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Tuesday, 14 August 2007
Page: 63


Mr ANDERSON (5:07 PM) —I rise to speak on the Water Bill 2007 and the Water (Consequential Amendments) Bill 2007. While there are many points that I would like to make today, there are some that I will make and some that I will not. I will begin by making the observation that the current water debate in Australia very much reflects a dawning understanding that, in an age when we think we can control and manipulate everything and manage it perfectly—or not manage it perfectly, according to which side of politics you belong to—the reality is that we do not control everything. We do not control the weather. As farmers often say, a lot of what we currently describe as a crisis has more to do with the fact that ‘the fellow upstairs has chosen not to send us reliable rainfall in recent years’. I think we need to sober up a little and recognise the reality that a great deal of the hysteria surrounding water at the moment stems from the fact that there is a shortage of water, which has nothing to do with any government, which is beyond the control of any government and which is, frankly, outside the purview of any of we mere mortals to greatly influence.

I am reminded of this when I look at the reporting we sometimes see in which people say that, despite all this effort, no water has been returned to the Murray-Darling and so forth. That is absolute hogwash. In fact, a great deal has been achieved—and not without considerable cost to a lot of people in electorates like mine who, through some pretty clumsy and unsatisfactory processes, have in fact surrendered a great deal of water. In the early days, they simply were not compensated or in any way recompensed for much of that water. The reason, though, that the sacrifices they have made have not yet been evidenced by increased flows of water through the Murray-Darling system is that there has not been any rain. So I place on record at the outset those two broad observations. Firstly, more progress has been made than has been acknowledged in even the august pages of papers like the Australian. I am a great admirer of that paper but, on water, whilst they have often enthusiastically covered the issues, they have not always fully understood what has been achieved and the effect of that out in the paddock. Secondly, when we talk of water crises, there is no use simply pretending that this is somehow the failure of governments. It goes well beyond that. In the end, we are all at the mercy of the elements. Australia is perhaps the most unreliable continent on earth for rainfall, and we remain, I think, the second heaviest users per head in the OECD. There are an awful lot of variables for any government to come to grips with. But governments, over quite a long period of time, have been trying to come to grips with these issues.

It is worth noting that, in 1994, certain agreements were entered into by COAG, but the member for Fraser might like to note that the great problem was that precious little was done about it. The states, particularly on the issue of clearly establishing what water entitlements might look like and how they might be compensable in the event of their impairment or removal, were sadly inactive—nothing happened. There is a reason for that. As a result of a very weak Water Act, put together in the early part of the last century, successive governments of all persuasions in New South Wales handed out far too much water. I suspect that the prospect of having to hand it back frightened the Treasury in that state to an appalling degree and they backed off. They started insisting that rights would not be acknowledged and not be conceded, and talk of compensation opened up legal issues that they did not want to touch.

The result of that was a lot of injustice and corresponding resentment and resistance from farmers and indeed small businesses and people who worked for them in country towns right across the basin. Their view was that they had done nothing wrong—they had used the water entitlements freely given to them by governments. Indeed, those entitlements, having been given out, often came with strings attached—‘use or lose’—and with taxation incentives to develop. So farmers everywhere in the basin did just that: they developed their assets and they created wealth, exports and jobs with those entitlements. So the broader community, having benefited greatly—and this seems to be a principle that was lost in New South Wales until, to his great credit, Craig Knowles acknowledged it—should reasonably have been prepared to share the burden, the real cost, of cutting back those water entitlements. The lack of understanding in Macquarie Street of some of the principles involved in that was, at times, astounding.

So we got to 2001, when I became directly involved in this, and the early versions of what has now become known as the Living Murray. The amount of water that was being talked about brought home to me the reality that, without a decent sharing of the burden, this would be catastrophic for country communities. I recognised that we really had to do something much more substantial to find a way forward that would break free of some of the ideology and emotional claptrap we got from the ‘deep Greens’, recognise the genuine conservation concerns of people who were looking to ensure the appropriate levels of quality in our water and the environmental health of our water systems, and recognise the legitimate interests of industries such as irrigation—not only those interests that were linked to the farmers who use the water, but also those that were linked to the communities and, indeed, the economy that benefited from them.

