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STANDING COMMITTEE ON REGIONAL AUSTRALIA
23/03/2011
Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR —Welcome. There are a couple of formal things I have to go through, and then we will hear your evidence. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. We have received a submission from you; thank you for that. There is a supplementary submission that has just been handed around as well. Is there any other additional material that you would like to provide for us, or would you like to give some brief introductory remarks and then allow the committee to question you?

Ms Ewing —I will make some brief introductory remarks. Thank you for the opportunity to speak here today. I will speak briefly to our opening statement and cover the main points, and Tim and Dennis will expand particularly on the groundwater and river operations. The first issue is that the current water sharing plan of the Lachlan is working. It is delivering for the environment. Under the water sharing plan the environment was to receive 75 per cent of the long-term average water and it is receiving that even with eight years of severe drought. The shares have been 74-26, so even the CSIRO acknowledges that the plan is working well. The rain we have had in the past year has produced a magnificent turnaround with widespread flooding. In the supplementary submission there are a few photos of some of the wetland areas in the Lower Lachlan that have been inundated as a result. That is very much largely from natural flows, it is not from the purchased environmental water.

The second issue that we covered in our submission and want to discuss today is groundwater, and particularly the case in the Lower Lachlan, which underwent the ASGE process. A figure of 108 gigalitres was accepted as a sustainable diversion limit three years ago, and that was agreed by both the state and federal governments. That resulted in a 50 per cent cut in entitlements at that stage. Tim will expand on this, but Hillston irrigators responded very strongly and very positively. They invested huge amounts in water efficient technology. There was a large amount of trading—34,000 megalitres was traded in the Lower Lachlan, more than any of the other major inland valleys. Farmers moved to high-value enterprises, built a lot of relationships with suppliers and processors and all that was backed on a secure supply of water. Now the guide has said there needs to be another 40 per cent cut to a new sustainable diversion limit three years after the first one was set, and with the debt levels that people are now carrying there simply is not the capacity to handle that.

The third issue is the robustness of the science that we used in the guide and the context in which it was used. One example is the sustainable rivers audit that rates the Lachlan as very poor, but in fact the hydrological health is moderate to good, macrovertebrates are poor and fish are very poor. That suggests to us that in fact solving the river health problems in the Lachlan is not an issue of greater volumes of flow, it is about riparian management, land management, carp and things like that.

One of the terms of reference of your committee is a request for infrastructure works that would assist further water recovery. There is probably limited scope for that in the Lachlan because there have been a couple of major projects done recently, including the Lake Brewster project, of which 60 per cent was funded by the federal government. Our view is that probably a focus more on on-farm efficiencies, the Commonwealth environmental water holder better managing the water that they already have, and using local knowledge to develop a sound environmental water management plan are likely to provide better results in the Lachlan.

Finally, the last point we covered and want to address today are the social and economic impacts. Using Hillston, again, as a case study, not only is it threatened by a further 40 per cent cut in groundwater, but in fact of the 100,000 megalitres that have been purchased by the state and federal governments in the Lachlan Valley, about three-quarters of that has come out of the Lower Lachlan. There is a barrier to permanent trade at Lake Cargelligo, so about 30 per cent of the current surface water of the Lachlan has already been purchased by state or federal governments—one of the Twynam properties, 52,000 megalitres went off that. Hillston is a small town, it is highly reliant on irrigation, it has already had a hit with the loss of surface water and now the potential loss of groundwater has really significant social and economic implications.

Mr Watson —Thanks for hearing us today. I appreciate the opportunity to be able to speak to you. We run a significant irrigation business based in Hillston, which we have expanded in the past 10 years. We have done this in a one in 200 year drought, we have had no river water and we have based it all on underground water. We have done that by doing everything that the ASGE program wanted us to do. They wanted to reduce the total amount of water available in megalitres back to a sustainable level. We negotiated our way through that process. They then imposed trading on us. We resisted, we did not want trading, but it was part of the deal. We embraced that. The Lower Lachlan has traded more water than any other aquifer in the whole of the Murray-Darling Basin. We have traded, we have all, as Mary alluded to, taken on extra debt—

CHAIR —Excuse me, Tim, you traded groundwater?

