LA NAUZE, Mr Jonathan, Murray-Darling Campaigner, Friends of the Earth Australia

OWEN, Mr Peter, Campaign Manager, Wilderness Society, South Australia

SINCLAIR, Dr Paul, Healthy Ecosystems Program Manager, Australian Conservation Foundation

Evidence from Mr Owen was taken via teleconference—

[11:51]

CHAIR: I welcome representatives from the Australian Conservation Foundation and Friends of the Earth, and I will welcome the Wilderness Society in due course. The Australian Conservation Foundation has lodged submission No. 149. Do you want to make any amendments or additions to it?

Dr Sinclair : No.

CHAIR: Would you like to make an opening statement?

Dr Sinclair : I have a brief statement.

CHAIR: Before you do, can I just say that we would love to have seen Arlene Buchan here today. We are aware that she has some good news.

Dr Sinclair : She is blooming and she sends her regards.

Senator NASH: We send ours back.

Dr Sinclair : Our generation will be the one to take on and finally resolve unsustainable water use in the Murray-Darling Basin. To succeed, Australia's governments must finally deliver on their promise, made over 20 years ago, to implement water reforms that would arrest widespread natural resource degradation. Australia needs a basin plan that coordinates the management of our interconnected river systems flowing across state boundaries and ignorant of party politics and law.

It is in the shared interest of city and country people for the basin's rivers to be better connected to their flood plains and ocean and able to flush salt from the region's ancient soils. Australians have a shared interest in investing in the natural fertility of the basin because it will provide lasting economic and social opportunities. Last month, the CSIRO estimated the benefits of improved environmental flows at between $3 billion and $8 billion.

What is needed to improve the management of the Murray-Darling Basin? Firstly, we need to recognise the progress that has already been made. Significant amounts of water have already been recovered for the environment and successfully delivered to internationally important wetlands throughout the basin. Most of the water recovered was acquired through the Australian government water buyback program set up under the Howard government and accelerated under the Rudd and Gillard governments. This program has delivered great benefits to irrigators and the environment, especially during the last drought, and must continue. Australia is leading the world by building the institutions and processes for managing environmental water in partnership with irrigation and urban water supplies. Our catchment management authorities are improving their skills and experience in re-establishing connections between river and flood plain and building community confidence. Clearly there is more to be done. It is critical that the Murray-Darling Basin Authority prepare a plan based on what is required to revive the river the system and not just manage its continued decline. Currently the plan delivers a good result to about 21 per cent of the authority's hydrological targets. That is just not good enough.

Minister Burke must require the authority to model the benefits from returning 4,000 gigalitres before he submits the final plan to parliament. Minister Burke talks tirelessly about the constraints stopping him from delivering a strong basin plan. The fact is that he has the power to overcome the dead weight of 19th and 20th century barriers to the sustainable management of our river system. Minister Burke could immediately allocate funds from the $5.8 billion Sustainable Rural Water Use and Infrastructure Fund for this task. Then we could finally move our management practices into the 21st century.

The increase in groundwater extraction contemplated by the proposed basin plan is reckless. The draft plan proposes to increase the extraction of groundwater by 2,600 gigalitres, about the same amount it once returned to the rivers. Enormous amounts of public money and effort are being dedicated to addressing the problems that have arisen from past decisions to over-allocate surface water based on poor understanding and political self interest. The authority should be prevented from repeating the mistakes of the past.

The risks associated with the changing climate must be incorporated into the final plan. Assessments by the CSIRO show it is the environment's share of water that is hit hardest by declining water availability under a drier climate. The OCF has serious concerns about the narrow focus of the Sustainable Rural Water Use and Infrastructure Fund. The Productivity Commission, the Victorian Ombudsman and the Committee for the Economic Development of Australia have all produced assessments questioning the economic sustainability and public benefit of the taxpayer subsidies currently being made to irrigation companies to renovate their infrastructure. Irrigation is a vital part of the basin but it is not the only industry of value. The economies of basin cities and towns, dryland agriculture, manufacturing and the renewable energy sector should all benefit from better alignment between the Sustainable Rural Water Use and Infrastructure Fund and other programs.

Australians have a shared interest in making sure our river systems can keep sustaining the economies and communities of the basin forever. It is a challenge Australians are more than capable of overcoming. Thank you.

Mr La Nauze : I would like to begin by acknowledging the traditional owners on whose land we meet. I thank the committee for the opportunity to provide input to your inquiry. Friends of the Earth has not made a formal submission to this inquiry. However, last week I provided the committee secretariat with a copy of our submission to the proposed basin plan. I trust this has been passed on to you senators. I have also brought in two summary documents today which I have tabled and will briefly speak to before we come to questions. On the subject of groundwater, the federal government has already acknowledged that the science is not in. The Independent Expert Scientific Committee on Coal Seam Gas and Coal Mining has been set up for exactly this reason. There is simply no case for the radical increases proposed. I refer the committee to the table I brought with me—the black and white one—comparing the guide to the proposed plan. Of the 11 groundwater units assessed in the guide as being overallocated, only one still has a significant reduction and that is the Upper Condamine Alluvium, which has about a 33 per cent reduction. Two of them have increases. The ACT groundwater and Angus Bremer units. From a total proposed reduction of 186 gigalitres in the guide, these 11 units now only account for a 39 gigalitre reduction.

There were 34 ground water units described in the guide as 'highly connected to surface water'. The authority determined:

Additional groundwater take from these units would further reduce surface water stream flow.