And so it was that after the 2001 election we set about the process that ultimately came to be known as the NWI—the National Water Initiative. It was very difficult in the early days. It is interesting to look back over this debate and recognise that at that time there was very little national interest in it. After one of the very high ranking officials, and his offsider, who came to help me with the National Water Initiative had gone away to look at it at the request of the Prime Minister and me—as I was then the Deputy Prime Minister—they came back to me and said: ‘We have to now concede that there is a major national economic and environmental interest at the heart of your concerns and the company needs to address them. When we started this we thought it was just a Nationals grab for money for farmers.’

On the basis of cooperation—and I must record here my appreciation for the work of Craig Knowles, who was then the minister in New South Wales—we started to put together what became known as the National Water Initiative. It had at its heart a belief that, without investment security for water users, you would compromise not only the economic outcomes from the use of that water but also the environmental outcomes. It was interesting that when we had the Bureau of Transport and Regional Economics have a close look at the impact of investment security on investment, jobs and environmental outcomes, we found that the greater water security offered to Victorian farmers on the southern side of the Murray—which has the same Australians, the same banking and financial institutions, broadly the same soil and the same types of crops—created vastly different outcomes. They stemmed from the fact that water security on the southern side of the Murray was greater than that on the northern side.

What was the result? To illustrate it simply, if a farmer went to his bank manager and said: ‘I have a flood irrigation arrangement that is very inefficient and environmentally horrible. I am not getting a high value of production out of it. I want to move to a highly sophisticated arrangement that will use less water but will grow more. There will be less environmental damage. It involves hundreds of thousands of dollars worth of expenditure,’ on the southern side of the river where the investment security was good, the banker would be likely to say, ‘Yes, you can borrow,’ but on the northern side the banker would say, ‘No, because we have inadequate security over your water.’ The point was understood and it was eventually picked up by the Wentworth Group, including the conservation representatives on that, and they were able to put that to the New South Wales government. It was then that we started to get a bit of movement.

Unfortunately, these things are seriously misunderstood even today. Yet, in reality, we have known since the industrial revolution that investment security is the key to investment. When you are using water, the proper valuation of water and the capacity to trade it and to move it to where it will do the greatest good are vitally important not just for economic outcomes but for environmental outcomes. Again, I urge the commentators, the armchair critics, the politicians and the people involved in this whole debate to recognise that core principle.

We have come a long way. A senior irrigator in my electorate, a lady I have some respect for, came to me the other day. We were talking about the problems of securing decent compensation for groundwater users in the Namoi, which is an issue that has now been resolved. She made the comment that we have come a long way, because no-one now thinks that governments can take water away without paying properly for it. In other words, there is security. That will drive investment. That will drive a whole range of desirable outcomes in the future, which is to be greatly welcomed.

I must gently remonstrate with the minister. He made the observation in here when he introduced his bill that this was the first legislation introduced into the House in relation to water for 106 years. That is obviously not correct. I will jog his memory. The National Water Commission Bill 2004—legislation introduced here by me on 18 November 2004—was all to do with the establishment of the NWI and the National Water Commission. Indeed, as the government’s own notes say, the National Water Initiative remains the blueprint for water reform in Australia. It is, in other words, the foundation stone. All of the legislation that we are debating at the moment—the $10 billion, the intergovernmental agreements and so forth—are about implementing the blueprint of the National Water Initiative. That is what it is about. I draw some comfort, pride and satisfaction from that and I ask that it be generally acknowledged that we have come a long way.

The key elements of the National Water Initiative include: the water access entitlements and the planning framework; water markets and trading schemes; best practice water pricing—which, wherever possible, should be left to the marketplace; integrated management for water for environmental and other public benefit outcomes; water resource accounting; community partnerships; and adjustment. There you have it. It is the cornerstone, if you like. It is the building block; it is the foundation stone. It is very important indeed.

What ought to happen? We ought to have a clear-cut understanding of what we are about. We need to recognise the highly variable nature of rainfall events and water flows in this country. We need to recognise the clear need to establish the higher use orders—environmental, household and so forth—and to do so on the basis of sound science and information. It is very interesting that a senior scientist here in this town told me a while ago that one of the problems with the slow delivery of the NWI was not the fault of governments; it was the fact that we have gone from a situation where the information and knowledge about water was well ahead of public policy.  The NWI leapt from the knowledge base. There is a great deal of science and these new funding arrangements recognise that. This needs to be done hand-in-hand with better monitoring systems, which interestingly will rely heavily on bandwidth. That is another reason why we need proper bandwidth right across the nation, not just as some sort of benefit for farmers but also because it will be critical to the management of our national resources in the future.

