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Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR (Mr Windsor) —A few people will have to leave for a short time because the Prime Minister will be speaking. You probably have had experience with other committees where people come and go. Everything will be recorded, though.

I formally welcome representatives of the Department of Sustainability, Environment, Water, Population and Communities and the Commonwealth Environmental Water Holder to today’s hearing. Although the committee does not require you to give evidence under oath, I advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. These proceedings are being broadcast and televised on the Internet.

Thank you for taking the time to be here. We have received your submission and we thank you for that. Are there any additional submissions that you would like to make, or would you like to make some opening statements and then be subjected to some questions?

Dr Grimes —We do not have an opening statement prepared and we do not have other material that we were proposing to provide to the committee. Essentially, we are in your hands and are happy to range over the programs that we are managing and other questions that the committee may have.

CHAIR —Would anybody like to make some introductory remarks?

Dr Grimes —We have provided a submission to the committee. The submission sets out a number of matters that the committee is considering. Obviously, the reforms to the Murray-Darling Basin are reforms of national significance: the importance of ensuring that there is sustainability in the use of water resources in the basin that we make the preparations for the future; a recognition that there are adjustments that need to be faced by communities with the basin; and the importance of carefully considering those matters ensuring that they are fully taken into account in the development of the basin plan. Our submission sets out the range of programs that the department manages. Of course there is a very considerable investment being made in programs within the basin. They will be very familiar to the committee, so I am very happy to hand over to the committee for questions.

Ms LEY —Can any of you describe to me your level of confidence in the science behind the basin plan and the reasons why you have confidence in the science?

Dr Grimes —I might invite Mr Slatyer to provide you with an overview of the scientific basis of the work that has been undertaken to date.

Mr Slatyer —Notwithstanding that introduction, the real responsibility for determining and advising on the nature of that science would be with the authority. They commissioned the science work that they have relied upon in developing the guide. We are aware that the authority have convened an international peer review panel and that the authority have described in some detail in the documents they have made public the science base for their work and that they considerate it to be the best available science that was available to the authority at the time. We understand also that the authority is currently seeking further science inputs and we are comfortable that the authority is earnestly seeking out the best possible science evidence that it can to go about its task. We are  not independently reviewing that science. As a department, we feel it is important that the authority does draw on the best available scientific information that it possibly can. If we can assist them in any way to do that we would, but at this stage it is in their hands to pursue that.

Dr Grimes —I might just add to that answer—and I think Mr Slatyer touched on this. One of the things that is very important is that there is transparency in the work that is being done by the authority and the basis on which judgements are being made. You may recall the ministerial council also just before Christmas made comment on this: on the importance of the scientific basis of the plan being quite transparent.

Ms LEY —I understand that it is not your responsibility to come up with the science but as the senior Commonwealth public servants implementing the policy that is currently in place, which includes water buyback and not just the proposed plan, what is your level of confidence in the science and can you tell me what that confidence is; can you describe to me—just very briefly—your understanding of what the science is?

Mr Slatyer —We are aware that the authority had undertaken considerable modelling of the hydrology of the environmental assets of the basin. They had also assembled a very comprehensive list of environmentally important sites and had determined the watering requirements based on that scientific information and that hydrological modelling associated with those sites. So we were comfortable that that kind of work was going on, but it is not our place to judge or make commentary on whether there might have been any other information out there or not, and so forth. That would be asking an opinion of us which we are not entitled to give. The department was aware of the type of science work that the authority was undertaking, and we were comfortable with the science that it had received, but that is not to say that there is not other science out there that the authority would also quite properly take into account. We understand that the authority is currently further developing the science base for its work, and we are happy that that is occurring.

Ms LEY —I have a quick question—I know there are other questions, and I do not want to hog the floor. You have said twice that the authority is undertaking other science work. Do you think that that other science work should be done concurrently with proposed policies being put in place, or should it have been done before?

Mr Slatyer —The reality of the situation is that there is a lot of work being done now that has not needed to be done in the past. The authority is at the cutting edge of that work, trying to figure out the environmental values of these various places and the watering requirements to service those environmental values. So it is not surprising to me that this work is ongoing and that the authority’s quest to get better and better science data will continue. That is quite appropriate. I do not think it implies that they somehow failed to obtain that data earlier; it just implies that there are continuing attempts to get the best possible scientific understanding, and that is quite appropriate.

