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STANDING COMMITTEE ON REGIONAL AUSTRALIA
25/03/2011
Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR —I now welcome members of the Ricegrowers Association of Australia and thank you for coming and the obvious interest you have shown in the proceedings. 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 your submission. Would you like to make some brief opening statements? Then we will have some questions.

Mr Gordon —Yes, we would prefer to do that. Our original submission was really one of support of the organisations of which we are members. I should also declare, for those who do not know, that I am a member of the Basin Community Committee of the MDBA, so I have a couple of hats.

By way of introductory remarks I would like to first thank the committee for the opportunity to appear before you today. Given the limited time available, I do not intend to reiterate everything in our submission; however, I would like to address some key points that may assist the committee’s deliberations at this point in the debate. Firstly, the RGA supports the committee’s interim findings announced recently. An immediate response by the federal government on these issues has gone some way to easing the concerns of irrigators and their communities across the basin, and restoring some confidence and credibility to the process. Resolving the issue of water use in the Murray-Darling Basin requires making trade-offs that ultimately mean political decisions will have to be made. The desire of some environmental movements within the basin to return it to its pristine state must be balanced against the realities of a regulated river system with communities and farmers that live and work alongside it, the need to have water for irrigation to produce food and fibre and the need to maintain strong, vibrant communities in the basin.

We consider that the task of balancing these competing interests cannot be outsourced to an independent authority that is not accountable to the Australian people. Decisions about these trade-offs must fall squarely to the elected politicians to balance fairly. While there is a role for the authority in working through this process, it is not determining where that balance lies.

We commend the committee for recognising the importance of drawing local knowledge and expertise into this process and inviting suggestions in regional hearings. While an academic approach to meet environmental objectives is necessary, it is also critical that the people who have the intimate working knowledge of the river are able to contribute their expertise and understanding to how best to achieve these objectives. Inevitably the time-consuming nature of this task will mean that resolving this issue will take more time than some people would like.

We strongly believe that getting the outcomes right is more important than getting it done on a specific time line that we regard as hasty and unattainable. Until all the knowledge that exists within the system can be used to its full potential we should let existing programs like Water for the Future be given the opportunity to work and deliver results which can be analysed and assessed.

We also stress the importance of the states and other groups likely to be involved in the implementation, such as the CMAs, being fully included in the Commonwealth’s approach to water reform in the basin. They have a knowledge of the river system that surpasses that held in the Commonwealth agencies. They know what flows are capable of being delivered through the system, they will be largely responsible for the monitoring and effectiveness and implementing of the adaptive management required, and they will also be responsible for implementing any reforms once they pass the parliament.

The states and others should not be handed a plan once the process is complete and told to go and implement it. They need to be deeply involved from now on to ensure that the best outcomes are achieved for the system and the communities that live within it. We recognise that the changes at the MDBA this year have already resulted in much more collaboration and cooperation with the states and with other parties, but there is still some way to go.

Another issue the committee may wish to address is the need to identify all the water currently held for environmental uses and this has already been raised today. A full audit of these resources, properly accounting for the different providers of environmental water, would give a more accurate basis for the discussion about what additional water may be required to meet the environment’s needs. It will also greatly assist with the complex task of integrating disparate environmental watering activities under the environmental watering plans. Thank you for the opportunity to make the statement and we now welcome any questions.

CHAIR —Thank you.

Mr McCORMACK —Our committee has heard from a number of stakeholders and people in general that this process needs to be delayed because we have had a significant amount of rain and flooding. What are your thoughts on that? Do you think the plan needs to be implemented as per program or do you think the time frame for it needs to be extended?

Mr Gordon —We generally support what has become the position of NIC, NFF and pretty much the stated position of Craig Knowles. That is that we will give a red-hot go to implement it in the time frames that have been scheduled but if we do not get there then we should be prepared to stand back and say, ‘We didn’t make it. It’s not balanced,’ ‘We don’t have the full knowledge,’ or, ‘We haven’t been able to include the full knowledge and we need to do it properly.’ We are happy to work in a spirit of ‘let’s try and get this done’ but if we do not get there we should be prepared to say so.

Mrs Wade —I do not think it has much to do with the current rain event. We have recognised for a long time that there does need to be change. We have never shied away from change. People are wanting certainty but we do not want certain death. What we want to get is the right outcome so that people can then progress through their investment programs and whatever that will maintain the robust economic and social life of the basin. In a way it is fortunate for our people to have had the rainfall events to take the pressure off on a day-to-day basis but that should not be an excuse for not progressing through the change that we see is absolutely essential.

