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Tuesday, 19 June 2012
Page: 6971

Dr STONE (Murray) (13:35): Water use efficiency is a critical issue in Australia given the high variability of our seasons. We have a high per capita consumption and we have one of the highest levels of water storage per head of population anywhere in the world. We have needed that, and we need that storage capacity to continue into the future. We have tried to improve the efficiency of water use by better storage, labelling, better measuring, pricing strategies and improved technologies. Labelling is one of the strategies that can really assist in water use efficiency. This, of course, is the focus of the Water Efficiency Labelling and Standards Amendment (Scheme Enhancements) Bill 2012, the subject of this debate.

The coalition began this strategy years ago. We were one of the world's innovators when it came to making sure that when a consumer wanted to know how whitegoods would perform with water consumption they could rely on a label which told them what water consumption would occur. This bill will improve the Water Efficiency Labelling Scheme, or WELS Scheme as it is known, and it is a bill that the coalition supports. We have just survived 10 years of drought in Eastern Australia. The coalition has responded to this by, amongst other things, a careful analysis of the potential for new dams for drought-proofing. Our new dam policy will be announced before the next election and stands in stark contrast to the Greens and the Labor Party who have a no-dam policy no matter what, if, or when.

Water use efficiency is also top of mind for irrigators who grow most of the nation's fine food and fibre. They grow it reliably, which means from them can come the food manufacturing sector—and food manufacturers employ the biggest number of workers of any manufacturing sector across Australia. The drive for more efficient water use should be a cause for celebration. It should not be controversial. And it certainly should aim to be achieved at the same time as improved productivity and environmental sustainability if we are talking about water use efficiency in rural and regional areas, particularly in irrigated agriculture.

Unfortunately in northern Victoria a tragedy is unfolding disguised as a drive for water use efficiency. I am referring to the Goulburn-Murray irrigation system. It all began with Melbourne's water shortages during the last drought, the 10-year drought that many think was even worse than the Federation drought that occurred just as we were becoming a nation. Instead of considering recycling or stormwater harvesting, the state Labor government of the day decided on a desalination plant, which is yet to deliver any of its promise but has delivered a lot of extra debt. It also decided that a pipeline to take water out of the Goulburn River and over the Great Divide to Melbourne was a way to drought-proof its citizenry.

To justify taking this water from the irrigating food producers of the Goulburn-Murray region, it declared that there had to be over 200 gigalitres of water saved in the Goulburn-Murray irrigation system. After a few false starts it was finally decided that one of the ways to guarantee that these savings would be found annually would be to reduce the water use of irrigators by halving the footprint of the huge irrigation system itself. The system has over 6,000 kilometres of channel, 900 kilometres of pipes and over 3,000 kilometres of drains. There are over 14,000 water consumers. Together the irrigators' product supports over 23 food factories and produces over $2 billion in agricultural production annually. They are in fact the biggest producers of agricultural output in Victoria.

Reducing irrigation to find that extra water for Melbourne, Ballarat and Bendigo was unfortunately not the only reason for the so-called reconfiguring or shrinking of the irrigation system of northern Victoria. Officially this project was called the Food Bowl Modernisation Project and a special agency was set up to oversee it: the Northern Victorian Irrigation Renewal Project, commonly called NVIRP. No-one denies that the state had long neglected the maintenance and proper planning of its state-owned water authority and state-owned irrigation system. The system has over 700 employees whose jobs, you would think, would be to make that system efficient, cost-effective and equal to any in the world. Unfortunately, as the Auditor-General of Victoria's report and the Victorian Ombudsman's report into NVIRP show, the opposite is the case. The Food Bowl Modernisation Project is characterised by a horrific lack of planning and inefficient business model development. It has been very poorly executed. Options have not been considered. There have been breaches of proper tendering practice. Privacy provisions have been overlooked. There is a lack of transparency. Communications with stakeholders have been appalling. The recommendation of the Ombudsman's report was in fact to roll NVIRP from an independent authority into the Goulburn-Murray Water authority.

Meanwhile, irrigators have had the cost of their water increase to such an extent that many cannot pay and many doubt that they can extract enough productivity out of their properties to justify the cost of irrigation water itself. But it gets worse. The plan to halve the irrigation footprint is not just about shrinking water consumption across northern Victoria. The original plan was for some of that water to go to Melbourne but a lot of it was also to go to the Commonwealth Environmental Water Holder, which is part of the Murray-Darling Basin proposal, in order to make sure that we have a sustainable environment throughout the Murray-Darling system.

