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Thursday, 16 August 2007
Page: 254

Senator ALLISON (Leader of the Australian Democrats) (1:13 PM) —I want to speak on the Water Bill 2007 today from a Victorian perspective. The lack of support of the draft bill from the Victorian government and their differences of opinion on it have been well canvassed in the press. I support Victoria’s position on this legislation. The Murray-Darling Basin is in crisis—there is no doubt about that. It is facing ecological collapse, with 90 per cent of wetlands having been lost, and a similar level of loss of populations of waterbirds. Three-quarters of the river red gum forests in the lower Murray are now dead, dying or highly stressed. When we combine this with toxic algal blooms and salinity problems, we have a serious problem at hand. Add to this a 40 per cent decline in the inflows reaching the Murray-Darling Basin and instability in the weather patterns due to climate change impacts and it is clear that the situation is serious. Healthy rivers are obviously vital to our prosperity and economy. A healthy Murray-Darling River basin is vital to both of those.

The Victorian government says it supports national leadership in the Murray-Darling Basin management and it is also committed to the sustainable management of the Murray-Darling Basin. It agreed to negotiate with all governments to improve the management and is proactively implementing the National Water Initiative. Victoria argues that it has established state based processes and policy which have been developed and agreed with the Victorian community. This includes annual water resource planning, annual allocations and control of river flows, land use planning in the Murray-Darling Basin and managing the associated economic development and community impacts. Victoria does, however, object to the removal of state rights and the overriding of the state processes and policy that have been negotiated with the community, have been proven to work and, most critically, have been able to manage urban agriculture and environmental allocations through the worst of the recent drought.

The Victorian government says that it agrees to giving the Commonwealth the constitutional powers and ability to set and reset a cap across the Murray-Darling Basin and to set subcaps catchment by catchment, with compliance to be enforceable through the Federal Court. It also supports giving the ACCC power to advise on water-pricing policy structures and to control market behaviour across the basin. It supports the powers to prevent any changes to water shares amongst states and the ability to hold environmental water in Victoria and to be not hindered in its use for environmental purposes. It accepts the ability to access any necessary information to determine whether the caps are being complied with and the ability of the Commonwealth to enforce compliance via the Federal Court.

A terms sheet establishing these principles and complete drafting instructions was, as I understand it, provided to the Commonwealth so that its legal advisers could see how we plan to alter Victorian laws to allow the Commonwealth to achieve its stated objective of sustainable water management across the basin. All of these terms were outlined in the Victorian terms sheet and provided to the Commonwealth, but so far the Commonwealth has not bothered to respond to those points. The representative of the Victorian government, Mr Peter Harris, said at the 10 August hearing:

The rejection by the Commonwealth of this approach was curiously framed. It did not respond to our proposals. Rather, it issued a demand for compliance with its own draft legislation, to which Victoria had never been a party. We were given no choice but to reject such a demand. I can table this terms sheet if the Senate would like that.

Victoria has rejected complete transfer of powers to the Commonwealth over our water sources because we have a very reliable water allocation system. Victoria’s irrigators and environmental groups agreed with the government that the certainty with which we had endowed their entitlements in negotiations over water reform between 2002 and 2004 was to be preferred to an unknown system of Commonwealth control. The Victorian water allocation system is a reflection of Victoria’s agriculture and relatively dense urban concentration within the basin, just as the more flexible allocation models of other jurisdictions reflect their agriculture and pattern of urban settlement. This is the heart of why state allocation systems vary.

In Victoria we allocate water already in the dam. As a result, we have a very high proportion of our water in high security and we closely restrict water access by providing allocations under bulk entitlements to water authorities. We keep within caps under the Murray-Darling Basin agreements because we simply cannot legally offer entitlements in excess of bulk entitlements, and bulk entitlements in turn match caps. The nature of our high regional population and our higher value permanent planting style of agriculture is vital to Victoria, and thus our system has always been more controlled and more reliable. As I mentioned, neither our farmers nor our environmentalists were prepared to give up this reliability, particularly after water allocations in Victoria held up so well during the worst ever irrigation system in 2006-07.

We believe Commonwealth negotiators never understood the nature of this issue, which is at the heart of Victoria’s objection. This was not ever about money. Victoria did not seek a special deal on funding. The Victorian government is actually spending today the first of more than $1 billion in real funds on irrigation modernising in Victoria over the period between now and 2012.

So I think it is fair to say that Victoria is more advanced with development, water resource planning and water management policy than other states. It has a water allocation system that is reliable and is moving at least towards sustainable practices, balancing consumption of water and the environment.

Victoria also argues that it is more advanced in controlling interception activities and farm dams and including within water planning plantation forestry, farm dams and groundwater, and flood-plain harvesting. Victoria has made commitments to the healthy river agreements and a red-gum policy and systematic assessment of river health.