Ms LEY —Do you think it is appropriate that a target of 3,000 to 4,000 gigalitres has been set before, as you put it, the environmental modelling requirements for the icon sites have been determined?

Mr Slatyer —For the purposes of the guide, the authority has laid out the information that it relied on in arriving at those numbers. That is set out in the companion document to the guide—volume 2 or whatever it was called. The authority has asserted that it relied on the best information it had available to it at the time in deriving those numbers.

Dr STONE —Looking at your program of work—your consultancies that you commissioned and so on—the biggest spend was on socioeconomic research. Perhaps they are fairly expensive compared with the physical sciences; I understand that that is the case. In your document you also came up with a number that you put down in the books of some 800 job losses as a consequence of the water buyback in particular. That figure was challenged, of course, at the very first meeting and subsequent meetings in the community as a huge underestimate of the employment impacts alone. You will remember that the previous chair of the Murray-Darling Basin Authority explained that that figure probably was inadequate—was an underestimation—because you were required to undertake a specific type of modelling. I think you were at that meeting, Ms Harwood. You will recall Mr Taylor’s explanation that you were required to do modelling which took on the whole of Australia or some such thing, which gave you this artificial number that then was put in the document as the employment impact.

Given that in your opening remarks, Dr Grimes, you said that community adjustment was one of the issues of concern that you were still investigating in your work, why is it that you do not have much reference at all to how the authority recommends to the government that adjustments be made by communities? There seems to be a lot of emphasis on the willing sellers buyback as the so-called compensation for water loss. You will recall that at that first consultation meeting, Ms Harwood, you were challenged about whether therefore adjustment should include things like delivery share compensation for irrigators selling their water in Victoria and you said, ‘No, no, there will be no compensation for payout of delivery share.’ I am sure you would recall that very well. You were asked that at a number of meetings and that was regularly your reply. What I am trying to ask is, ‘Have you changed your mind already in the further work you have commissioned on the socioeconomic impacts of the numbers of gigalitres you identified as needing to be found for the environment? Where are you up to with that? And what are your new or further thoughts on how communities should adjust to a removal in some cases of more than 50 per cent of their productive capacity?’

Dr Grimes —Many of the elements of your questions really touch on work that is being done by the authority itself. That is socioeconomic work that is being conducted by the authority and the authority’s own analysis of the establishment of SDLs. In our submission, we make reference to some of that work that has been commissioned, but it is important to recognise that this is work that has been commissioned by the authority and not work that has been commissioned by the department.

One of the points that we do make in our submission is that we are quite supportive of the further work on socioeconomic analysis that the authority is doing, particularly looking at the shorter run effects and the transitional effects on communities. Some of the modelling that you referred to looks at long-run aggregate effects. That is very useful modelling to provide a long-run picture, but it is very important—and we draw this out in our submission—to also consider the shorter run impacts and the transitions that will need to be made. We are quite supportive of the work that is being undertaken by the authority at the moment to look at those things in greater detail. But, as I said at the beginning, most of this work is not being conducted by the department; it is work that is being done by the authority.

Dr STONE —But you identify though the need for this work to be done and you are encouraging them to put more effort into discovering socioeconomic short-run impacts as well as long-run impacts and adjustment?

Dr Grimes —We are certainly supportive of looking at the socioeconomic work in greater detail, yes.

Dr STONE —Ms Harwood, are you still of the opinion that your department should not be compensating in addition to just the market value for water bought back from so-called willing sellers when they lose productive capacity?

Ms Harwood —The normal practice is that a water trade happens like any other water trade in the market. If a person is selling all their water entitlements and wishes to terminate delivery, they will have termination fees owing to their irrigation provider if they are in an irrigation system, whether it is in Victoria or elsewhere, and they are responsible for those charges. We operate like any other purchaser in that we pay the market price for the water and the person selling it makes their decisions about what they do with their delivery right.

Dr STONE —When the Campaspe irrigators sold all of their water back to be environmental water via the Victorian state government, they were compensated for delivery share.

Ms Harwood —The Campaspe irrigators sold their water to NVIRP. That water was not sold to the Commonwealth. That water is held by NVIRP.

Mr ZAPPIA —I have a couple of questions. One arises from the water market. Is anyone tracking the sale of permanent water licences within the basin so that we are able to determine just what is happening—where water is going and what districts it is leaving?