The other part of the agenda in shrinking the footprint of the Goulburn-Murray irrigation system is to save the state the cost of continuing to manage such a big system—a big system that does produce very substantial amounts of food in the form of dairy product; fruit product; cereals, particularly oil seeds; and sheep and beef meat. These sectors are, as I said before, contributing to some of the biggest outputs of agriculture in the state, including the biggest exports of milk powders through Geelong, but that has not been considered. The consideration and the key driving force behind the Food Bowl Modernisation Project tragically now is how to save the state the costs of running the big system and also how to keep their over 700 employees in business or salaried.

In the northern Victoria area 425 gigalitres have already been recovered from irrigators for the environment. There are another 200 gigalitres shortly to be found. The difficulty for irrigators are self-evident. If you have a system being halved then how is that being achieved? It is being achieved by identifying two parts of the system: the backbone or main channels and then the spurs. The spurs are the smaller channel systems which might have five, 10, 15 or 20 farmers along them and they are supplied water off the backbone or what used to be called the main channels. Goulburn-Murray Water, via their lawyer John Adams based in Kyabram, have come up with a plan where syndicates or 'pods' will manage all of the spurs by themselves. That includes the maintenance as well as the ordering and distribution of the water amongst the various farmers on the spur. It also includes deciding what and if and how they might in the future make any changes or efficiencies in their particular spur. That might all sound fairly reasonable except that you have to understand that a spur might include a dairy farmer and a wheat grower or a cereal producer of some sort or a fruit grower. It might include a big property, a small property, a hobby farmer and a third- or fourth-generation farmer. The tragedy of all of this is that these pods, as they are now called, cannot be insured. They are not subject to unlimited liability. If someone refuses to pay their fees and charges, the rest of the pod are liable. They have to pool all of their water together into one account. It does not matter how many of them there are or what the difference is between their enterprises. If a child falls into the channel and drowns or the pipeline is broken by a rampaging bull, they are all liable. There is no capacity for them to develop a sinking fund for their future maintenance and, if they do not maintain their spur, the water authority can choose not to keep supplying water to them.

The way these things are being proposed and planned is a moral hazard. In fact, as we speak people are being pressured into becoming a part of one of these pods. At the moment, if you refuse to do as the Food Bowl Modernisation Project intends for your part of the system—perhaps it is insisting that you go from irrigation to a stock and domestic system only—you are able to uphold your rights within the law and still be supplied with water. Unfortunately, we have now been told by the Minister for Water in the state of Victoria that the legislation is to change and an irrigator who chooses or would prefer to continue to operate an 800-cow dairy farm with irrigation to support that enterprise can be forced to relinquish their water and become part of a stock and domestic supply system only.

This is a serious problem, of course, for the irrigators who, in my part of the world, are still trying to recover from the 10-year drought and the floods that occurred first in the west of the electorate and last year in the east of the electorate. At a time when our food manufacturers are wanting to reinvest, as herds rebuild and farmers are trying very hard to adjust so they can survive the new carbon tax coming on 1 July, we have this incredible attack, as I call it, on the production of food in northern Victoria and on the economy, which in turn translates into an attack on our way of life and our communities themselves. There has been no consultation on this decision to halve the irrigation system or on its impacts on the 52 towns across this area. There has been no stakeholder agreement that this is the best option and the way to go. I believe there are now significant reasons to very seriously consider the governance of the irrigation system itself. I believe that, like all other states in Australia, Victoria should consider the establishment of an irrigator owned cooperative, just as there is in New South Wales, with the Coleambally, Murray or Murrumbidgee irrigation systems, and in Western Australia, with the Harvey and Ord systems. All of those systems are irrigator owned and managed and stakeholder driven. These coops are responsible for every aspect of irrigation system maintenance, including the costs, policies and practices which keep them viable and able to produce food and fibre for the nation.

We are now, quite evidently, in a situation of total policy failure and governance collapse in Victoria in relation to the Goulburn-Murray Water irrigation authority. The minister understood the problem when he became the minister and immediately replaced the board, having called on the previous board to resign, which they all did. The CEOs and CFOs resigned. The NVIRP CEO resigned 24 hours before the ombudsman's report became public. There is a well-understood problem in this part of regional Australia. It has to be addressed with an irrigator cooperative. It must be urgently examined before we lose for all time an investment of four generations in food production in Australia.