CHAIR —Thank you. Questions?

Dr STONE —We were up on one of our field visits and we saw rice growing where they were also using environmental flows on private properties to maintain some little wetlands and some biodiversity that survived the droughts. Could you tell us more about that? Have you got other examples amongst the rice growing community where individuals have taken on a stewardship role, using environmental waters perhaps and some of their own entitlement, or they use some of the water authority’s water to do the job?

Mr Gordon —I could not give you exact numbers but it is relatively common. A random sample in this room of two rice growers would probably say two out of two would have areas set aside for environmental protection. Our farming system is very much a mixed one; mixed to a greater or lesser extent across the area. Some areas are obviously more intense than others. There are a number of ways that growers can avail themselves of that opportunity. There are environmental parcels of water that are available. On the other hand, some growers might choose, if they have water available, to do it themselves. They value the area where they live, they value the values that it brings to their lives and they are happy to protect it. It is certainly not uncommon, particularly in the Murray Valley but also in the Murrumbidgee Valley.

Mrs Wade —We have for about 10 years now had a very strong environmental program. We operate that through our Environmental Champions Program. We still have about 300 people at the end of the worst drought in history. When we got down to 39 rice growers in one year we still had about 300 people actively participating in that program. It is worked on groups and the groups tend to work on a very local basis to identify biodiversity issues, small wetlands, those sorts of things, which they can work as a group to maintain and to ensure that they manage it appropriately.

They are very proud of that because it recognises that a vast majority of the basin is held in private hands. It is not on conservation lands. They are going to have wildlife corridors; they are going to have wetlands that join up and link. We also recognise that we add water into a system which is traditionally dry; we add water in the summer. We have a responsibility to make sure that works well in terms of our biodiversity. We still have about 300 people participating in that program and each of them would have one of the small programs dotted around the Riverina region.

Dr STONE —This is your Ricegrowers Australia Environmental Champions Program?

Mr Gordon —Yes.

Mr ZAPPIA —I have two questions. Firstly, can you give me an idea of what the projections are for world rice prices? I assume that your industry monitors the world prices. Are they trending upwards or are they stabilised? Secondly, I notice in your submission you talk about 800,000 tonnes of rice being produced this year. That is probably about half of what you got to at your peak. Again, what is your forecast on the trends for the coming few years, assuming that the water is available?

Mr Gordon —There are about 1,000 rice growers out there at the moment who would dearly love to know the answer to the first question, given that they are about to start harvesting and still do not have a starting price. The trend has been volatile, given world rice shortages, food shortages, and food security becoming a bigger issue around the world. The price—particularly in the niche market that we supply into, which is high-quality medium-grain rice, not tropical varieties of rice—has been quite volatile. More recently they have been trending down. On the other hand, in the last week or so I believe there has been another trend upwards. But they are certainly off their traditional base; they are higher than that. I suspect that the volatility is likely to continue, given events in places like Japan, and also given that the state of some of the international trade agreements at the moment are causing some confusion. That is the answer to the first question.

To the second question, 800,000 tonnes is about the planning base but, given the availability of water, I think there are a couple of things that may drive that production up in the next year or two. One is if returns are solid. Growers have had a pretty tough 10 years. In fact, they have had a horrific 10 years and they have some accumulated debt that they would dearly love to get rid of. One of the ways we can fix the Swiss cheese effect is for the growers that are left to expand. For them to expand, they need to be making solid profits. Some of that adjustment process that you spoke about with Stewart earlier is much more easily lubricated if the production systems are producing, making money and doing well and one of the beauties of rice is that traditionally it has. For that reason, I think it is likely to trend up.

It will depend on other rates of return. Rice is very much a part of the system. It is not a monoculture like orchards or viticulture or whatever. Most rice farms produce also sheep, cattle, wool—all sorts of stuff. If those returns are very solid then farmers will prioritise some of their water to some of those and that will hold the total tonnage back, so it is likely to be a little variable too. It is unlikely to go to the 1.7 million tonne again, but it is quite likely to go to 1.2 million. I could easily imagine that happening. But certainly the industry’s preferred base, the size of the niche market that we largely slip into, is probably around that 800,000 or 900,000 tonne and they start to get a little twitchy over that. On the other hand, if we are going to get another bit of a drought come along and we have a bit to carry over, it would not hurt either.

Mrs Wade —When we talk about expanding our industry, we are very careful about that. In the Riverina we are highly regulated. We are a tightly controlled industry. You cannot grow rice just anywhere; you can only grow rice on approved soils. It has to be basically a bathtub. It has to be a heavy clay base and if the soil is leaking—it is reported on an annual basis—it is either fixed or that area is taken out of production.

