what we have seen is the development of more sophisticated planning arrangements that consider a wider variety of climate variabilities and changes and that also look at more efficient investment scenarios.

I think driving that has also been the implementation of pricing reforms, ensuring that consumers face the real cost as much as possible of the water that is delivered to them, which gives them the incentives to use the water efficiently but also provides the utilities with the revenue to be able to invest in infrastructure in an efficient way into the future. Similarly, the establishment of independent economic regulation in most jurisdictions, and improved consumer protection arrangements in many jurisdictions, means that there is more transparency of our pricing arrangements and more confidence that consumers can have about the service they get delivered.

CHAIR: You say that there has been insufficient progress towards the core commitment—that is, the tackling of overuse and overallocation. What are the key impediments to meeting your core commitment?

Mr Cameron : That core commitment reflected in the NWI was a commitment to make substantial progress in addressing overuse and overallocation in relevant water systems by 2010. I think the discussion we are having right now in relation to the Murray-Darling Basin and in relation to other parts of the country reflects the fact that in many places we still have yet to substantially make moves to address those particular challenges. I think it reflects a range of issues. In some senses, as the commission observed in our 2011 report, the time frames associated with delivering on that commitment are possibly overambitious, expecting that the complex and detailed planning arrangements that need to be put in place across the country could all be implemented within that sort of time frame. Room remains for continued improvement in our knowledge in many systems, in particular groundwater resources. There were some comments in the hearings earlier today about the more limited knowledge we have about some groundwater resources across the country. In a practical sense there is also room for continued improvement in understanding the broader social and economic impacts of those sorts of adjustments. There are a range of challenges that jurisdictions face and they need to address those issues with limited resources within their own organisations.

CHAIR: You say that the great challenge is the Murray-Darling Basin and then you go on to say that planning is at the heart of a participatory process. You state:

Community engagement in water planning is essential to understand the disparate concerns of all interest groups, to help establish non-consumptive social values and to inform the tough decisions that must be made about how finite resources will be shared.

Is that a criticism of the Murray-Darling Basin Authority?

Mr Cameron : No, it is not. It is a statement of the challenges that all water planning organisations, whether it be the Murray-Darling Basin Authority or the planning arrangements in particular jurisdictions, face. There will be different views in communities about economic, social and environmental objectives. There are challenges in terms of understanding some of the underlying scientific and other information required to make those sorts of judgments, and in the end governments who are the final decision makers in determining plans, often need to make quite hard decisions trading off those particular objectives and particular interests. In order to do that effectively, while absolute consensus is an unrealistic goal, having transparency and robustness of the articulation of how those decisions are reached and the information base which was used is the important component and the critical component of water planning.

CHAIR: What is a non-consumptive social value?

Mr Cameron : There are a range of social values. Consumptive water generally refers to the water used for urban or irrigation or other productive purposes. All communities have other values in water systems, whether they be values associated with the environmental outcomes. For Indigenous Australians there are spiritual and cultural values that they attach to either water systems or to the environment which depends on those water systems. There are a range of other values that are relevant to the consideration of what are the appropriate objectives sought to be addressed through a water plan.

CHAIR: You then state:

Water planning decisions should also be based and seen to be based on best available scientific evidence and social, economic information.

We have had a bit of a debate and discussion about modelling. Modelling would be part of the scientific analysis, would it?

Mr Cameron : Modelling is certainly an important component of the information base on which you would rely. As I think you have said, some of the discussion will always go to questions about the nature of the modelling, the assumptions made in there, but that is one important input. Other inputs include broader scientific evidence, often the consultation with communities to understand their particular views, and that is why the consultation process is so important.

CHAIR: There is one thing that has been puzzling me in the last couple of years on this. ABARES, for instance, uses econometric modelling. They have got modellers. They have got three different models that they use. It is widely accepted in the rural and agricultural communities that this is good information, solid information; it should instruct the future of the industry. Why is this not carried through when it comes to water?

Mr Cameron : In some sense, it is carried through into water in the sense that ABARE is used by an organisation such as the commission and the authority is a source of modelling advice.

CHAIR: We might have gone on a different track here. I am saying why, for instance—I do not want to personalise it, and I won't—do key voices in the rural community not accept the science on water when they use the science coming out of ABARES continually?

Mr Cameron : That is a question I am not sure that I can answer on their behalf.