SDLs for these 34 groundwater units were set at current use in the guide. Jump forward to the proposed plan, however, and we find these units account for a total increase of 333 gigalitres, 250 gigalitres of that in the Lachlan Fold Belt, where the authority has proposed to triple current diversion the limits. These figures I quote are on top of a total 566 gigalitre increase in what the authority estimate to be the base diversion limit. As our submission to the authority makes clear, we believe it is in the interests of all parties that these base diversion limits are subject to an independent verification.

On the subject of constraints, the authority has been particularly mischievous. Even if we assume that they status quo rules and infrastructure remain frozen in time, in no valley has the authority modelled up to those limits. In the highly modified southern basin, a review of the modelling indicates that more than 3,200 gigalitres could be delivered within existing constraints with better environmental outcomes. In the northern basin, the constraints have nothing to do with the failure to meet environmental targets. Worse, a double standard has been applied. On the one hand, the authority tell anyone who will listen that SDLs cannot go any lower because of certain operating rules and physical constraints, even though many of these need to be and most likely will be changed before the plan comes into effect. What they are less wont to broadcast is that their modelling assumed at least two key operating rules will be changed in relation to the protection of environmental flows from reregulation and the ability to piggyback an environmental release on top of a natural tributary inflow. Conveniently, assuming these constraints can be overcome, which will require the cooperation of state governments and is therefore outside the remit of the authority alone, allowed the authority to increase SDLs. They acknowledge that if this does not occur, environmental outcomes of the proposed basin plan will be far worse than what has been modelled.

Finally, I go to the modelled environmental outcomes of the proposed surface water SDLs. Paul mentioned that only 21 per cent of the MDBA's targets are met. I would like to bring a little colour into that picture. I refer to our submission and the summary table I have brought today. The authority has never published a simple summary of what the proposed plan means for the environment. It took days of poring over some 20 authority publications, but this is what it looks like: what lives and what dies under the plan. As you can see, there is a lot of red in this table. It is not just in the hard to water black box at the edge of Hattah Lakes and Chowilla flood plain. It is in almost every vegetation type in almost every valley in the basin. Of the basin's 16 Ramsar sites, the model results show plainly that at least eight would suffer such a significant decline that it would amount to a change in ecological character, which is a dereliction of our duty under the Ramsar convention and contrary to the objects of the Water Act. In many cases, existing operating constraints have nothing to do with it. The authority's own documentation states that the failure is simply down to the fact that the SDLs are not low enough. As such, we can only conclude that the proposed plan is a complete and utter failure. Thank you.

CHAIR: Can I just take you to your chart—the Booligal wetlands. Do you know what the Booligal wetlands are?

Mr La Nauze : Yes, on the Lachlan system.

CHAIR: Tell me where they are.

Mr La Nauze : They are fairly close to the end of the system.

CHAIR: Do you know where they are?

Mr La Nauze : Not precisely.

CHAIR: Do you know what the colonial nesting waterbirds site is?

Mr La Nauze : Do I know what the site is or do I know what the watering requirements of the site are?

CHAIR: Do you know what it is?

Mr La Nauze : I know that one of the authority's ecological targets is—

CHAIR: Do you realise that it is an artificial wetland?

Mr La Nauze : All I am aware of is that it is an ecological target which the authority has set—

CHAIR: But if you did not have the banks in the system you would not have the wetlands. It is actually an artificially created wetland, and the natural wetlands are all ignored.

Mr La Nauze : The authority has chosen it as an accurate measure of the environmental water needs—

CHAIR: I know they have. The government actually thought they brought the property it was on, but they brought the property next door. They bought the wrong property. You say that the Lachlan fold belt has been given a 300 per cent increase.

Mr La Nauze : It has been tripled, yes.

CHAIR: Why is that, do you think?

Mr La Nauze : I am not really able to read the minds of the authority. I do not think it is a particularly wise decision.

CHAIR: Could you describe to the committee where it is and what it is?

Mr La Nauze : No, I cannot describe it to you. I am not a groundwater expert. But I can read and I can see a radical change from the thinking in the guide to the thinking in the proposed plan.

CHAIR: Mr Owen, would you like to have a crack at an opening statement?

Mr Owen : Not other than to echo the sentiments that have gone before. I think we have a fundamentally flawed plan on the table that is not going to deliver on the whole point of this process, which is to restore the Murray-Darling Basin to health once and for all after generations of mismanagement. I do not want to repeat what has been said, but what is on the table rejects the advice of Australia's leading river scientists. It builds in major delays for directing the issues. It entertains massive further groundwater extraction in New South Wales. It fails to consider the implications of climate change. On the scientific advice we have got, I think it is going to struggle to flush the millions of tonnes of salt and pollution that is dumped into the Lower Lakes every year from the rest of the basin and even keep the river mouth open. I would argue that that is probably one of the most fundamental scenarios that we need to be able to guarantee to have any chance of a healthy, functioning river. Other than those things, I do not have anything further to add.

CHAIR: The great difficulty from the committee's point of view is getting technical detail out of witnesses. The basin groundwater diversion limits document, courtesy of Friends of the Earth, is one that Friends of the Earth do not understand. This is the difficulty. You do not even know where it is.

Mr La Nauze : I will not purport to be a groundwater expert.

CHAIR: That is our problem as a committee. We have all these experts shoving stuff down our necks but when it comes to breaking it up into local and technical detail you just get a blank look. You do not really know whether what they have proposed for the Lower Lachlan Alluvium, for instance, is a good idea or a bad idea. I do, but you do not.

