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Thursday, 7 December 2006
Page: 18

Mr HARDGRAVE (Minister for Vocational and Technical Education and Minister Assisting the Prime Minister) (10:08 AM) —I move:

That this bill be now read a second time.

The main purpose of this bill is to amend the Murray-Darling Basin Agreement to enable improved business practices for River Murray Water, which is the water business unit of the Murray-Darling Basin Commission. The amendments also clarify that Queensland cannot be held liable for works and measures in which it is not directly involved and set out details of authorised joint works and measures in relation to salinity management.

These amendments represent part of the response of the Murray-Darling Basin Commission and Murray-Darling Basin Ministerial Council to the Council of Australian Government (COAG) water reform principles adopted in 1994. Specifically these required the ministerial council to put in place arrangements so that funds to maintain, refurbish and upgrade infrastructure controlled by the commission can be provided in a timely way.

Since 1998, the ministerial council has each year endorsed a cost-sharing arrangement based on levels of service provided by its River Murray Water business to the states of New South Wales, Victoria and South Australia. Further business reforms, inherent in the application of the COAG principles, were, in fact, limited by the terms of the Murray-Darling Basin Agreement. Recognising these limits, the National Competition Council endorsed the initial responses of the ministerial council, including its commitment to seek the agreement of the relevant partner governments to amend the agreement to enable the full extent of the COAG principles to be achieved.

The amending agreement allows governments to make annual ‘annuity’ contributions towards the future capital and maintenance costs of the commission’s water business, with the power to borrow where accumulated funds are insufficient to meet costs in any year. These annuity contributions will reduce fluctuations which might otherwise occur in governments’ annual contributions and also give a better reflection of the long-run costs of providing water business services.

Of particular interest to the Australian government, the amending agreement simplifies the identification of costs to which the Commonwealth does and does not contribute. Under the agreement, the Commonwealth is responsible for one quarter of all the investigation, construction and administration costs of the commission. It also contributes half the cost of investigations for salinity mitigation schemes. As the Commonwealth is not responsible for any of the operation and maintenance costs of the commission’s water business, any Commonwealth contribution to an annual annuity cannot be used for maintenance costs.

The amending agreement enables the ministerial council to recover water business costs from state governments in shares comparable to those which would apply if fee-for-service pricing were introduced. The amendment enshrines COAG principles relating to the costs of water services and eliminates cross-subsidies between the states for water business costs.

In 2006, the Australian government provided a $500 million cash injection to the Murray-Darling Basin Commission. The funds will accelerate water recovery measures, ensure that best use is made of water recovered for the environment and fully implement agreed programs. The amending agreement allows this and other commission monies to be invested more flexibly than the current agreement allows. Instead of being restricted to investing in fixed bank deposits, the commission will be able to invest in accordance with guidelines set by the ministerial council.

The current Murray-Darling Basin Agreement sets financial thresholds for certain commission activities, above which approval must be obtained from the ministerial council. These thresholds were set in 1992 with no provision for adjusting them to account for inflation or price increases. The amending agreement allows the ministerial council to alter the thresholds as it sees fit.

The amending agreement also makes a number of minor amendments including clarifying definitions, clarifying the annual estimates approval process, providing flexibility to appoint auditors and adding a detailed description of works and measures to the basin salinity management schedule.

Queensland became a party to the agreement on the basis that it would only contribute towards works and measures in which it is directly involved. The amending agreement removes ambiguities in the agreement that could be interpreted as widening Queensland’s liabilities. This amendment has no impact on the Commonwealth.

Negotiations between governments on these matters have extended over several years, leading to a final endorsement by the ministerial council in September 2005. The amending agreement was subsequently signed by relevant first ministers at the COAG meeting on 14 July 2006.

In summary this bill asks the parliament to approve the Murray-Darling Basin Amending Agreement 2006, which will, in turn, amend the existing Murray-Darling Basin Act 1993.

The Murray-Darling Basin Agreement amending agreement has been agreed by the Commonwealth and the governments of New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory. The amending agreement will also require the approval of the parliaments of New South Wales, Victoria, Queensland, South Australia and the Australian Capital Territory before it formally comes into force.

The bill will not affect the level of funding the government has allocated for the Murray-Darling Basin Commission. However, it will enable the commission to improve business practices for its water business unit, River Murray Water.

I commend the bill to the House.

Debate (on motion by Mr Laurie Ferguson) adjourned.