CHAIR: But it is a question that you have to think about—is it not?

Mr Cameron : It is a question that those developing water plans and governments making water plans need to consider. They need to consider the commentary and analysis not only of modelling efforts but also of the critiques that are given of those models. In the end those questions about what the underlying assumptions appropriately are are important questions, but at some point a decision needs to be made about the best available information and rely on that, but also be able to manage adaptively into the future as more or better information becomes available.

CHAIR: I do not think I am making myself clear. It is a conundrum. On the one hand, the rural community accept modelling on a range of issues from ABARES, but when there is modelling done—and maybe, Dr Dickson, you might want to contribute to this as well—in relation to water or the Murray-Darling, then it is highly contentious, hugely contentious, and it is challenged as if it is some kind of voodoo science. If we cannot overcome this as legislators and you cannot overcome it as public servants dealing with the issue and trying to get the change, I do not think we are going to make much of a success of this. Have you looked at this as to why?

Mr Cameron : What I can say in a more general sense is we have certainly looked at the challenges associated with community engagement and consultation as part of water planning, and it is true to say that there are significant challenges that all water planning authorities, not just the Basin Authority, face in providing clear information and making use of the input they receive from communities, because of the wide divergence of skills that sometimes come from those communities. If you look at Indigenous communities, for example, they have important contributions to make but do not necessarily understand water planning processes effectively.

With other parts of society there are significantly different sets of value propositions from which they come and perspectives that they use. I am not sure that there is a simple answer to these sorts of challenges except to say that it is important that the planning authorities are transparently able to articulate what information they have drawn upon, why they believe that information is the best available information and how they have taken account of other input that has been delivered to them.

Senator JOYCE: I want to go back to that law advice you got from the, what is it, the international legal advice? Why did you get that legal advice?

Mr James : We sought advice from the Australian Government Solicitor—this is in relation to the plan released late last year?—to make sure the authority was confident that the proposal they were about to put out was consistent with the act.

Senator JOYCE: That was the instructions you gave, 'Is this proposal in line with the act?'

Mr James : Broadly, it would have been, yes.

Senator JOYCE: What was their answer?

Mr James : We covered that before. We do not share our legal advice.

Senator JOYCE: How involved was the legal advice that you got back? Was it pages, voluminous?

Mr James : I am not sure how many pages it was, sorry. I can take that on notice if you want to know.

Senator JOYCE: How long did they take to get it back to you?

Mr James : I am sorry, I do not know how long it took them to prepare the advice.

Senator JOYCE: Did you ever ask advice if amendments could have been brought to the act so as to solidify the position of the Commonwealth?

Mr James : That would not be a job for the authority to do—the department or ministers. That is not within our remit really. We operate under the act.

Senator JOYCE: Where did the instruction come to get that advice?

Mr James : Sorry, to get the advice from—

Senator JOYCE: Who?

Mr James : It was initiated within the authority.

Senator JOYCE: Who was the head of the authority at that point in time?

Mr James : Late last year; Dr Dickson would have been the chief executive.

Senator JOYCE: Did you seek that advice, Dr Dickson?

Dr Dickson : I do not think I signed the letter. It was just a standard requirement that we would have made, so it would have come from some part of the authority.

Senator JOYCE: From your legal department?

Dr Dickson : We would have to give you who it came from, who actually signed the letter requesting it, but I can get that on notice for you.

Senator JOYCE: I want to go back to the buybacks. There was a joint house committee chaired by Mr Windsor, and it advised against any further buybacks. You have moved an extra $40 million into the current financial year for buybacks. Why have we moved an extra $40 million into this year for buybacks?

Ms Harwood : The recommendation from the Windsor committee was for a more strategic approach to purchasing. It was not for no further buybacks. The government's response was that there would be no further general tenders until 2013, but in the meantime a more targeted purchase initiative took place with a two-stage process involving an expression of interest and looking for water purchases that did not affect the delivery effectiveness in shared delivery networks. There is $40 million brought forward from next year into this year, and that is in the expectation of better matching the appropriation in this year to the likely amount of trades we will settle this year in total through the buyback.

Senator JOYCE: I am still trying to work out why we have $40 million worth of extra buybacks in this year. Have you got something in mind? Is there something out there you need to purchase in a big hurry?