Dr Sinclair : We are environmental organisations. We rely on information that is in the public realm.

CHAIR: I understand that. We are most grateful for your input. But we really do need people who understand the technical break-up of that decision. I am talking about an aquifer west of Hillston where in the early days they just asked, 'How much do you want?' and it would be 35 quid or something like that. The original 200-acre licence of Lachlan water was just 35 quid. I have great difficulty in getting the logic behind the figures because we are not told any of the real assumptions. We were told yesterday, for instance, that the Gunnedah water—the 300 gigs or whatever it is up there—was going to come out. Obviously, it is to cover the mining industry. You would have to be blind Freddy not to know the political imperative for the Queensland and New South Wales governments is to get money in because they are both broke and they need the cash flow and bugger what happens in the next 300 or 400 years. In the meantime it is someone else's problem. The response from the decision maker—that is, the Murray-Darling authority, Craig Knowles's set-up—was that there was plenty of storage there and therefore the 300 gigs did not matter. You would know and I take it the Wilderness Society would know that it is not how much you have got stored but it is how long it takes to recharge it. But they just flicked that as if it did not matter. This is sort of bizarre. Anyhow I will hand over to my colleagues.

Senator HANSON-YOUNG: Thank you, all three of you, for appearing today. What you have put to us seems to be becoming a quite consistent position. People feel that, yes, we need a plan but this is not a plan that is going to help. A couple of times in the last day and a half the phrase 'locking in failure' hand is being used by several witnesses, and that seems to be the growing sentiment. Do you feel that if we were able to do season modelling of the 4,000 gigalitre figure and perhaps some other larger ones that we would then at least be able to make an honest and transparent assessment given that when you look at this graph that you have given us you see how much red and how much green and how much 'maybe' we are risking? At the moment we cannot compare this with anything. Is that your view?

Mr La Nauze : Certainly what has not been made transparent is this: what is the gap between clear failure and success and what do we need to do to bridge the gap? Nor has there been any evidence put forward that closing the gap is insurmountable or impossible. There has been no evidence put forward as to what the cost would be or even, as I think has been said a number of times to this committee, what is even achievable within the existing constraints, let alone what it would take to overcome the important ones.

Senator HANSON-YOUNG: What is your view on the argument that we have been debating this forever and at least now there is something, so there is some plan there and it might not be perfect but we could change it as we go? What is your view on that if we were to tick it off by November so we could all get to the election on time?

Mr La Nauze : I do not think the act gives you the freedom to do that, frankly. The act does not say to come up with any plan and any plan will do. It is very prescriptive as to what the plan must do, and that is something that you will have to bear in mind come decision time.

Mr Owen : It is critically important that whatever plan is put forward can withstand a legal challenge, because I think that point has been made very clearly, certainly from the South Australian government, so we do need to treat that seriously.

Dr Sinclair : This is a plan that will be owned by the Australian parliament. We are concerned to see the additional work around what volumes of water increase the amount of certainty we have of getting a good result for what is a massive public investment. This is the latest chapter in a long-running story of trying to get the balance right in the Murray-Darling Basin. We think that unless that modelling is done we cannot see how members of the Australian parliament can vote for or against this plan unless it is on an understanding that they have the best information before them about what gives the river system a chance of being sustained into the future. Take a vote for or against it, depending on what your assessments of the trade-offs are. Without that additional modelling of the high volumes of water, no member of parliament can be in a position to say, 'Look, I understand that 4,000 meets 70 per cent of the targets that we think are important for the basin but I am not prepared to cop that.' Fair enough, that is your call. But unless the authority is made to do this modelling you are not going to be in that position. We do need a plan. We have needed a plan since we started regulating the river to manage it as an interconnected system. We need to be careful as it is the nature of plans throughout human history that there is no such thing as a perfect plan. There never has been and never will be.

CHAIR: All humans have had failure.

Dr Sinclair : It is the nature of the beast and it is one that we have to accept. From the ACF's point of view, we want a strong plan that delivers a high certainty of a healthy river system, but whether you are an irrigator, a dry land farmer or someone who lives in the city, no-one can expect to have a gold-plated 100 per cent plan that ticks all the boxes. That is not going to happen and we accept that. But the plan that we have before us at the moment, as we have discussed, has serious failings that we still have time to fix, so fix it.

Senator HANSON-YOUNG: As to this issue of the legality of the plan, obviously there has been some independent legal advice released over the last few weeks calling into question the consistency with the Water Act. Have your three organisations looked over that, and what is your view on that legal advice?

Dr Sinclair : We have sought legal advice on a range of matters through this process but, to speak frankly, I am less interested in the legalities. Irrespective of the law, the thing that gives the law its power is the agreement of society to implement that law. We have to get a plan that people believe creates a sustainable future for the Murray-Darling Basin. There are always people who want to get deep into the legals. Fine, but in the end I think most people, from the progressive end of the irrigation sector and beyond and in the environment movement, understand that we have to get some sort of detent that enables this plan to be delivered. At the moment, we are a long way from that detent.

Senator HANSON-YOUNG: Mr Owen, do you have anything to add to that?

Mr Owen : No, I think what Paul said there makes sense. But it is critically important, I think, that we get a plan up that can do what it is going to say on the cover—that is, restore the system to health. We are not going to get a plan up unless it is actually a legal instrument because otherwise someone will strike it down. Whilst I agree with the sentiments that Paul has put forward, unless this plan is actually in line with the act, we do not really have a plan because it will get struck down. I think it is a critically important point to keep in mind.