This process was established on the basis of science and not green ideology or popular sentiment, which so often misunderstand water use. I do not know how many times I have run into city people and people in the media who have said to me, ‘We should not be growing rice and cotton in Australia.’ They completely misunderstand it.

For a start, neither of them use as much water as many other industries. Secondly, as I think has been said often enough in this place, they are perennial crops. If you do not have the water, you do not grow them. Thirdly, you do not want bureaucrats or union officials, like Bill Shorten, making these decisions. If there is surplus water available over, if you like, the framework in which you meet your higher use orders—the environmental outcomes that you need: water quality needs, riparian rights, town water, urban consumption—then let the market determine where it goes. If it should not go to cotton or rice, farmers will quickly divert it to where it creates greater wealth. But again I make the point that these are perennial plantings. They are ideal where you have highly variable flows, because if there is no water you do not grow them; if there is water you do grow them. So that is a classic example of why decisions must be made on science and information.

I would not agree with a lot of the things that Dr Suzuki, that world renowned environmentalist, said, but if there is one thing he said that is right and, frankly, that the government needs to be cognisant of—and I attempted to be when we were negotiating the NWI—it is this: if you have an environmental issue you want to tackle, then go and talk to the people who live with it in the area where the problem is, because if they are committed to the area they will have a lot of knowledge and a lot of commitment to finding the quickest and most efficient route to resolving the environmental problem. I notice that, again in the government’s notes in relation to all of this, they talk about the need for community involvement and so forth. But it needs to be elevated to its rightful spot, right up the chain, right up the food chain in terms of priorities for people who run the National Water Commission, the new instrumentalities and so forth that are set up, if you want results.

I want to turn my attention to what irrigators are facing. Their primary problem undoubtedly is a lack of rainfall across the basin right across Australia. That is extremely concerning. The drought is doing untold economic and social damage in electorates such as mine and that is cause for great sadness and frustration for me. But we all recognise that governments cannot control rainfall events. Having said that, the principle remains: decent water security based on people’s entitlement. It is not actually ownership of water that the NWI offers but a property right inasmuch as it gives security of a percentage share of the available consumptive pool at any given time.

The water-sharing plans negotiated under the NWI in New South Wales will be honoured under the new arrangements, and so they should be. In essence, farmers respecting common sense and acceptable past practice recognise that they wear the risk for climate change, drought and so forth, but governments should wear the risk for policy changes and changes in government priorities. Those risk-sharing arrangements are fully honoured. I hope New South Wales will come to the party and honour them completely in their intergovernmental agreement and I hope that the other states will do the same. That is very important indeed.

I think it is sometimes a bit too easy for our irrigators to lose sight of the fact that it is not the Commonwealth government that got them into this mess. The Commonwealth government has never issued any licences, impaired any licences or removed any licences. Now that the Commonwealth has a much greater say, of course, irrigators have the security of being promised that water will not be forcefully removed but, rather, purchased from willing sellers or retrieved through environmental savings on a fifty-fifty basis through infrastructure improvements with the capital that is now being contributed or will be contributed both on farm and off farm—off farm when the states agree to decent IGAs—and that gives them a level of security that they have not had in the past. They also are in a position where, whilst it is taking some adjustment, the idea of water trading does mean that in country communities the water will go to where it can create the greatest economic benefit and therefore the most jobs and the strongest communities in a social as well as economic sense.

Coming to that issue of the $10 billion, it is a very welcome injection; there is no doubt about that. It means that significant on-farm works can be undertaken. I have already had an irrigation business come to me to say that they have identified some works on their farm which will enable them to maintain production and therefore jobs, including a lot of Indigenous jobs at current levels, while meeting their cap obligations. That is a very attractive proposition. If we can duplicate that across the basin, it may mean that we can minimise a lot of otherwise very damaging economic and social outcomes.

Finally, the off-farm works should allow for the major redesign and reconfiguration of things like Menindee Lakes. Those savings ought to be returned fifty-fifty as agreed to both irrigators and the environment. I think that would be a very desirable outcome for all involved.