Ms Harwood : At the moment what we are doing is following through all the due diligence and conveyancing processes from the strategic initiative that I just described. If all of those trades are settled this year, we will likely use that $40 million that has been brought forward.

Senator JOYCE: So, you will likely use it or you—

Ms Harwood : Yes.

Senator JOYCE: We are towards the end of May. We have only got a month to do it. So, you have got it all lined up, ready to purchase now?

Ms Harwood : Yes, there is a great deal of conveyancing and due diligence activity underway. We have already exchanged some contracts, and the trades from that initiative are proceeding.

Senator JOYCE: How many offers to sell water were received under the expression of interest phase of this tender?

Ms Harwood : From memory, over 700 were offered.

Senator JOYCE: How does the department determine whether an offer to sell water was strategic or not?

Ms Harwood : There were criteria published in the expression of interest phase and, in essence, if trades were going to be offered from within an irrigation delivery system they would only be eligible under the expression of interest if the irrigation water provider—the irrigation body where the trade was being offered—confirmed that that trade was compatible with their modernisation plans.

Senator JOYCE: How many offers in the 700 that you received were deemed to be non-strategic under this tender?

Ms Harwood : Some trades that were offered were not confirmed by the irrigation water provider. Basically, they were not eligible in the expression of interest. I might just check. I do not have the precise number with me.

Senator JOYCE: Who actually sits back and makes the decision about whether something is strategic or non-strategic?

Ms Harwood : In essence, under the expression of interest process that judgment as to whether the trade was compatible with the modernisation plans—that is, if the system was being reconfigured or modernised and that trade was compatible with the plan of the irrigation body from which the trade was offered, if that was confirmed by the irrigation body—the trade could proceed under the expression of interest. In essence strategic in that the trade was compatible with the modernisation plan, which is a simple way of dealing with Swiss cheese.

Senator JOYCE: So, who made that decision? Ms Harwood, was it you that made that decision? Who makes that decision?

Ms Harwood : In assessing the eligibility of—

Senator JOYCE: Who in the department makes that decision?

Ms Harwood : It is within the Water Recovery Branch in my division. The assessment was made by officers in that branch in the light of the advice received from the irrigation water providers as to whether these individual trades were or were not compatible with the modernisation plans for that district.

Senator JOYCE: Since it is made in your department, can you give me your definition of what a non-strategic purchase is?

Ms Harwood : In this case, strategic, I would go to the affirmative; strategic was characterised as a trade which did not affect the delivery system efficiency, which was judged by the irrigation water provider from which the trade was coming to be compatible with their modernisation plans. So it was strategic in that sense. If they said that they did not have any areas coming out of being rationalised or reconfigured and therefore they did not consider trades were compatible in that sense then we did not take trades from that district.

Senator JOYCE: In that 700 that you have currently got, because we have got this money and we have got to—

Ms Harwood : I should say there were 782 conforming bids, but we only purchased a proportion of that. From memory, it is about 370 trades that are proceeding to contract.

Senator JOYCE: And the rest were deemed non-strategic?

Ms Harwood : No, they were not. They just were not value for money in comparison with the other offers. There was a modest number that did not meet the terms of the EOI and were not invited to participate in the select tender. Of the trades that then participated in the select tender, about half of those we are proceeding to purchase—that is, they are going through due diligence, conveyancing and through to contract.

Senator JOYCE: What was strategic about the purchase of the water from Collarenebri that Twynam had?

Ms Harwood : Are you talking about the Twynam purchase?

Senator JOYCE: Just in the past. I am just trying to understand strategic and non-strategic and I am trying to work out what it is.

Ms Harwood : In the case of Twynam, it was a large parcel of water entitlements that enabled an early gain in the acquisition of the portfolio. There were administrative savings compared to acquiring the same water by a large number of individual trades having to go through all the processes that we do for the careful due diligence and so on, so it could be purchased in a single transaction. In the case of that, it was the acquisition of a large portfolio of entitlements for environmental use, and there was an administrative saving by not having to do that through lots of little trades adding up to that amount of water.

Senator JOYCE: Can an administrative saving make a purchase strategic?

Ms Harwood : From the Commonwealth's point of view, if we are seeking to acquire entitlements to bridge the gap in the most cost-effective way, that is a factor in that process. It is not the only factor, but it is a relevant factor in procuring water for the environment.