Ms Harwood —The National Water Commission does an extensive report on water trade each year. The most recent one came out just a few weeks ago. That provides a lot of information about both temporary and permanent trade, the volumes and values of trade occurring across the basin.

Mr ZAPPIA —My second question relates to the funds that the federal government have set aside to improve water irrigation efficiencies. I notice that in your submission you talk about how much water has been bought back by the Commonwealth, but there is no amount associated with irrigation efficiencies. Is that because to date there has not been any water returned to the government as a result of those investments? If so, are there any projects currently under consideration that are likely to be approved for funding?

Ms Harwood —There has already been water returned to the Commonwealth through infrastructure projects. For example, in the On-Farm Irrigation Efficiency Program, where delivery partners work with a group of farmers to do individual on-farm upgrades, that water is starting to come through under the contract process for which those works are done. We also have some water coming through from some of the system level district upgrades that are occurring. So those water recoveries are starting to come in and, yes, there are a number of projects across the basin where, under the contract schedule for delivery of works, there are points in that schedule where water is transferred through to the Commonwealth for savings coming from that project, including to the New South Wales Private Irrigation Infrastructure Operators Program, the on-farm program, the program in South Australia and the Queensland on-farm program that is delivered by the state government. So there are quite a few projects where water is on its way, so to speak.

Mr ZAPPIA —Just to clarify that, in your submission a figure of just over 700 gigalitres has been referred to as being returned to the government. Have those efficiencies been factored in anywhere or can you give us an idea of how much water we might be able to add to the 700 gigalitres?

Ms Harwood —As I understand it, there was an estimate in the Guide to the proposed Basin Plan that rolling out the infrastructure investments of various kinds across the basin would deliver around 600 gigalitres in long-term yield terms as the water saving that would come through to the Commonwealth from those projects. It is necessarily an indicative estimate because a lot of those works are at the preliminary stage or they are just coming under contract or whatever. But that is the volume that is expected on the current span of expected projects and real current projects. So it is 600 gigalitres long-term yield.

Mr ZAPPIA —Thank you.

Mr SIDEBOTTOM —A lot of the evidence that we have taken and some of the evidence that we have seen about the buyback scheme indicated the swiss cheese effect. You are no doubt well aware of the swiss cheese effect and how that is mitigated by efficient use of the infrastructure that is there. It is also leading to a decline in the capacity of some areas to be productive. In fact, it is acting against some of the very things that we are trying to support. What approach to the buyback program does your department have with regard to this negative effect? Are there incentives or other programs available to try and mitigate it?

Ms Harwood —Firstly, as part of the Restoring the Balance in the Murray-Darling Basin Program, which runs the buyback, there is a component which is called the Irrigator Led Group Proposals program. That is basically an initiative where a group of irrigators who are willing to and wish to depart irrigation together—it has to be their proposal—come forward. If they wish to cease irrigation along a channel, if it is in an inefficient part of the system, the program will purchase the entitlements and assist with the decommissioning of the irrigation infrastructure and the development of an alternative stock and domestic supply system. So there is a program there which essentially enables the program to purchase water entitlements in a sort of concentrated way at the fringes of the system, where there are inefficient parts of the system.

Secondly, we pay a large amount of the water in the basin which is in irrigation districts. Most of those districts have had a grant from the government to do a deep and wide planning exercise to basically look at where this irrigation district is going in the future and at what the logical footprint for irrigation in the future would be if we were going to rationalise the system and upgrade parts of it and maybe decommission other parts. Where should that take place? The grants basically pay for the irrigation providers to do that themselves and work out their preferred footprint.

Then, under the infrastructure programs, in various ways, there are already a number of projects proceeding where those plans are coming to life. So the infrastructure investment will pay for the rationalisation and decommissioning of the parts that the system providers themselves have worked out should come out of irrigation, upgrading the delivery standard in the parts of the system that they intend to retain and then also buying on-farm upgrades, which are enabled by having a superior standard of delivery through the main stem of the delivery system, wherever it is. So the investment there is helping the irrigation bodies to reposition their system for the footprint that works for the future.