Mr SECKER —State government regulation?

Mrs Wade —Yes. The reporting is through environmental reports by the irrigation companies et cetera on an annual basis. So, when we talk about expanding, it is expanding back into what we currently know or what pre drought was recognised and had been used as rice country. We support the efforts that are being made in a lot of other areas in Australia to expand our industry outside the New South Wales Riverina and we have been closely linked into that, because if we want to expand the industry we basically know where we can grow rice now, what the approved soils are and where the problem areas are, so it is limited by that. I think we just need to be quite careful when we are talking on the public record: any expansion of our industry will be back into areas already used, back to our pre-drought base, or into areas outside of the Riverina.

Mr Gordon —Given we also produce temperate varieties of rice and not tropical, we have two limiting factors. The first one is soil and the other is suitable varieties. Our capacity to expand is relatively limited because of those two things.

Mr SECKER —You have expressed frustration that the government has managed to utilise so little of the $5.8 billion it has committed to investing in infrastructure efficiency upgrades. They are your words.

Mr Gordon —Yes.

Mr SECKER —And I think most if not all of us are always on the lookout for where we could use that money for efficiency on farm but, probably more importantly, to farm. Have you got any proposals that you are aware of that could be used in that fund?

Mr Gordon —Largely our expertise exists around on farm because at the end of the day we are farmers. I am like you: my expertise is that I am a pretty handy tractor driver. The off-farm stuff, the supply system stuff, really does fall to the irrigation corporations. On farm, though, I am going to answer the question; I am not going to let Ruth. It has been such a frustrating process that, if I start her up, she is not going to stop. It really is that simple.

Someone asked the question earlier, ‘What is the capacity?’ There is enormous capacity. We were a delivery partner in the first round through SEWPaC. We had previously delivered two joint programs in the Living Murray program between rice growers and, in the first instance, the Murray-Darling Basin Commission and then subsequently the Murray-Darling Basin Authority, both successfully completed. We had hoped we had picked up the learnings of those when we went to the SEWPaC programs. It did not turn out that way. As Stewart or Danny alluded to earlier, it took ages to get them to go anywhere.

We are now in round 2. We do not even appear to have learnt the lessons from round 1 in round 2. It is a shemozzle. Our call for expressions of interest as the other delivery partners was oversubscribed to billyo, so there is plenty of scope, plenty of capacity, to deliver on farm and plenty of desire to deliver on farm. Out of the drought, people have realised that the only way they are going to survive in the long term is to continually improve their efficiency. The rice industry has improved its water use efficiency—that is tonne per megalitre—by over 60 per cent in the last 10 or 12 years or whatever it has been. There is heaps of scope to continue to do that and we need to continue to explore it.

That is probably what is driving the situation that Stewart alluded to earlier of people putting their hands up and saying, ‘I want to be involved.’ They have got to be involved. They have this huge debt hanging over their heads. They know the only way they can do it is through improved efficiency and they know that they cannot take plenty of water for granted like they might have 10 years ago.

Ms LEY —What do you think some of the key initiatives or ingredients of a campaign might be? Many Australians are quite biased against the Australian rice industry. What can we do to remove that bias?

Mrs Wade —I wish I knew. We have invested a lot of time, energy and money over a long period of time, and at a time when we had zero water—you have seen the graph in our submission of the production figures through the drought—if there was no general security water allocation, there was no rice, so people sitting anywhere in Australia saying, ‘The rice industry is stealing our water,’ was fundamentally incorrect. There was no water available and we did not grow rice. We believe we are a valid part of the system. That is what we want to be. We want to be the best and we are at the moment. Last year we had a world record yield and we are by a country mile the most efficient water use growers.

Ms LEY —Ruth, I am not trying to interrupt. I am just trying to compress—

Mrs Wade —What I was just going to say is that I think we have to keep doing what we are doing. We have to be the best at what we do. We have to keep pushing the margins so that we are that and hope that we can get our messages out.

Mr Gordon —Yes. We have to find a better way of telling people, though; there is no doubt about it. Try as hard as we might, we do not seem to be doing a very good job.

Ms LEY —Did you have a former federal Treasurer come and give you some advice in this area and, if so, is that advice that you might be able to share with the committee?

Mr Gordon —No, I am sorry.