Mr Watson —Yes. I do not see how you can actually do it, but we were told we had to trade groundwater. I believe that until we can accurately see what is going on underneath the ground, we should not be trading groundwater, but it was bundled into the whole water sharing plan. We fought it for five years. We got John Anderson at one point in time to agree that we should not trade groundwater but it got wiped out. The National Water Initiative said that we had to have free trade of groundwater. It disregards salinity, it disregards your accessibility. Some people have a piece of paper that says that they have X amount of megalitres, but they have absolutely no access to it. They have the same right as someone who has high-quality water as a benefit of being in a good location. That is wrong, the whole deal. But anyway we have embraced that, we have taken it on after we fought it. We went through all the public process and we got rolled, so we have just got on with it.

The aquifer is performing. The levels are static. We have pumped it really hard over the past 10 years. We have had a one in 200 year drought. The usage has ramped up significantly, but it is stable, it is handling it. Now we are faced with a potential 40 per cent cut to what we thought was a secure resource. Personally, in our business, we have committed to companies like Edgell. We supply 100 per cent of Edgell’s beetroot. We have gone into a cooperative process with them. We have convinced them that we are a secure supply and they have invested a lot of money in a new factory in Echuca. Now they are questioning us: have we done the right thing partnering with you at Hillston when there is potentially another 40 per cent cut to what you told us was a secure water supply? I do not think we can take any more.

In a nutshell, that is the underground water situation. The plan is working. The current plan has provision for coping with any significant draw down and the New South Wales Office of Water is comfortable with the way it is working, as are all their hydrogeologists. We were floored when the MDBA came out with this.

The only other thing I would like to allude to is that the Lachlan is a disconnected river; it is not connected to the Murray. All that Twynam water was bought last year, ostensibly to improve the health of the Murray, but we cannot actually take it there unless we put it in a truck and cart it down there by road. It is only once every 50 years that the Lachlan actually joins the Murray.

CHAIR —Dennis, would you like to make a contribution?

Mr Moxey —Thank you, Tony. I do appreciate being here today. I just want to sum up a few points briefly. I would then be happy to answer some of the questions that the committee has. We believe that the past water sharing plans have done their job, as the others have alluded to. One of the unique aspects of the Lachlan water sharing plan is translucency, which means that water runs straight through the dam. It is not captured. In those periods of time when the main rainfall events happen in our valley, it flows straight through and it is an environmental flow. This is going to deliver huge amounts of water to the environment within the Lachlan, but we have not got the science to prove this because we have had a 10-year drought. We have had seven years of zero water and zero flows. If the dam had not been there, there would not have been any water running past Cowra, which is only just downstream of the dam, for the last seven years because of the drought that we have been through. So we have no ability to prove that in a scientific way or in a monitored way. It has become very difficult to support our case on that.

The water has already been removed in these water sharing and groundwater plan processes to address overallocation. We get really annoyed at the comments that come out that this process is to address overallocation and to address the disasters and the mismanagement that have happened in the past. This has been addressed and dealt with as we have gone through these other state based processes. Also, the federal government process, through the Murray-Darling Basin Authority, that we are now facing is removing productive megalitres. We are down to a base now were it is all usable and productive water that is being removed from the communities. My major concern is that it is being taken from those communities. We find it very difficult to mount a case for an individual irrigator because the answer we get is that they are buying from willing sellers. That is a very plausible answer, although in the Lachlan they were buying during the drought when the only asset some of the farmers had to sell was water, so we question that a little bit.

We just find it so hard to comprehend why there is so much water going out of these different communities. Tim and Mary have alluded to Hillston as an example, but that is multiplied in several sections up the river system with the groundwater sharing plan that is now being done in the upper Lachlan and the cuts that will happen there before the Murray-Darling Basin process takes place. The removal of water from these communities is actually lowering their productive base and it will be those communities that will suffer because of the lack of production, the lack of jobs and the lack of stimulus. If you look at the town of Hillston, cotton moved into that area many years back and it was a ghost town before that. It built the town. It supported the town. It brought the people there. It brought the backpackers there. It created a sometimes moving population but also a base population. What are we going to do with those people?