In terms of the immediate effect of swiss cheese, if there is a water sale off a channel and that property is no longer supplied, they terminate their supply. The irrigation provider has the right to charge termination fees of up to 10 times the annual fixed charges, so in essence, although that property may not be actively irrigating, there is the equivalent of 10 years of fees, and if someone buys water back onto that property and continues irrigating or if they bring water on through the temporary market then they will pay delivery charges for that as well. It is not to belittle the impacts of the changes that are occurring. Through the investment programs there are a number of arms of investment that are seeking to help irrigation districts with delivery systems to bring their footprint to a good, viable footprint for the future, paying for the planning, for the infrastructure changes, for taking out the rationalisation process, for taking that forward, and also through the normal buyback. That is a quick summary of the landscape.

Mr SIDEBOTTOM —Your general tender process is open. What about a strategic rolling out of tenders? I suppose it is a consultation thing as well with stakeholders. But what about rolling out catchment by catchment to try to deal with this in a strategic way rather than having this general tender, which I think is at the heart of the swiss cheese effect?

Ms Harwood —The tenders do operate in a way which is designed to be market based and to deliver value for money for the Commonwealth. Less than half of the trades are for the whole water coming off the property. A lot of trades are people selling some of their water entitlement. There are many irrigators in districts that will be continuing in irrigation and wish to continue who will wish to sell part of their entitlement. It is a tension between respecting the property rights of irrigators and their right to deal with their asset as they wish, to trade it to the Commonwealth or anyone else. It is balancing those interests. As I said, where there are groups of irrigators for subdistrict closures who want to work together with us and the irrigation provider, bring the conveyance savings back into the irrigation district and basically decommission that area back to dryland farming, we assist with that, and we have a couple of those in train now.

Dr Grimes —One of the advantages of the open tender approach is to provide a mechanism for when irrigators are making efficiencies, so, as Ms Harwood was saying, not leaving the land but actually staying on the land provides an avenue for them to make those efficiency savings and to be able to contribute to the overall achievement of the SDLs. It is not just about closures in parts of the footprint.

CHAIR —Has the department actually viewed any proposals, particularly from some of the irrigation districts where there have been proposals to shut down part of their systems, if in fact the government or the water holder purchased their water, which would overcome the Swiss cheese effect and enhance the water availability back into the system? Have you seen any proposals?

Ms Harwood —Yes, we have.

CHAIR —Could you explain what has happened to them and how successful they have been?

Ms Harwood —A number of proposals have come forward. In the early days of the irrigator led group proposal, the basic tension was around price expectation. So you have got the normal water trades occurring across the district to the Commonwealth or to anyone else at the water market price. Price expectations were very high. Some of the proposals sought two, three or four times the market price of water for the water coming off the channel that they were proposing be closed. But, over time, the understandings and communication between us, the irrigators and the irrigation water providers have settled to a place where everyone’s expectations can be met, and we have two proposals of that sort that are actually proceeding.

We have to go through a physical due diligence to assess the decommissioning and other costs of basically removing the irrigation infrastructure and assisting to bring it back to dryland and then work with the irrigators and the irrigation provider. There is a negotiation between them as well as to what happens with the conveyance savings that come back from closing a channel. The tensions are not just between the Commonwealth and the irrigators; it is also that the irrigators who are intending to depart and the irrigation provider have to reach an accommodation both is satisfied with that the decommissioning is being handled well and that the conveyance savings have been distributed in a way that is acceptable to both. Then the price has to be reasonable from the Commonwealth’s point of view. Those proposals generally involve a small premium on the water price but not two, three or four times the market price.

Under other programs, the New South Wales Private Irrigation Infrastructure Operators Program is in some ways the quiet achievers in that space. For instance, with the big renewals of systems like Trangie, Marthaguy and Tenandra, those proposals are, as I said, a sort of composite proposal and they involve active decommissioning. So there are parts of the system where the irrigators themselves have determined the footprint should pull out of that area for the irrigation delivery.

CHAIR —Could you give us some examples of where that has actually happened?

Ms Harwood —Yes. The Trangie renewal project under the New South Wales Private Irrigation Infrastructure Operators Program. The same sorts of things are happening in Marthaguy and Tenandra and in Murray Irrigation, in West Moulamein. We have had other proposals from Murray Irrigation, some of which have not proceeded.

Ms LEY —West Moulamein is not a proposal that is proceeding, so it is not an example.

Ms Harwood —There is one in West Moulamein that is currently past due diligence and is approved and is proceeding. There have been other proposals from West Moulamein that did not proceed, but we now have a proposal there that is proceeding, a proposal inside Murray Irrigation.