Senator HANSON-YOUNG: I want to go to the issue of the constraints. It struck me, Dr Sinclair, that you brought the minister into this by saying that the minister could deal with these things. Do we know what all the constraints are?

Dr Sinclair : COAG currently has a working group that is assessing what these constraints are, but the minister has a large and talented department at his disposal. He has $5.8 billion sitting in the sustainable rural water use infrastructure fund. We can assess and understand the range of imagined and real physical, institutional or process constraints that are out there. The idea of creating a plan for the present as opposed to the future is just nonsensical. The minister has the capability and a talented department. He has the ability to talk kindly to the authority and suggest that this is what needs to be done. We could have this review. We could have a work program set out to gradually improve the management of the river system—and ultimately this is what it is about. It is about continually improving the management of a river system that, as we have heard from a previous witness, is built around irrigation infrastructure. It was built between 1910 and 1940.

Senator HANSON-YOUNG: Do you have concerns that the authority have or have not been listening to these concerns? We had some of Australia's top scientists in here yesterday saying, 'Regardless of what you think about the outcomes, the science that is being used is dodgy.' What is your view on how the authority has responded to these very serious concerns of organisations such as your own but also of other independent bodies?

Dr Sinclair : In my view the authority has changed from the days of the Murray-Darling Basin Commission in seeing the environment movement, irrigators or local government as partners to now seeing us as opponents to be held at bay, to be managed, to be given chicken and avocado sandwiches and engaged as opposed to being involved in meaningful discussions. I think that the authority is really struggling to listen respectfully to the voices of groups like our own and, I am sure, other people involved in this debate. All groups like ours can do is to keep knocking on their door and saying, 'Hey, have you thought about these issues?' We are prepared to work with anyone who wants to find a solution to this problem.

Senator HANSON-YOUNG: The public consultation, obviously, is officially closed but it did go for 20 weeks. Did you see any change through that process with the concerns that you raised with the authority in what they then took on board?

Dr Sinclair : We saw very little change. When the proposed plan was released I described it as like watching someone walk slowly into a metal fan. The whole thing has been horrendous in terms of the ways that it has been communicated. We have Johnno La Nauze spending his nights creating this simple communication device. For whatever faults you want to find in it, it is a simple communication device. Why we have not had this sort of stuff from the authority I do not understand.

Mr La Nauze : I agree, I think it is rather scary when a government authority uses a myth-busting website to basically bludgeon its way through and say, 'It is our way or the highway.' It is incredibly frustrating and to refer to this document that is a summary of what is fully referenced in our submission. That was based on documents that were released up to within two weeks of the close of the submission period which were incredibly dense which allow getting to this kind of simplicity—that information exists it was just never actually explained. I worry that the reason it was not explained is because it does not look very good.

CHAIR: It would be fair to say in summary that the ordinary person involved in this debate is smothered in information.

Mr La Nauze : Certainly, but is that useful?

CHAIR: No, no. We are just as frustrated as everyone else.

Senator HANSON-YOUNG: A number of people have named the 2,750 gigalitres figure as a political figure. The authority will not tell us where it came from. I and I know other members of the committee have asked several times. Do you think that the independence of the authority is questionable?

Mr La Nauze : Can I start by saying that I think some documents which Senator Birmingham unearthed under freedom of information a while ago actually describe in the clearest, most simple terms how they came to that number. It was that they had panicked during the consultation over the guide. They took the very bottom of that—3,000. They spoke to some irrigators in the northern basin and decided they could shave 200 off that in the northern basin and that is when they got 2,800. Very late in the piece they spoke to some people in the Condamine-Balonne and realised they could shave another 50 off and that is where 2,750 came from. The independence of the authority I am loath to question but I think that is the answer for where it came from.

Dr Sinclair : I think that we need to remember, despite the authority's problems which are severe and have been a source of deep anxiety for the ACF and many other organisations, that the institutions from where it came, the Murray-Darling Basin Commission and now the authority, are the institutions that are vital to the good management of the basin. We need to be careful that we are not throwing the baby out with the bathwater. In terms of raising performance, accountability, transparency, communication, I agree absolutely. But these are the sorts of institutions that are looked on globally as 'Right, that's how we need to pull things together.' So, with the catchment management authorities, even our basin authority, I think the goodwill that has been built up over generations around the management of water, is still fundamentally there, and it is a platform from where we can get to a decent basin plan—I hope.

Senator NASH: Could I just take you to your original submission. I realise it was the 2010 one. You make the comment:

The Committee should advise the Government and Authority Board to advocate the benefits of a transition to sustainable water-use in the Basin and not undermine public confidence in its commitment to delivering a strong Basin Plan.

Does that comment still stand? Can you just explain for the committee what you mean about not undermining 'public confidence in its commitment'.

Dr Sinclair : Our original submission was made in late 2010, I think.

Senator NASH: If that has changed now, that is fine. I just wondered if that still stood.

Dr Sinclair : I think, under the leadership of Mike Taylor, we were somewhat astounded by the way the authority seemed to go out of its way to create a negative energy around this whole thing. I think there was a lot of confusion about why a chair whose responsibility was to advance the sustainability of the basin acted in the way that he did.

Senator NASH: Have you seen an improvement with regard to that, with the transition to the new chair?

Dr Sinclair : There are many, many good people in the basin authority who have been working in this area for a long time. Craig Knowles sought us out for conversation, as he has done with many other stakeholders, but he has a vision of where he thinks that the plan needs to go. It is not our vision, but he has been respectful and open in his conversations with us. In terms of where he has brought the plan, we do not agree.