Senator HEFFERNAN: When we were last at this the other day I asked your modeller man—

Senator Conroy: Could you be slightly more precise?

Senator HEFFERNAN: No, they know what I am talking about. In the modelling of the 2,700 whatever gigs, how did you define the different categories of terminal water, supplementary water, high and low security in the model and I just got this blank look? Have we got something better than a blank look today?

Dr Dickson : Are you wanting to know how we model different types?

Senator HEFFERNAN: I know it is a political outcome; it is not a scientific outcome. In arriving at a political outcome, which no-one can deny who is in the know, in the model, say you have got a modeller and you have modelled what happens if you take 2,700 gigs. In that water there would be a certain amount of supplementary water, high and low—

Dr Dickson : What was the portfolio, whether we put that in there?

Senator HEFFERNAN: He just did not have a clue, and I presume it was a very opaque model.

Dr Dickson : I will ask Ms Swirepik.

Ms Swirepik : For each valley that a recovery was projected from, what the Murray-Darling Basin Authority did was to assume that the entitlements that were required were in proportion to those that were issued. If there was 40 per cent general and 20 per cent high and—

Senator HEFFERNAN: That does not tell me the answer. Can you provide to the committee the model and the make-up of the model for each valley with whatever—what does the 2,750 gigs consist of, how much of it is supplementary in your plan, how much is terminal, how much is high and how much is low?

Ms Swirepik : Yes, that information—

Senator Conroy: We will take it on notice and give you as much of that information as we can.

Senator HEFFERNAN: You do understand it is pretty important to know that?

Ms Swirepik : Yes.

Senator HEFFERNAN: Thank you very much. I hope everyone has noted in the Australian today the dilemma that China finds itself in with the contagion of their land and water resources through chromite. In your brief where it says water quality, what is your view on the mercury findings in the likes of the Goulburn River, and those Victorian rivers? Some of the fish being caught there show five or eight times the safe limit of mercury in the fish. That is being leeched out of some of the old mining sites. There is a proposition by the person who gave me this huge folder to read to recover a lot of that, and there has been in fact an EPBC approval for them to do it in one of the rivers—the Goulburn, I think. Do you have a policy to make sure we do not finish up like China with just completely contaminated waterways?

Dr Dickson : Our role in the water quality management of the Murray-Darling Basin waters is to set the standards and the requirements, but the management of that is done by the states.

Senator HEFFERNAN: That is the strong message I have got, and the strong message I have also got is the states have told them to bugger off, with great respect to language. Minister, this is something far more important, and it is persuasive that the Commonwealth takes a keener role in the priority to provide clean water, long term in our river systems. I could not possibly burden you, Chair, in eight minutes with the technical detail.

Senator Conroy: I am happy to pass on to the minister your concerns.

Senator HEFFERNAN: Yes, sure.

CHAIR: On some of the technical detail—

Senator HEFFERNAN: It is here if you really want to get it.

CHAIR: No.

Senator HEFFERNAN: I am most appreciative, but I would like probably to have the opportunity to brief or be briefed by the appropriate people in the department and probably—

Senator Conroy: I am happy to pass on that request.

Senator HEFFERNAN: Are the people at the front table aware of the mercury problem and arsenic in the water?

Dr Dickson : No.

Senator HEFFERNAN: It is not something that has come on your agenda?

Dr Dickson : No, it is not.

Senator HEFFERNAN: You are not aware that there has been some testing done in those river systems that are showing many, many times the safe level of mercury? You are not aware of the danger to foetuses, the human health effects of small intakes of mercury into a foetus in a pregnant woman and so on, which is now well documented and which is now on the front page of the Australian today about China? We have levels that are many times the safe level in some of our water. I do not want to go any further than that, but I just think it is something that we should deal with responsibly and forget about all the stupid politics around it. Thank you very much. You will get back to me with the modelling of the 2,700 and whatever gigs?

Senator Conroy: We said we would take it on notice and get back to you.

Senator HEFFERNAN: Could you perhaps also take on notice for me in the Murray-Darling Basin Plan with the groundwater that there appears to be some clear vagary in some of the logic behind that, especially when it comes to trying to find a political solution to coal seam gas extractions and some allocation which seems vague about how we would cover that off. I am also concerned that we would be responsible as a parliament—you have put up a plan that intentionally mines aquifers, the Wimmera and the Mallee. Where do I go to get some sense out of that?