CHAIR —Trangie-Nevertire, is it?

Ms Harwood —Yes.

CHAIR —Would you consider that a template in terms of the process that was engaged in to achieve a win-win outcome?

Ms Harwood —It followed the sequence I was describing, yes—basically grassroots based planning for the district about: where does our future lie; where should our irrigation footprint be? But it is done from the point of view of the provider and their member irrigators, from their perspective. Then they bring a business case to us for the refit of the system, the rationalisation of the parts that they want to bring out of the system and whatever other works to achieve the basically renewed system that they wish to operate. Then we proceed to assess that under full due diligence, and that project is underway.

Dr STONE —I could also add to your list of disappointed negotiators with the Commonwealth. The Torrumbarry irrigators wanted to deal with the Commonwealth and sell a chunk of their water because they were in a very poorly serviced part of the Goulburn-Murray irrigation system. They still await some sort of negotiation, mediation or whatever it is you call it.

It seems to me that you have two incompatible things happening. I asked a question before about the extent to which the tenders or the so-called willing buyback process had embedded in it any adjustment values or attempt to help those people who sold all their water to actually be able to afford to do that, and that was adding in payment for the delivery share.

You talked about how you are in fact wanting to be strategic. You said to us just now that you want these irrigation systems to do their footprint work to see what would be strategic for them in the future, but can you not also see that at the same time as long as these so-called ‘market-based buying from willing sellers only’ processes are in play it then creates this Swiss cheese outcome even though that irrigation system has done some strategic planning and identified the less well served parts of their footprint? If you have happening over in the left field these non-strategic buybacks, the ad hoc buybacks, you will be defeating that footprint because the owners of those systems, whether they are state or cooperatives, cannot stop the individuals negotiating directly with the Commonwealth in the tender process. Can you see what I am trying to say?

Ms Harwood —Yes, I can, except—

Dr STONE —You have the two happening at once and one is counteracting the other. You seem to be quite keen about the notion that people are happily selling their water. I think someone mentioned it was ‘to improve their own water use efficiency’. Let me put to you that, at this stage of the game, after seven years of drought and now floods, with the production that those farmers have been able to get out of their places for so many years that they are not willing sellers; they are stressed sellers. Are you doing any research or work where you have a tender offer to you—after, indeed, you have even accepted the tender—to find out the motivation for that person to sell so you can get a better sense of whether you were simply paying back debt for that person to goes straight to their lender or whether this person in fact had some strategic purpose or possibility with the dollars they get out of selling all or part of their water? In other words, do you have any idea what is going on?

Ms Harwood —There are quite a few questions there. There are a number of things happening in parallel.

Dr STONE —They are not in conflict?

Ms Harwood —There is investment in system renewal, rationalisation, upgrade et cetera. The government has made a decision also to operate the buyback process. In terms of the trade on and off the land, there is a lot of trade occurring. The NWC report that I referred to earlier really casts a clear light on this. The Commonwealth is a player in the market but the water trade, which is a fundamental principle of the National Water Initiative—that a water market is developed and active—is occurring and will occur, so whether the Commonwealth—

Dr STONE —Yes, but it occurs within an irrigation system so that the economies of scale of production are not lost to that system if the water goes to other irrigators. When the water is removed from irrigation production, you lose your economies of scale in, say, dairy production for manufacturing, fruit production for manufacturing and so on. I think you must understand that difference.

Ms Harwood —I do and water moves across the landscape as well in normal trade. That is, water will trade from Sunraysia to Robinvale; water moves up and down through the entire southern connected system. Water can be traded and can be moved commercially—

Dr STONE —But it remains in agricultural production.

Ms Harwood —for people to do different things with that water for agricultural production. The water buyback is one of the initiatives moving the transition towards lower extraction levels in the basin expected under the Basin Plan. It is being operated in a conservative way in terms of a modest pace of water purchase. Given that the guide is just a guide at this stage, basically the scale of that program is pitched to be careful across the catchments to ensure a modest pace of recovery that does not overshoot the mark, to put it simply.

I guess it is that water trade is a basic part of the landscape now, and the Commonwealth is one of the participants in that trade. In terms of the proportion of trade that the Commonwealth trades account for, I think that peaked at around 38 per cent but will be less this year and in years beyond, basically because the investment is less; there is a lower pace of investment occurring at the moment.