Senator NASH: We had the Department of Agriculture, Fisheries and Forestry in this morning. There were a number of issues not raised, a number of issues where the committee had some real concern about the level of understanding within the department of how this all works and how we arrive at some kind of workable plan. Have you had much interaction with the department? Do you have a view on the department's understanding of what is before them?

Dr Sinclair : The federal department?

Senator NASH: Yes.

Dr Sinclair : We have had a lot of engagement with the department, particularly over the buyback program—discussions about the buy back—and also in seeking some understanding of the cost-benefit analysis that they apply to infrastructure investment. From our personal engagement with staff of SEWPaC, they do have a high understanding of the policy—

Senator NASH: Sorry, that is SEWPaC. I was talking about DAFF, but SEWPaC is fine. We have not got to them yet.

Dr Sinclair : We do not have much involvement with DAFF but more involvement with SEWPaC, who have shown high levels of understanding around the policy frameworks and issues. But, as you guys know very well, it is often the local catchment management authority that is required, in working the X, Y or Z, to get water from one area to the other that has the greatest understanding of the opportunities and risks of putting the water on the floodplain.

Senator NASH: Another issue raised yesterday referred to a comment by someone in the MDBA about localism. The comment made was that localism in itself might not be a good thing—it seemed contradictory in some ways—because something happening in a small area might impact adversely on another area. There seemed to be this conflict between localism, which the MDBA is now touting in iteration too, and the overall, more centralised approach to getting a basin plan. Is that something that you have come across or has been raised with you?

Dr Sinclair : I think that issue is one that has been prevalent in the Murray-Darling Basin since, as Senator Heffernan said, whitefellas have been here. It is a system made up of bits that create a whole. Like the saying about finding God in a grain of sand, the smallest bit contributes to the wellbeing of the whole.

Our challenge has always been how we coordinate the Goulburn, the Murrumbidgee or the Kiewa across those state boundaries and what have you in a way that manages it as an integrated system. Localism on its own will not work for the system. It might work for bits of the local environment, but we have to find ways of connecting the local to the regional and to the valley and to the basin. That is the thing that is really hard but also really exciting. I think one of the previous witnesses was involved with the Murray Wetlands Working Group, and community institutions like that are a pivotal link between the overarching basin vision and the actual delivery of water and relationships with people locally in getting that water into the environment.

Senator NASH: Do you think the MDBA have their heads around that? They were very keen to start touting localism this time around, I guess as a response to the charges about the lack of consultation last time and the lack of listening to people on the ground in these local areas. Do you think they have got their heads around the connectivity that is needed between localism and the bigger picture?

Dr Sinclair : No. But I do not think many people have, because it is bloody hard and we have not done it before. The thing that gives me great hope is that the investment of successive Australian governments in the regional delivery model of natural resource management has created a framework. We are not at zero. There is an institutional framework out there for doing this stuff that we have to build on, not say, 'Right, get rid of it; start again with some newfangled local thing.' We already have these regional institutions out there. Increasingly, they are involved in the management of carbon in the soils and the landscape, and, increasingly, in the management of water. We need to build their strength and the vertical connection with our overarching plans for the basin.

Senator NASH: And you are right: there is a framework in that way that could be utilised, certainly. In the past, this committee has come up against some NRM groups who are very good and some who are not so good, so there would need to be a lot of work, I think, if that framework were going to be used as the delivery model for this localism.

Dr Sinclair : I agree, and part of the theme of my intro was that we have to recognise that we are not at zero, that we have actually progressed a significant distance. I was at a natural resource management sharing knowledge thing last week. It is amazing the things people are doing in their local patches, but most of them also have a pretty sharp eye to the way that their local action can be amplified to provide a much better model for a bigger area. We are never going to find nirvana. It is always going to be a series of successes, a couple of stuff-ups, then moving through to bigger success.

Senator NASH: Thanks.

CHAIR: Senator Rhiannon.

Senator RHIANNON: Thank you for your evidence. I would like to explore the issue of climate change and the consideration that should be given to the impacts of climate change in drawing up the basin plan. We had a discussion about this with the MDBA people when they were here. You have probably seen the 'Mythbusting' section on their draft basin plan website where they dispute what the Wentworth Group have to say about climate change. I was interested in exploring that further because they spell out quite specifically that they have taken it into consideration; however, they have not taken on board that 2010 science briefing that factors in a three per cent reduction in water due to climate change. Having listened to them and read their material, I felt that it was more of a case where they have used the English language cleverly to say that they are taking that into consideration but, in fact, it is not being factored into the actual modelling. Could you expand on what you see as the climate change impacts and how the authority have handled this.

Mr La Nauze : In very crude, back-of-envelope terms, I think the authority estimates that surface water availability averages around 33,000 gigalitres a year in an average year—of course, the average year never occurs; it is a theoretical average. Let us take the median climate change scenario assessed by CSIRO where that is reduced by 10 or 12 per cent. That takes you to losing more water than what is restored to the environment under the proposed plan and, with the way the risk assignment is worded under the proposed plan, that will almost all be borne by planned environmental water, or by the environment. If they have taken it into account, they have certainly not planned for it in their risk management.