Dr Dickson : Are you seeking something on notice for advice on those fossil systems?

Senator HEFFERNAN: Being a terror for technical drill-downs, I would like to know the answer as to how you justify in a hundred-year snapshot of the system mining deliberately—as by the way some boofheads in New South Wales did, Wal Murray—

CHAIR: Is that one of your technical terms, is it?

Senator HEFFERNAN: It is; Nick Greiner's time. Big Wal Murray, the late Wal Murray, good fella. As Barnaby would know, they set a plan to deliberately mine the Namoi aquifer, and many years later they had to take back 85 per cent of the allocated water licences to a couple of those subaquifers up there, which caused great distress to the families. They have had to do the same in the Mulwala aquifer. They took 80 per cent on one side of the Mulwala road. And some of those blokes that had to maintain their water then had to buy water which people at Booroobin had, but the water at Booroobin was too salty almost for barramundi and too salty for irrigation, yet technically they could trade it back to Mulwala. It was stupid. So, I just do not want to see—

CHAIR: Are these questions on notice or is it just a—

Senator HEFFERNAN: This is what I want to get briefed on. How we are going to avoid that in the new Murray-Darling Basin Plan? I think it is a fair dinkum question. The new Murray-Darling Basin plan says we are going to mine aquifers. You would agree with that, would you not?

Dr Dickson : No, I would not agree with that.

Senator HEFFERNAN: But the Wimmera and the Mallee, it says, will be mined.

CHAIR: Ask a quick question.

Senator HEFFERNAN: No, let us just get this clear. I might have it wrong—is that not right?

Dr Dickson : What I might suggest is that we can provide you a question on notice after we have finalised the new revised plan on the groundwater arrangements in that plan.

Senator HEFFERNAN: But the groundwater extraction now that you have in the plan includes mining—ever so slowly, but mining—the Mallee and it is the Wimmera aquifers; is that not right?

Dr Dickson : Are they the fossil ones?

Mr James : That is right. Broadly, across the basin the plan that went out for consultation last year, and on average the SDLs were set at 17 per cent of recharge. In most cases the consumer has—

Senator HEFFERNAN: The Wimmera and the Mallee, I am referring to.

Mr James : But, yes, for that one specific case it is a fossil resource. Disconnected from surface water, and so there is really not much—

Senator HEFFERNAN: So, you are going to mine them?

Mr James : As you said, over a long period.

Senator HEFFERNAN: I strongly object to that.

CHAIR: Senator Birmingham.

Senator BIRMINGHAM: Dr Dickson, just to be clear on the exchange you had with Senator Joyce in particular about the legal advice that the authority has received and its release or not and so on, will the basin plan that you will send as a proposed final to the states next week comply with the authority's understanding of its legal requirements under the Water Act?

Dr Dickson : We get advice from AGS on what our compliance is—all along the way, as we described earlier—and so clearly we intend to put forward a plan that is compliant with the Water Act.

Senator BIRMINGHAM: You expect that the plan will be compliant with the Water Act and you assess that compliance against the legal advice that you have received from AGS?

Dr Dickson : That is correct.

Senator BIRMINGHAM: By the way, has anybody in the government asked to see any of the South Australian government's legal advice that claimed to be able to overthrow the Water Act or the like?

Senator Conroy: The South Australians are taking it to the High Court.

Senator BIRMINGHAM: They have not initiated action yet. They just keep threatening it. Has anybody asked to see their legal advice?

Senator Conroy: It is a bit like you and Senator Joyce.

Senator JOYCE: They probably wanted to secure the Water Act by getting amendments, but the Labor Party does not seem to want to do that. They just want to stick their head in the sand instead.

Senator BIRMINGHAM: Has anybody from South Australia sought to engage with the Commonwealth on the matter to reconcile differences of legal opinions without it having to end up in the High Court?

Mr Parker : That is an interesting question. There is obviously a range of meanings implicit in your question. There are discussions which are proceeding with officials of the South Australian government about the next stage of the basin plan. I think that all parties in those discussions are aware of the legal positions, or potential legal positions, of those parties, but we have not sought to arbitrate the legal claims of South Australia.