Dr Grimes —The point that I think I made to Mr Sidebottom before is a really fundamentally important point, and that is the importance of driving efficiency in water use—not just rationalising the footprint but actually driving efficiency in water use. That is right across irrigation districts; it is not just on the fringes of the irrigation districts. So you need to have a mechanism that is providing the incentives for driving the efficiency across the system as a whole. So there is the importance of having a tender process that allows all irrigators to participate and have the opportunity to drive efficiencies and to earn a return by selling some of their water.

Dr STONE —Why does the government have to be in the water market for those efficiencies to occur? Surely farmers can sell to their neighbours if they wish and gain the same efficiencies on farm.

Dr Grimes —You would not have a mechanism for securing those efficiencies back for the environment. In fact, to be able to get that back to the environment you need to have the Commonwealth purchasing for the environment. If all of the benefits were simply coming from rationalising the footprint then all of the savings would come back to the Commonwealth just from those water savings. But my point is that a very important part of the savings is to come from efficiencies in the system overall.

Dr STONE —You mean on-farm water use efficiency grants?

Dr Grimes —Or even efficiencies in distribution of water to farms.

Dr STONE —Hence the importance of the on-farm—

Dr Grimes —So it is not just about the footprint, and that is a really fundamentally important point.

Dr STONE —Indeed, which is why we are concerned about the effectiveness of your on-farm water use efficiency grants and of work like NVIRP, which is why the Victorian government is now comprehensively investigating its failure to perform to date.

Dr Grimes —Of course, many of the efficiencies are things that irrigators will be doing themselves, not because of a government program but because of actions they are taking in the way in which they manage their farming operations.

CHAIR —One of the issues that have been raised from time to time with the guide, based on the various models that have been used, is the delivery of water, particularly through the Barmah Choke. We are getting different evidence from different people as to the capacity to deliver certain volumes of water to environmental icon sites with some of the physical constraints both at the choke and further up in terms of releases, and as to the impacts that it may have on others if certain quantities of water are released into the system. Does the department have a view on the mechanics of operating some of the flows that are suggested in the guide, particularly with the Barmah Choke, and how all that will actually play out in a managed system? I am not talking about the current event.

Mr Slatyer —It is a bit like my previous answer, regrettably. Yes, we have a view that it is very important to get this right, but the responsibility and the knowledge base for working out all that hydrology sit with the authority, and the River Murray Water division of the authority in particular, who are the experts in and have the responsibility for the management of that system; they have the knowledge base for judging how best to release water through the choke and so forth to minimise third-party impacts and so forth. So, yes, the department has a view that it is very important that any additional flows are very carefully managed to avoid unplanned third-party impacts, but the department is also conscious that it is one of the authority’s central responsibilities to manage that issue. So they are well positioned to also factor that in in their development of the Basin Plan, as they themselves are the responsible management authority for that system.

CHAIR —Does the department fully understand the modelling that the authority has based its projections on in the guide? One of the issues we are facing, and maybe it is the failure to communicate on the authority’s behalf, is that a lot of people do not know what is being proposed in terms of the impacts on specific parts of the system. It is very difficult for us and for others if there is a lack of understanding as to what the authority is actually basing some of its conclusions on. Does the department understand the methodology that has been used by the authority to arrive at some of the suggestions that it has, particularly in relation to environmental flow?

Mr Slatyer —We have been briefed by the authority, as have many other parties, on the modelling approaches they have taken. Whilst we ourselves are not hydrologists and are not modellers, we do understand the methodology they have employed.

Dr Grimes —I think I alluded earlier to the fact that one of the things that we are very strongly supportive of is the authority finding ways of better communicating the findings that it is reaching and making sure that they are well understood by the communities that are affected. That is something we are quite supportive of.

Mr James —The other thing perhaps to say about the modelling is that it was informed by the work that CSIRO did a couple of years ago on the Sustainable Yields Project, which was I think at the time one of the largest research projects that CSIRO had undertaken. So there was an awful lot of expertise developed through that process and I know the authority actually had CSIRO scientists working with them on their modelling. So, while we do understand it as nonexperts, if you like, we also have a degree of confidence that the modelling that they did was the best that could be done.

Mr TEHAN —Could someone explain how the Commonwealth is going about getting efficiencies from the water that it owns?

Dr Grimes —Mr Robinson, who is the Commonwealth Environmental Water Holder, will give you an overview of that.