When cotton was not as good, a lot of the people moved over to vegetables, as Tim did, and horticulture. The largest cherry orchard in the Southern Hemisphere is now situated in Hillston and supplies cherries throughout the world. The number of pickers that come there is huge. But if we lower the productive base and take those productive megalitres out of those sorts of communities—and the communities are Hillston, Condobolin, Forbes and Cowra, and they all have their own unique industries that we need to support—we believe that this is going to have quite large ramifications for those communities.

CHAIR —Thank you for those introductory statements. Just for the benefit of the committee, the ASGE references that were made were to a program in New South Wales called Achieving Sustainable Groundwater Entitlements. You would have seen some of it at Gunnedah, where there was a quite involved scientific process—as well as a political process, in a sense—to achieve a ramp-down in terms of water use for sustainability in those groundwater systems. Six valleys in New South Wales went through that process. I think there is a legitimate beef that, while a scientific process was entered into there to achieve sustainable numbers—and even though some people did not agree with them they were at the time the best science—one of the things that the authority has not been able to do is really demonstrate where the better science has come from in relation to another 40 per cent cut. So ASGE means Achieving Sustainable Groundwater Entitlements for those six valleys.

I will get to my question. I am puzzled about this trade in groundwater, but we will not get into that too much. Within the Lachlan system, the surface water can only be traded within that system, can’t it? Over the last 20 years quite a lot of water has been traded down the system to Hillston from further upstream, hasn’t it?

Ms Ewing —You are correct: the water can only been traded within the Lachlan system. There is a barrier to permanent trade at Lake Cargelligo, which is about halfway along in geographical terms, and there can be no permanent trade across the barrier either way at this stage. There is a temporary annual trade allowed downstream, of up to 30,000 megalitres per annum, which is the maximum that had ever been traded downstream prior to the introduction of the water-sharing plan. Most of the environmental assets in the Lachlan are in the lower Lachlan below the barrier. That is why the Commonwealth and state purchasing programs targeted water in those areas.

CHAIR —My second question relates to those environmental assets that you are talking about. For the benefit of Hansard, are there any micromanagement or more efficient ways in which some of those assets could in your view be managed? If so, what sorts of water savings could be achieved?

Ms Ewing —Qualifying it by saying that I am not an ecologist, yes. The lower Lachlan is a large flood plain and the three indicator environmental assets chosen by the MDBA are sort of extensive flood plain and swamp type assets. Some are partially in private ownership. I think there is a good opportunity for environmental water managers to work with landowners to actually achieve better results there. In the recent flooding, one of the sites that have been flooded is on a property owned by a private landowner on Merrimajeel Creek. They actually alerted DECCW to the fact that bird breeding was taking place. They advised them when the water was coming down the creek and how close it was getting. I think that indicates that building cooperative relationships with the actual landholders enables a lot better management, because you have got someone on the ground providing advice.

Mr Watson —Also, they need to be able to react quickly, which is what Mary is alluding to, if there was a rain event below the dam that they can build on to supply water to the ibis—there was ibis breeding out there—without a delay in getting ministerial approval to get the water released. Some of the landowners have been there for three or four generations and they know the land better than anybody. If they can make quicker decisions they will achieve better outcomes.

CHAIR —That is one thing we are picking up in a number of areas. Some sort of localism has to be built into the process, including the state water managers that seem to have been left out of the process quite a lot.

Mr Moxey —We have attempted that in the Lachlan by forming a riverine working group through the CMA. It includes a lot of the government departments and scientific advisors to provide advice to the Murray Darling Basin Authority on how water could be managed within the Lachlan. We believe that that local base and that local knowledge and the selection of those people within that local area is very important in managing the water as it goes down—just was much as infrastructure can manage that water use.

We can give the example of Lake Brewster. A major $12 million project was completed there which will minimise losses in the storage and it has also created 300 hectares of wetland on the inflow side to clean the water as it comes in and create bird breeding areas and things like that. Then there is a 600-hectare wetland on the outflow side. Both of these were constructed under these infrastructure programs. It is probably the biggest wetland in the Lachlan and yet it was enhanced by the work that was done under this project, which was all about water savings. Now there is an allocation to keep those wetlands viable through most periods, unless you get an extreme drought like we just had, and maintain those bird breeding events, water plants and environments in that very critical area of the lower Lachlan and on the flood plain down there.