Senator BIRMINGHAM: The South Australian government's submission to the MDBA says that the draft basin plan's 2,750 gigalitre scenario 'does not adequately export salt through the Murray mouth, with the risk of accumulation of salt in the Lower Murray region during drier periods', yet the MDBA in response to questions—in this instance by Senator Xenophon—on notice states, 'The recovery of 2,750 gigalitres proposed in the basin plan will be sufficient to meet the salinity export target of 2 million tonnes of salt per year from the basin.' Why are you right and why is the South Australian government's submission wrong?

Dr Dickson : I think the South Australian submission was talking about the certain salinity exceedences in the northern and southern Coorong, which is a different measure than salt export.

Senator BIRMINGHAM: Their submission says 'does not adequately export salt through the Murray mouth'. They are quoting Goyder and Heneker.

Mr James : I understand the South Australian government has basically just applied a higher test to achieve the same outcome. I think they are looking to keep the mouth open in 95 per cent of years, and the target we have set is 90 per cent, or nine years out of 10.

Senator BIRMINGHAM: That test of the mouth being open, what exactly does that mean? Is that the mouth being open without dredging? Is it the mouth being open 90 years in 100 years for the full 12-month period in each of those 90 years? What does that figure that the minister put mean?

Dr Dickson : There are a number of different ways of expressing what mouth openness means. The one that we have used is based on 2,000 gigalitres barrage flows being enough to keep the mouth open without dredging. There is quite a lot of technical analysis of other things, such as the height of the bed and a range of other things that Ms Swirepik could run through for you if you like.

Senator BIRMINGHAM: Briefly; if it is too technical we can put some of it on notice because there is not a lot of time.

Ms Swirepik : I am happy to put some on notice because there are a whole lot of different ways to assess mouth openness. As my chief executive has just said, we have adopted a very generic one at a macro level, which is the 2,000 gigalitres per year. When you look through the historic record, where you have had 2,000 gigalitres you have always had the mouth open and I think the generic modelling shows that provides a flow which is enough to counteract sand coming in from the ocean currents, if you like. There are a lot more technically specific ways to calculate mouth openness and, of course, if you do not get 2,000 gigalitres a year then it is not a matter of literally open and shut. The width and depth of the Murray mouth depends on the conditions not just for the weeks or months beforehand, but probably the year beforehand. There are much more accurate hydrodynamic models that can model that and determine the number of days.

Senator BIRMINGHAM: From your historical analysis, if you get a minimum of 2,000 gigalitres flowing through the mouth in a year, in a very simplistic sense, that keeps the mouth open naturally without the need for dredging?

Ms Swirepik : That is correct.

Senator BIRMINGHAM: The South Australian government has assumed you need a higher figure to keep the mouth open. Is that an equally simplistic analysis of their research?

Ms Swirepik : I have never seen that they have assumed that you need a higher amount. I am not sure if it was in the Goyder report or in follow-up discussions that I had with South Australia afterwards that there was a suggestion of a much more variable scale, if you like, about openness, with between one and two metres depth being partially open and less than one being closed in their opinion. They have their own views on that. They have never formally suggested to us a different indicator to use.

CHAIR: Senator Joyce, I have given everybody a fair go. I had 15 minutes and I have let Senator Birmingham go for five. I have some questions that I need to ask.

Senator JOYCE: I will just ask one.

CHAIR: No, you will not ask one. Senator Birmingham, are you finished?

Senator BIRMINGHAM: I was happy, if it is going to aid getting an understanding of this, for Senator Joyce to ask his question if it is on the topic.

CHAIR: All right.

Senator JOYCE: Do you prioritise the environmental assets? Are some environmental assets more important than others? Are the Lower Lakes, for instance, more important than the Culgoa floodplain?

Senator Conroy: You are asking an opinion.

Senator JOYCE: No. It is where you are going to try to get water to.

Senator Conroy: Perhaps you could rephrase your question.

Senator JOYCE: In a lot of these instances you cannot use the water twice, so that is my question, Minister. Are the environmental assets prioritised from the most important to not very important at all?

Ms Swirepik : At a conceptual level, all the assets are the same in terms of the objectives that we put forward that we are trying to achieve from different parts of the basin. From a modelling perspective we have to figure out how we dedicate water to different sites. In fact, the way that the modelling is done is to dedicate the water to upstream sites, before the Lower Lakes. Why that happens is that the water needs to go through those sites before it reaches the Lower Lakes. What we are trying to do is hit as many different targets on the way down to meeting the Lower Lakes. In our modelling we did a first pass through to hit targets along the way and then we looked at the deficiencies in the Lower Lakes, tried to re-add water to the system and model it again.