Mr Robinson —In regard to efficiencies, firstly when we accepted and established our arrangements we were very keen to have good assessment criteria of options established. We did that in consultation with states and jurisdictions and interested groups, including industry groups. Amongst those assessment criteria is firstly the environmental issues but amongst the issues is cost-effectiveness. If a use of water is highly costly in terms of dollar cost or the volume of water that might go to the actual site, we take that into account. It does not mean it is not necessarily going to be done but we take the cost-effectiveness into account. Secondly, one thing about the Commonwealth environmental water is that under the legislation it is called held environmental water, which basically means it has got the same attributes as any other similar entitlement, say an irrigation entitlement. That means it can be actively managed, and that includes using infrastructure that is there and potentially having new infrastructure developed over time to improve the efficiency of the deliveries. That includes infrastructure that is there that has been essentially established for agriculture; we are using that for environmental water delivery. There are currently environmental works underway as part of the Living Murray program and of course as part of the process the MDBA is looking at other environmental works that might be able to improve the efficiency.

There are other things we are keen to do and will do progressively, including that when the volume of environmental water is more substantial, and because of the rainfall this year allocations have increased quite substantially, the size of actual use options can increase along with that. In the past it was more site by site, it would be individual wetland by wetland at a time. Our objective is to start using environmental water so that we get the connected benefits, so we use it at one site and link that to the use downstream at multiple sites. That could include, for example, in the Barmah-Millewa Forest through the Edwards and Wakool system and downstream to any of the sites where it can operationally be delivered. So there are efficiencies that can be achieved in that respect as well.

Mr TEHAN —Could you at this stage put a dollar term on new infrastructure for improving delivery that the Commonwealth has undertaken?

Mr Robinson —I have the TLM numbers here somewhere, and in terms of new additional works, as I said, the MDBA are looking at that. In conjunction with the states, the Commonwealth and local catchment management authorities, they are really open to any input being provided for additional works. There is a $280 million program under the Living Murray currently underway; $167 million of that is Commonwealth funding and it includes some quite big works at most of the Living Murray icon sites.

Mr TEHAN —Do you think it would be fair to say that irrigators are probably more advanced in putting in infrastructure and improving efficiency in managing their water than the Commonwealth is?

Mr Robinson —I think with the Commonwealth we are in our third year of use of water and in terms of managing held environmental water it is a new business for everyone. The Living Murray program was a few years ahead of that, so it would be right for me to say that managing held environmental water is a new field and we are working on that, but our objective is maximum environmental outcome per litre. It is not just good environmental outcome it is the maximum outcome. We get really good input from river operators who know how the system works, and that includes people like River Murray Water Division but State Water in New South Wales. In terms of a Commonwealth department we do not have staff out there turning pumps on; it is being done through catchment management authorities and sometimes the local nature group, river operators and similar. They are people who are good at it and they are bringing their skills to helping us.

Mr TEHAN —One of the things that the floods have shown is that there does seem to be a lack of infrastructure within catchment management authorities with regard to recording rainfall and being able to measure how rivers are rising at the speed that they are rising, and there would seem to me to be a real need for us to improve that infrastructure. If the Commonwealth is going to be able to manage its environmental flows, I would have thought that those would be the types of investment that we should be looking at.

Mr Robinson —I agree. Mr Slatyer might want to comment, but there is a very big Commonwealth program through the Bureau of Meteorology on water information, which includes capturing not just rainfall but river flows and storage volumes, et cetera. They have done great works, including on their websites. In terms of our own role, it may be in capturing some of the return flows, which is about efficiency of environmental water use and capturing some of those flows, some the things we might need to do is have measuring at particular sites and we are absolutely open to talking to the landholders and states about some of that work.

Mr TEHAN —The predictions were that we were going to be heading for less rain; now it seems that we are going to be heading maybe for more rain and it is going to come in more sustained periods. They are now saying that we are going to get our rain through the intensity of storms rather than it being more consistent. That would also, I would have thought, have to lead to improvement in catchment management authority and their measurements.

Mr Robinson —Yes, I think the climate scientists would still say, as you said, that climate change includes greater variability, so rainfall in peaks and more severe droughts but, generally, in the southeast of Australia on average less rainfall, but absolutely quality of information, which is why I think about $400 million is part of the program to the Bureau of Meteorology to do that work.