I would also say that in this table not only is there a lot of red; there is also a lot of light green. That means the authority has essentially said: 'Of course there is a degree of uncertainty in predicting ecological thresholds. We're aiming to restore a certain amount of flow events compared to what would have been natural.' They are not trying to restore the flow regime to completely natural but they say they are trying to restore 60 per cent of the flood events or reduce the interval between flood events. They have said that there is a high-risk threshold and a low-risk threshold. Essentially, in a lot of places, they have assumed that meeting their targets at the high-risk threshold is sufficient. Now that, to me, is not planning for uncertainty. It is not good risk management. At the very least, if you were to do nothing else, you would aim to have a buffer in meeting those targets, not aimed to just meet them at the very, very lowest possible level beyond which you are fairly sure there will be a permanent decline.

Senator RHIANNON: Did you have the opportunity to put that argument and, if so, what was their response?

Mr La Nauze : Their response was to explain in detail what they have done but not, I think, justify it. All of the modelling is based on the past 114 years. A number of the important ways to manage the risk of climate change—of course, it is very difficult to predict exactly what the weather is going to be next year, let alone in 2030—is to give the environment a buffer, ensure that the risk assignment for changes in water availability is equitable and sustainable, and make sure you are also doing a whole lot of other risk management things like ensuring that fish ladders and various other complementary management works are put into place so that the environment stands its best chance of adapting to any reduced run-off. The proposed plan does none of those and, in some cases, it does the reverse. It ensures that the environment will bear the risk of every single drop of reduced run-off.

Dr Sinclair : We can see from the last drought in the Victorian wetland systems along the Murray that the water that kept many of those refuges functioning for water birds, for trees and for aquatic plants was water that was created in the late 1980s to primarily allow Gippsland water duck shooters to blow some ducks away on. That water was high-reliability water under one of the first water sharing arrangements with the Murray river system, and that high-reliability water meant that the Victorian government had the flexibility to provide that water even in dry conditions. On the other hand, the Victorian government paid almost $100 million for sales water, which was low-reliability water as part of the Living Murray Initiative. I think it was about 120 gigalitres. You heard earlier from Juliet Le Feuvre from Environment Victoria that, even in a wet year like this, that water has still not been delivered. So your $100 million is not for much at all. Under dry conditions, the ability of environmental water managers to maintain the functioning of ecological processes, to provide refuge for wildlife, to maintain water quality for both critters and people is absolutely paramount, and that needs to be factored into this plan.

CHAIR: Random, non-compulsory water, which is an easy political position to be in, is fraught with danger if too much water gets traded up the system? In delivering an environmental flow which is piggybacked on a work flow can be lost if you are not strategic with the way you trade your water.

Dr Sinclair : Yes, those risks are there, but this is where the constraints are that Minister Burke needs to sort out. As water flows through the Barmah Forest it wets the forest and the endangered grasses and then 90 per cent of it flows out. Then it hits Gunbower and waters the red gum forest and then about 80 per cent of it flows out. If the water is running right at Hattah about 60 per cent runs out. So can think carefully about how we actually use a lump of water in a way that maximises the benefit.

CHAIR: Why don't you think Queensland gets that? The overlaying flow capture in Lower Balonne, which is the bulk of the water that is irrigated there, sadly, as you have just described, actually leaves the river. Unlike some systems such as the Lower Lachlan where it does not come back to the river, it returns to the river, but because they have allowed them to intercept so much water they have completely destroyed the viability of the Narran Lake setup et cetera. So why don't they get it?

Dr Sinclair : It is really complicated, but the river is connected to the flood plain. Both need to exist and be connected to live.

CHAIR: As you know, I have had some pretty serious arguments with a few people, including some of my own, about some of this. We had a hearing in Toowoomba where we were told by the manager of a certain station up there that it did not matter about the flood plain; they should just be compensated with a cheque and not given any water. That is pretty much the aggressive other end of the argument, which we do not hear much about these days. I have to say that the debate has changed and there is an appreciation generally. We were told yesterday, I think, by the CSIRO that they took one degree as the median shot, which meant that 2,000 or 3,000 gigs by 2040 of declined run-off. Do you think the reality of the risk of two degrees or a proposition of that sort is just too hard a political pill to swallow, so the reason they have included the history of the past and nothing of the future, as it were, is because in reality if any of that future stuff turns out to be true what we are doing now is going to be a neutral sum—we are going to be no better off in the future.

Dr Sinclair : Partly reflecting on what Jonathon said—I support the Essendon Aussie Rules football club. Those guys train their backsides off, they are in peak physical condition and they think through their game day strategies. All they do is try to control everything they can control. They do not know what is going to happen on game day, but they think that if they prepare themselves and if they think flexibly they will be able to respond to whatever the opposition throws at them. I do not see river management as being much different from that. We do not know what the future is, although we expect it to be a certain way. We need to ask the question: what is it we can control about the here and now that gives us the opportunity to respond flexibly and cleverly in the future? Jonathon's point is that if you are running the environment right on the edge and any variation sends it into the red zone, that is not smart. You have to give yourself some buffer. You need to think about the institutional and process constraints on the system aside from the environment. For example, if we do have those projections that the CSIRO is talking about—I think Garnaut was talking about a 90 per cent reduction in inflow over 100 years in his early work—it is not going to be happy for many people or fish. We have to get the smart systems, not imagine what the road signs of the future look like. Like the Essendon footy club, I reckon we should be able to have a think about what are the things we need to do now that we are pretty confident will optimise our performance on game day.

CHAIR: Given all of that, if you had the druthers—if you had the call—what would you do now?

Dr Sinclair : Right now?

CHAIR: With the plan, yes. Tell me: the floor is yours.