Mr SECKER —How much of your 108-gigalitre extraction is underground and how much is extracted from the Lachlan River?

Mr Watson —The 108 is just the underground water. As Tony alluded to, that was the best available science that the New South Wales Office of Water came up with. There is already a 30,000-odd megalitre provision for the groundwater dependent ecosystems, of which they have not found any yet, that is included within those 108,000 gigalitres.

Mr SECKER —Has the buyback bought any of that underground water?

Mr Watson —Yes, we got $19 a megalitre for the water. We went from 215,000, which was the original entitlement, back to 108,000. We have not got it in blood yet about whether they are going to buy underground water.

Mr SECKER —I was referring to the Commonwealth buyback.

Mr Watson —No, they have not bought underground water.

Mr SECKER —I did not think so; I just wanted to make sure.

Mr Moxey —We are wondering how that process is going to work because surface water is there and is deliverable to the environment, but why would they want to buy underground water and pump it out to deliver to some environmental source if they cannot find any groundwater dependent ecosystems? We just question how this is going to be achieved. If the 40 per cent cut in the lower Lachlan and the 15 per cent cut in the upper Lachlan is going to go through, as proposed in those early documents, how are they going to acquire that water and what is it going to achieve when they do acquire that water in the process?

Mr SECKER —It is feasible that they could pump water, as part of some environmental setup, from underground but I can understand where you are coming from. How much water has been saved by these water sharing plans throughout New South Wales because we have seen quite a lot of evidence to say that there is a lot already being saved? I think it would be useful for the committee to find out the actual amount.

Mr TEHAN —As I understand it, the Carrathool shire’s population is 3,000. If you were to take another 40 per cent cut, do you have any idea what that would do to the population within the shire and within the communities? Given the cuts that you have already been through, are you going to reach the stage where this is going to have a real impact on the sustainability of your communities?

Mr Watson —Particularly the town of Hillston, which is the largest town in the Carrathool shire, cannot take any more. Our eldest daughter is 18. When she started at the primary school there were 90 kids there. There are now 50. You cannot take any more out of that school. That is the sort of thing that is going on. If you take another 40 per cent, we will lose the primary schools, the secondary schools and the doctor—we will just lose the lot. It is not much fun living out there when there is nobody else out there.

Mr TEHAN —Are you seeing already that there are shops that have closed down and you are having trouble getting people purchasing from those shops and that type of thing?

Mr Watson —Businesses have definitely closed and it tends to be run remotely from Griffith—that is about how it works. We are losing that regional base. We employ quite a few people. The real battle is getting them to stay there. Why would 20-year-old people want to stay there? There is no nightlife. People have left the district, so why would they want to hang around there? Trying to keep staff there is the real battle we have. Probably the biggest thing is that we lose that security. With that ASG program, we were told that eventually we will have a secure asset from which we could build a secure business, and we have done that. We have convinced Woolworths, Coles and Simplot, or Edgell, to back us into a secure business, and we have convinced our staff to come and live here on our farm and build a lifestyle. If you take another 40 per cent out of that, we are shot.

Mr TEHAN —On the Twynam water which was bought by the Commonwealth, what sort of impact did that have on the community? Was there consultation by the Commonwealth coming in and wanting to purchase that water? Was there any sense of what the socioeconomic impacts would be?

Mr Watson —You should ask Johnny Kahlbetzer that. He was the only one who was consulted.

Mr TEHAN —So there was no broader consultation with the community and no sense of the broader economic impact it might have?

Ms Ewing —It seemed to be reasonably untargeted. After the first year that the buyback started, Dennis and I attended a meeting in Dubbo with some people who were going around and getting community feedback and they said, quite openly, that they had taken a no-regrets approach. So there were no regrets buying that water at that stage. It really was not targeted.

Mr Moxey —And the first the community knew about that was through the newspapers when it was announced that that water was moving from that productive base on the Twynam properties—not just one property but an extensive number of properties in the lower Lachlan area. It also impacts on the ones around Forbes, because they used to share in that water and there was temporary trade throughout those properties. It has an impact over their whole business: it turns them from an irrigation business into a dryland business. It takes away the work that was being done by the irrigation companies, the supply companies and the receival companies from the produce that was produced out of that. No, there was no consultation with the community on that one large purchase.