Mr TEHAN —Would you think that that $400 million spread across Australia would be sufficient to be able to deal with these issues so that you are maximising the efficiency of the water that you hold plus hopefully we could also get improved information about where rain is falling and the impact it is going to have on rivers and creeks rising?

Mr Robinson —I think that is probably a better question for the bureau. It is a very significant funding contribution, and I know internationally people are looking at it as a model, so it is an excellent program really.

Ms LIVERMORE —You have talked a lot today about various Commonwealth government programs and trying to maximise the outcomes in terms of the water regained from on-farm efficiencies or buybacks for the environment. Do you think that that authority has made adequate provision for those expected savings that the Commonwealth is investing a whole lot of money to acquire in the reductions that they are talking about in the guide?

Ms Harwood —They will be assessing the progress of the various initiatives as they go. In the guide they made comment in relation to the water recoveries to date and they also made some comment around future recoveries. There are lots of questions for the authorities to deal with in moving through to a proposed plan in relation to which water is already counted as being essentially on the green side of the ledger. So where does the Living Murray water sit in all their calculations of the water balance in the basin? Part of their job is to deal with each of the different sorts of environmental water, including the environmental water held by the Commonwealth, and make a clear account of how that sits against the proposed diversion limits in the basin plan, so where that water figures in their calculations.

Ms LIVERMORE —Do you think they could have gone further? Is it consistent with the sorts of projections that you would have as the people running these programs?

Ms Harwood —That is really asking me for an opinion on their work but in essence in their guide, as I said, they made an account of the water that they could see so far—held environmental water such as the Living Murray and the river bank and things of that sort. They will continue to do that. They had a lot of questions on the road about which water is in and out and which has already been counted et cetera, and that is part of their work in developing a proposed plan.

Mr James —I might just mention that the numbers that they used, which Mary mentioned earlier—the 600 gigalitre estimate of recovery under our infrastructure programs—were supplied by us to the authority, so there is no difference there.

Ms LEY —I have a question for Mr Robinson—and just a brief response. What do you think of the proposition that a careful environmental watering plan calculating the amount of water required for all of the identified icon sites and wetlands in the plan should have taken place and then that should have led to a calculation of the total number of gigalitres to be either purchased, restored or resumed rather than having the announcement of 3,000 to 4,000 gigalitres with 7½ thousand sitting on top of that? That is a proposition that has been put to us everywhere in the basin, and I would just like your response.

Mr Robinson —I think the environmental watering plan really is a very important part of the Basin Plan. It should get a lot of attention, information and feedback from all the stakeholders. I think MDBA would say that the modelling that they have done is high-level modelling that is also designed to meet individual site issues. But all that information should be assessed and reviewed, and comments should be made on it as part of the consultation process.

Ms LEY —What do you as the environmental water holder think about that proposition—that the calculation of how much water was needed should have been done before the announcement of how much water was going to be taken?

Mr Robinson —I think they did do a calculation of how much water was needed, but they did it on what I would loosely call a flow basis which they have assessed will meet the requirements of individual sites. It has sort of come from the top and—

Ms LEY —So if they have made an assessment of what is required at each individual site, what is your job?

Mr Robinson —My job is to actively manage the water as efficiently as possible in accordance with the environmental watering plan when it is finalised.

Ms LEY —Is it your job to create the environmental watering plan or has MDBA already done that, given that they have already decided how much water is required at each site?

Mr Robinson —MDBA are doing that as part of the Basin Plan. Their current approach is their draft for consultation. They are doing the environmental watering plan, in consultation with ourselves, the states and local groups. They are doing the environmental watering plan.

Ms LEY —Just to make it absolutely clear, they and not you are responsible for the environmental watering plan—in other words, how much water goes where and when?

Mr Robinson —Yes. I need to manage the water in accordance with that plan when it is finalised.

CHAIR —Thank you very much for taking the time to be here today and for the evidence you have given and your submission. There will be a transcript of today’s hearing and you will receive that. If you have any issues, please let us know. If you have any other information or you would like to respond to some of the questions that have been raised today or the general thread of questioning, we would appreciate that. Thank you very much for coming.

Dr Grimes —Thank you, Chair. I wanted to thank both you and the committee. We found today quite a useful exchange.

Evidence was then taken in private but later resumed in public—

Proceedings suspended from 9.57 am to 10.12 am