Dr Sinclair : I would model 4,000 gigalitres. I would try to get a whole lot of environmentalists, irrigators and dryland farmers in a room, lock the door and have a conversation about how they see the world working out over the next five or six years, and I probably would not let them out until we came up with some sort of arrangement. So the politics is important to get right to get it through the parliament, but I would also come back to that point that we need to understand what we need to give the river the best chance.

CHAIR: So do you think that the 2,700 gigs now, given the run-off we know, is not enough?

Dr Sinclair : Yes, it is clearly not enough.

CHAIR: So you think the 4,000 gigs, given what we know now, is the figure.

Dr Sinclair : I think that they need to look at 4,000 gigs. Based on the science that we have had over the last decade, the indications are that the volume of water is around that margin. But we know that the authority has modelled up to 3,200. We know the South Australian government is saying it will have a look at, I think, 3,500, 3,800 and 4,000. I would support that too. Have a look at it. My point is—I come back to the start—that we need to be in a position to have the knowledge before us in a way that we can understand that says, 'This gives us the best chance; this is in the middle; this is pretty ordinary.'

Senator NASH: Is that 4,000 a new 4,000 or, in your view, should it take into account the efficiencies already made in terms of the water savings?

Senator HANSON-YOUNG: And current buybacks.

Senator NASH: Yes.

Dr Sinclair : The authority's work is based on 2009 as a baseline. The important question is: what is the volume of water required to give us the highest probability of a healthy river?

Senator NASH: Yes, but the reason I ask the question is that 4,000 as a new figure, compared to 4,000 taking into account the savings that have already been made post 2009 and the buybacks that have happened, is a very different quantum of real water that is going to come out of the entitlement. So which one do you mean?

Dr Sinclair : As we have heard politicians talk about for a generation, it is about outcomes. So if the outcomes look like this, even factoring in the 2009 numbers—which this does—then we want to make these boxes not red.

Senator NASH: Yes, I get all of that. I am just trying to get from your perspective whether you mean a new 4,000 or taking into account what has been saved already?

Dr Sinclair : Not 4,000 plus what has been done. It should work against the same baseline.

Senator NASH: That is fine.

Dr Sinclair : I would say that the original calculation was in the vicinity of 3,856.

Senator HANSON-YOUNG: I want to come back to this point of the need for modelling. Just to be very clear, you are not suggesting that it is a problem if we do not get this ticked off by parliament by the end of the year, if indeed we have not yet done the modelling in order to allow us to be properly informed.

Dr Sinclair : I think we need a plan that is informed by what the river needs to be healthy. If we have a plan that is not informed by that information then we have major problems with it. The concern is that the time lines are artificial, but I am sure that Wayne Swan is wandering around looking for areas that he can cut money around. Ten billion dollars of spend on this issue is not going to come around again quickly, so there is that driver. We do have an opportunity to make investments into regional Australia that can be good investments and fix the river system at the same time. Our concern is that if we—

Senator HANSON-YOUNG: You are not asking for delay but you are asking not to rush something through simply for the sake of it.

Dr Sinclair : There are two processes going. What are we doing well now? My very strong view is that buying water back has been the only thing that has actually made a real difference to the river system, and we think it needs to continue. If it makes economic sense to invest in irrigation infrastructure, go for it. If it does not, think about what other social or economic infrastructure is needed in a community. That is happening parallel to the Basin Plan that comes in in 2019. We are not all going to sit around in our baths drinking gin and tonic till 2019. We need to keep doing stuff. So buying water back and investing in regional communities all needs to happen till 2019, and then the Basin Plan does its thing.

Senator HANSON-YOUNG: The reason I am asking this is that the minister, particularly in the last few weeks, has been saying, 'This has to be done by the end of the year.' If the parliament does not have the information to make a decision by the end of the year, and if the authority has not done the work it should be doing, is the river going to better off, worse off or the same?

Dr Sinclair : It is better to have a good decision.

Mr La Nauze : There is a big unknown here, and that is what the final version will look like. But you would have to say it is pretty clear that the current version locks in failure, does not disclose the roadmap to success and pretty much undermines the very notion of how to make good public policy. For such an incredibly important reform, delay is an non-issue. But, even on the minister's ambitious time frame, there is still some time before we are likely to see a final version. The authority is very clear; their models are very clear. It does not take long to actually assess some alternative options; it is feasible.

Senator HANSON-YOUNG: We heard from the authority yesterday, and we can ask them again this afternoon, about all the things that have been raised as concerns—groundwater extraction, the constraint issues and the exclusion of climate change modelling in the current draft plan. We hear, 'That's all right, don't worry, we'll fix it all in 2015 during the review.' What is your view on that?

Dr Sinclair : At the moment, 2015 is an excuse for another bunfight to get you both to an election.

CHAIR: To get you both to an election.

Senator HANSON-YOUNG: Ready for the next one.

Dr Sinclair : We have deep concerns about the review at the moment. As you all know, it is very hard to monitor environmental response over such a short period of time.

CHAIR: I have been at this for a bloody long time. When they originally separated the water, I was a serious opponent of the way they separated it. The original thing from cabinet at the time was: 'We're going to minimise speculation in water.' Then the Victorian government decided you could trade supplementary off-allocation water, which was barmy. You talk about a review. But now it is: 'We've set it in concrete, so they are financial instruments. If you want them back, give us a few billion dollars.'