Senator JOYCE: That is very important because that means we are using water to water upstream assets, which takes away from the water that would otherwise get to the Lower Lakes if it just flowed through, because water that just flows through and does not go out into a floodplain gets to the Lower Lakes, but if you say now I am going to water this—

CHAIR: Senator Joyce, you are starting to—

Senator JOYCE: That is the case, isn't it?

CHAIR: I am moving on. Mr Cameron, I would like to come back to you. The legislation that governs the National Water Commission expires on 30 June this year; is that correct?

Mr Cameron : That is correct.

CHAIR: What are the implications if the legislation currently before parliament fails to pass on time?

Mr Cameron : As you said, there is a sunset clause in the current legislation and if that were to take effect then the National Water Commission would cease to operate.

CHAIR: What are the implications for all those fine goals that the National Water Commission has?

Mr Cameron : The commission certainly welcomed the government's announcement of its intention to continue its operations as a recognition of the important role it plays in water management across Australia. We are the organisation that provides a national independent and expert source of advice to COAG on the delivery of state, territory and Commonwealth governments in terms of their commitments under the NWI. We also have a function to undertake an audit of the effectiveness of the implementation of the Murray-Darling Basin Plan, when that is in place, and to more generally undertake activities that promote the outcomes and the objectives of the NWI. Certainly, through the process of review undertaken by Dr David Rizowski last year, which was an independent review required under the legislation, there was strong support for the commission's operations from many jurisdictions as well as industry stakeholders. The products that we deliver are things that would be missed by many parts of the water sector.

CHAIR: Is there alternative advice available to your independent advice? Would that have to be the private sector?

Mr Cameron : The review by Dr Rizowski considered the issue of NWC's place in the water system and his view was that the National Water Commission plays a distinct and unique role in providing that sort of independent advice. He took the view that our role would become even more important in the future as the reform commitments that are yet to be addressed are the more difficult ones that were set out in the National Water Initiative.

CHAIR: How many employees are there in the National Water Commission?

Mr Cameron : The National Water Commission currently has employees of around about 63. Under the budget arrangements announced in May we will move to a staffing level of 44 next year.

CHAIR: There would be an expectation from those 44 employees that, given the government's decision, there would be a future for them in the National Water Commission?

Mr Cameron : That is absolutely the case.

CHAIR: Where is your main base?

Mr Cameron : We only have one office, which is here in Canberra.

CHAIR: Dr Dickson, sometimes I think it is pretty good. I have a couple of minutes. I am not sure if you have time to go back to the basics and take us to what the problem is in the Murray-Darling and to what the solution is. I just think from time to time we end up spending hours on some of the detail and we cannot see the forest for the trees. Can you encapsulate it basically?

Dr Dickson : There are probably two main issues that we are addressing in the plan, in the broader water reform that the department is responsible for, and that is to address the overallocation which has led to a lot of the problems which started back in the seventies. They were all brought to a head during the drought. We saw significant declines and close to an almost ecological point of no return in the Lower Lakes with significant declines in a lot of the floodplains and wetland habitats.

The second issue, and one of the reasons behind those symptoms, has been the fact that while the basin has had some coordinating mechanisms, it is still being managed as a set of individual states rather than being brought together in a coordinated management and planning regime. Having that sort of coordinated environmental watering and coordinated resource planning now being brought together at the same time means that there is a more effective way of managing the basin.

CHAIR: Given all the controversy that has been around are you confident that you will meet the task that has been set for you?

Dr Dickson : We are doing the best we can. One of the heartening things, despite all the controversy and the very different views, is that most people want to have the issue resolved. Having it unresolved just continues the uncertainty. They all want it resolved in a particular way, of course—in their own way—but just having it resolved and being able to get on with their lives is one of the most common views across the board. We are doing the best we can to achieve a proposed arrangement that is going to work for most people, but we appreciate that there are going to be polarised views that are not going to be changed for some time yet.

CHAIR: That concludes the questioning on this part of the program. Thank you to the officers for your attendance. We will move to outcome 6, 'Protection and restoration of environmental assets through the management and use of Commonwealth environmental water'. I welcome officers of the Commonwealth Environmental Water Office.