Mr TEHAN —The Commonwealth basically took no regard whatsoever for what the socioeconomic impacts would have been?

Mr Watson —No. They were buying swimming pools of water and the Lachlan was the cheapest per swimming pool that they could buy, so they bought the most out of the Lachlan.

CHAIR —That purchase has essentially put you in credit, hasn’t it? In fact, the work has been done in your valley in terms of surface water. I think you are owed one gigalitre, aren’t you?

Ms Ewing —That is correct. We would probably say they have gone far more than one gigalitre over, but that is a judgment.

Mr Watson —The Lachlan was the highest cut river in the state back in the original process.

Mr Moxey —In the purchase process, we believe they have gone plenty far enough. That is one of the real questions we have: what is going to happen with the infrastructure program that is still on the table, that is still available to people but that has not really been rolled out now that all the water that they probably need within the Lachlan has been retrieved? We will probably miss out on that program, so the efficiency gains that we would like to see happen amongst our irrigation community in the Lachlan are not going to be helped by that funding, are not going to be helped by the whole program that the federal government is rolling out. It is another case where circumstances have overtaken the process and we are going to miss out.

Mr TEHAN —And that is because your efficiency gains would go to putting more water back into irrigation rather than the environment, because you have already had the cuts. You could then put everything you save back into increasing the productivity of the area, but you are right—that would probably count you out from being able to get access to that money.

Ms LIVERMORE —Looking at the graph that you have on page 6 of your original submission showing the inflows and usage, can you explain what is going on there? Even in the years where there are reasonable inflows, there is still quite a gap between entitlement and actual usage. So that graph suggests that you could cut entitlements without necessarily cutting into the actual usage of water. Can you explain what is going on there?

Ms Ewing —New South Wales operates an allocation system where, as you have probably heard from other people already, you do not get the face value of your licence. You do not get that water every year; you only get 50 per cent, 80 per cent or whatever percentage depending on the resources available to the area. That obviously reflects the very severe drought we have been in since 2002, when inflows fell off and then usage fell off as well. In our water-sharing plan the modelled usage is between about 440 gigalitres and virtually nothing. So even in the water-sharing plan it is modelled that people would not use all their water every year.

Ms LIVERMORE —But look at the period in the graph from, say, 1996 to 2000. That was before the water-sharing plan and before the drought, presumably. That seems to suggest that there is quite a gap between entitlements and usage. So, if what we are talking about is cutting entitlements, that does not necessarily, according to the graph—

Mr Moxey —But the entitlement is what you own, and that has already been cut in the water-sharing plan to 50 per cent of what you own. So we are no longer able to access all of our entitlement. We need to remember that. There were 600 gigalitres there in entitlement and licences in the original part. We are now not allowed to use any more than 305 gigalitres in any one year on average. That is the restriction we have and that is sometimes reflected in those gaps. The process that was entered into in that water-sharing plan evened out the ups and downs. We went from a boom and bust type of irrigation industry to a conservative industry that wanted to operate every year and thought that the dam would do that for us, but it has not through the drought.

Ms LIVERMORE —On page 6 you talk about recommending an effective environmental watering plan. Do the water-sharing plans not adequately provide for that already? What is the difference between the water-sharing plan and what you would want to see in an environmental water plan?

Ms Ewing —The water-sharing plan specifies water that is available for the environment but does not specify its use, so that is where we think an environmental water management plan with local, regional and state government input would be a more comprehensive way to manage it.

Mr Moxey —You need to remember that the water that is being purchased is licensed water; therefore it has to be managed water, against the other environmental water that is out there that flows naturally down the river and gets to its natural point. The water that the Commonwealth has bought holds exactly the same characteristics as an irrigator’s water, so it is released from the dam and is sent down the river to a targeted project. We believe those targets should be negotiated and should be focused in the right places.

CHAIR —We will wind it up there. Thank you for your submission and for taking the time to be here today. That graph Ms Livermore was referring to, on page 6 of your original submission, does not show the ramp down to 305—

Ms Ewing —No, it does not.

CHAIR —which probably explains the issue there. We do appreciate you coming along today.

[10.38 am]