One of the considerations of this plan for this committee is other opportunities in other catchments and thinking about the global food task—I will not burden you with all the detail, but I easily could. Should we be giving consideration to the next generation of opportunity for the next generation of farmers and a lot of increase in research et cetera to some other catchments which are relatively undeveloped? The Timor catchment has runoff of 78,000 gigalitres, the gulf catchment has run-off of 98,000 gigalitres—we could divert 55,000 out of that—the north-east catchment has 85,000 gigalitres and, as you know, the Murray Darling has 23,000-odd gigalitres. Should we be bold enough and visionary enough to say: 'We have a serious problem in the south. There is some science that says it may get worse, so let's have some contingency planning in other areas in the meantime.' Would your association and the Wilderness Society agree? I will not talk about the wild rivers legislation; that is the bait floating around on the water. Should we in a responsible way be asking: what other alternatives have we got?

Mr La Nauze : Senator, I am happy to indulge you in a discussion over a beer sometime, but today I am here to talk about the Murray-Darling.

CHAIR: Obviously what we have got is a political solution to an imponderable scientific and human problem. But what if I have a young son who wants to be a farmer. He knows that I am going to lose the water from my 200 acres of grapes or whatever. He says: 'Dad, what am I going to do? I still want to be a farmer.' It would be great if the government said: 'We're going to develop Ord Stage 2. Instead of letting the Chinese do it, we're going to do what we did with the soldier settlements after the war, a lot of which worked well. We're going to assist you to do that.' The objection to that at the present time is that it is too far away, too hot, too far from the market. The best place to be on a hot day is in a tractor as its air-conditioning is better than a house's. The market is actually closer: two-thirds of the world's population. It is just that they are looking in the wrong direction, towards Sydney instead of Asia. There is all that sort of stuff. Isn't that a great opportunity?

Dr Sinclair : I think that with land, given the majority of what the northern Australian task force said, there is a small opportunity.

CHAIR: I know exactly that, given that I started it and we killed it politically and we did not let the water study include storing the water or damming the water; it was 'how can we stop this?' and my good friend Dr Stuart Blanch and others went about that very effectively. We do know the science and we do know why Humpty Doo failed. So we do know all those things. But we do know there are huge mosaic opportunities there which we are too bloody tired to take up.

Dr Sinclair : I just do not think the basin is done yet.

CHAIR: Most definitely neither do I. But is it a little bit of 'let's hedge the bet' as it were? This could get a lot worse with, as you know, the extension of the vagary of the science. We got down to 200 gigs left in the system three years ago.

Dr Sinclair : I think we have got more to do in the basin. I think that there are other threats in northern Australia with 400 mining leases having been issued in the last little while. There is a massive amount of work going on up there, so there is some concern that we have. In terms of agriculture, I think that as for the levels of innovation that we can acquire as to the Murray-Darling Basin we have come a long way but we have got tonnes more to do.

CHAIR: I think you have got a very sensible position.

Dr Sinclair : Take the example of the guy with the grapes. We know businesses that are operating and trying to reconfigure their floodplains so that they can be paid ecosystem service flood mitigation, so the water goes out on their floodplain and it gives a town downstream an extra two days to get ready and does not knock out the local school. That is worth something. If you knock out the school that is worth a few bucks. So I reckon there are opportunities in thinking about how we partner up irrigation as to the needs of the floodplain in a way that creates new economic opportunities—and we have not scratched the surface of that stuff.

CHAIR: Can you assist us to scratch the surface?

Dr Sinclair : As an example, in the US there are tens of billions of dollars paid out in insurance for houses that are built on floodplains that get knocked out every time a flood comes around, so there are schemes operating in the US whereby people are paid to move off a floodplain and the insurance premiums around it drop and the floodplain is allowed to work in the way that it needs to work and it provides an economic benefit to the people surrounding that floodplain who have changed their management of the floodplain. That is as opposed to handing out $60 billion or whatever it is every decade for flood damage. They are getting in first, thinking cleverly about how they can recognise the value of these natural processes and put a price on that value. In northern Victoria there are some very clear examples of where you can provide benefits from the better management of floodplains. It is good for towns, good for farmers and good for the environment. Where we are struggling at the moment—and this is intensely dull—gets back to not having a set of national environmental accounts that properly set down and understand what the assets are in each catchment region. Once you have that set of national environmental accounts then you can start thinking about creating markets for those services or smart regulatory structures, whatever the tool is that you think can apply. But we are still at such a poor level of understanding about the way that our country operates that our capacity to be smart is really hamstrung.

CHAIR: We are right on lunch time. I think we are going to have to invite you all back.

Senator EDWARDS: Chair, I have one thing. It is on the theme of your earlier question. Are you engaged with the National Irrigators Council, the newly formed one, on the issue of trying to put people in the room and sort something out and take it to Craig Knowles?

Dr Sinclair : We are engaged with national irrigators in varying ways, but the short answer is, no, we are not. We have been in the past and it is something we have particularly with the National Farmers Federation, whom we have a stronger relationship with, that despite the hot air there remain strong relationships between, I think, the farming community and the conservation community. We do have to get into a conversation with people who make their money by extracting water from the river system, and that is one of the great challenges over the next six months. I think there is a challenge for NGOs and for the farming community to actually lead the process a bit more.

Senator EDWARDS: Okay, I guess that is their challenge, to engage with you, and that is your challenge, to engage with them.

Dr Sinclair : Correct.

Senator EDWARDS: Well, I hope you come together very soon.

CHAIR: Thank you very much. We are most grateful to everyone for their patience, indulgence and input.

Proceedings suspended from 13:00 to 13:45