The Victorian allocation system may be reasonably good, but in my experience the infrastructure in most irrigation areas is still fairly poor. The Victorian government has committed $1 billion to infrastructure, and an irrigation committee will be deciding where and how that will be spent. I understand it will create roughly 225 gigalitres of water savings which will be shared in thirds between the environment, the farming community and urban users. That seems to me to be a good start. Much more needs to be spent, but at least we are on the way.

Victoria’s irrigators and environmental groups are backing the Victorian government, preferring the certainty of the water allocation to the unknown system being proposed by the Commonwealth. The Victorian government reports that there has been a lack of consultation with key stakeholders and there is a lack of involvement of subject matter experts. Of course, allocating only one day to the Senate inquiry has not assisted in the understanding of the implications of this bill.

That there has been no consultation with state governments to discuss and resolve community and state government concerns is, I think, a disgrace. I understand that there has not even been consultation with the National Water Commission, the Commonwealth Department of the Treasury or the Commonwealth Department of Agriculture, Fisheries and Forestry, so I think that the Victorian government is right to be cautious about the haste with which the Commonwealth is passing these provisions. There has been very much an attitude from the Commonwealth of, ‘Trust us; we’ll address that issue in time,’ but that is not an adequate response to what are quite reasonable questions from the Victorian government, such as how the cap would be set and issues of seasonal allocations.

In reality there are a number of key instruments and details missing from this bill. They include the intergovernmental agreement, which has not been developed—certainly no-one appears to have seen it so far. There is no clear statement from the Commonwealth on policy objectives, beyond obtaining the referral powers from the Murray-Darling states. And there is no statement of environmental protection, for example. Victoria wants clear objectives for water resource security for environmental protection and the enhancement of environmental values. There is no clear indicator of the extent of the control and the definition of the Murray-Darling Basin. As it stands, the interpretation could be that the Commonwealth will control the catchment area north of the Dividing Range to north-west Victoria, an area that includes the Goulburn Valley, north Gippsland, Wodonga, Seymour, the Grampians, Western Desert, the Mallee, Mildura, Campaspe, Loddon, Coliban, Ovens and Keilor valleys and catchment areas. That is two-thirds of the landmass of Victoria.

There is no specific plan for improving the health of the Murray River, and the bill fails to recognise mechanisms established by governments under the Living Murray and Snowy River initiatives. We do not know how the Commonwealth will set seasonal allocations. Currently, allocations in Victoria are made under a conservative regime, more conservative and secure than other states. And it is not clear who is going to manage and set the level of the allocations to the irrigation community. We do not know how the four per cent exclusion from water trading will be handled. The original intent from the National Water Initiative was to retain this four per cent to maintain the integrity and resilience of farming communities; however, that too would seem to have been compromised.

Other problems include the compromising of established water resource planning for a catchment and making allocations outside the longstanding process established between the Victorian government and the Victorian community; making way for ‘interception allocations’ like farm dams and weirs without addressing how these activities will be policed; and the absence of a definition of a sustainable level of extraction of water from the Murray-Darling Basin. A legislated guarantee is needed to protect Victorian irrigators and the environment from any impacts on Victorian water entitlements or loss of production caused by the Commonwealth proposal.

Other concerns include the additional administrative overhead of $1 billion that does not result in any water benefits, protection of water rights or drought management. If this legislation is to be effective, the Commonwealth needs to conduct proper consultation and work cooperatively with state governments rather than rushing to pass the bill in an election year. It is also worth noting that the urgency to pass the Water Bill is not reflected in the time lines set out in the $10 billion funding package, which spans a period of over 10 years.

Because Victoria is advanced in its progress and management of water resources, allocations and resource and development planning, there are differences between state practices, and this may genuinely mean that there is a need to bring all the states into a consistent basin structure. But the Water Bill will be meaningless without a commitment to time lines and targets for water recovery. The Victorian government agreed to the ACCC managing and overseeing the enforcement of water rights. But of key concern is ensuring the Water Bill enshrines the independence and power of the new Murray-Darling Basin Authority to keep water use at a sustainable level and to make sure the environment gets its fair share. We need to see a strong, truly independent authority that has the power to enforce a sustainable cap on the amount of water taken from our rivers and to deliver the water needed to restore river health. Also of critical importance is the need to preserve and capitalise on the expertise, experience and intellectual capital of the personnel from the Murray-Darling Basin Commission to ensure ongoing involvement with the new authority.

The federal legislation still needs more work if it is to deliver on its promise to fix the problems of overuse and overallocation of our river systems. The Murray needs at least 1,500 billion litres by 2012. We need to be able to manage within that figure and define what a sustainable level of extraction is going to be, and also to manage for seasonal and annual variations. The intergovernmental agreement needs to be finalised as soon as possible and in a spirit of cooperation. This will only be achieved if federal and state governments get serious about buying back water entitlements and ensuring that the market works. This will not happen if the Commonwealth takes over all the functions. To be effective and to move to full implementation of the National Plan for Water Security this must be based on a cooperative approach between the states and the Commonwealth. There are still critical roles for the state and local governments in this planning.