Mrs Wade —No. We told our story and we hope that that has provided a basis for comments that he makes. We do this regularly. We bring people through. I think many of you have been through the industry. One of the strongest points that we can use in the last little while is that when there is no water, we do not use it, and that is actually something that we had to learn the very hard way through the drought. Up until then it was very difficult to say that, but that will be a very strong point of our promotion campaigns in the future.

Ms LEY —Do you think the Water4Food campaign is working?

Mrs Wade —I think it has been a useful way to hear a voice other than rice. I think it is very difficult for rice, rather than the broader community, to be talking about rice. We have a number of communities across the Riverina that are very dependent on the strength of our industry.

Deniliquin is a classic example. The uplift in that community in the last few months, since the announcement that the rice mill was reopening, has been palpable; you can feel it when you drive into the community. So there is no need to convince those people about the value of the industry. What we need to do is convince the rest of Australians that we are responsible users, that we understand our responsibilities and we will keep pushing the margins.

The on-farm irrigation programs are extraordinarily difficult. They are designed for people who will be there after whatever the plan delivers, who are committed long term, and who realise that the only way they are going to survive long-term is to be absolutely better at what they do. So the works that they are doing provide benefits into their communities in terms of the goods and services that they are purchasing and using and utilising in the communities when they are doing the projects, but they are looking to the long term and saying, ‘If I’ve got to do more with less, then I need to be able to do that.’

Ms LEY —Sure. I share your frustration, as someone who represents rice growers, and I am sure Michael does too. We are very supportive of your industry and we know that that message is not well communicated.

Mr Gordon —We seem to be wearing them down one at a time, but I do not think that is a very efficient way of doing it.

Ms LEY —It is still moving in one direction, isn’t it?

CHAIR —So with that political pitch, we will get Sharman to ask her question.

Dr STONE —We used to have rice growers and the rice mill in Echuca. They are all gone, all of them. We have had the Wentworth Group and others present to us who say that there was no productivity decline across the basin during the drought and they quote ABS statistics to prove that. Clearly, you have different statistics which show in fact that your productivity or your production levels were very much a reflection of how much water was available. I am sure you are aware of those statements as well, from the Wentworth Group and others.

Mr Gordon —Yes.

Dr STONE —Have you got any strategies or have you been able to come up with any thoughts about how we can convince the Murray-Darling Basin Authority—or, indeed, the Wentworth Group, if we can be bothered—that taking across the basin averages is not helpful, and that in fact you also have to look at indebtedness and other factors that might have marched alongside people being able to maintain some productivity despite the enormous restrictions in water access?

Mr Gordon —There are two questions in there that I would clearly like to answer. The first is the one of averages. I share a previous presenter’s frustration with those. My definition of an average in Australia, particularly in terms of river yield, is drought plus flood divided by two, and we are trying to do planning around something in the middle that never, ever happens and that has led to the frustration that came out of the guide. While I am on the flavour of the frustration from the guide, so much of it did not stand up to that local knowledge test, which is essentially the point that I think your question is making. A lot of it was academia; it was disjointed; disconnected. The scientists that are involved in running commentary—not just scientists—people who are running commentary on this need to ask themselves one very basic question: ‘What if I am wrong?’ I can answer that question for me. I know. I will lose my house; I will lose my business; I will lose my job; I will lose my aspirations for my children.

Dr STONE —And we lose your food production.

Mr Gordon —Yes. But so many of those people, if they get it wrong it really does not matter. Once upon a time scientists, particularly, had a reputation to defend, or at least some risk to that reputation. They do not have even have that any more. People are used to them being wrong, so they can almost say anything they like and get away with it. In some instances, the more strident or offbeat it is—because of the way we fund science now—

Mr SECKER —It sounds like Tim Flannery.

CHAIR —Don’t be provoked!

Mr Gordon —The more outlandish it is, the more likely they are to be funded. Sometimes it is even of benefit to have a bet both ways. I think I have seen a little bit of that at the CSIRO in recent times. So if it does not stand that commonsense test, if it does not stand the inclusion of the local knowledge—and it did not just apply to science, it applied to flow structures, it applied to a whole range of stuff, and the people living on the ground just said, ‘That is clearly and plainly wrong. Let’s go and riot in the streets,’ and that is exactly what happened.

I have been doing this stuff for a while. If you go back to the Living Murray process, one of the things we talked about then was that we needed to find a way to include local knowledge. Here we are eight years, or whatever it is, down the track and there are two things we still have not learnt how to do: one is to include local knowledge; and the other is how to inform the trade-off decisions that we are all going to have to make in the next little while.

Mr McCORMACK —Somebody said to me the other day, Les, ‘The trouble with commonsense is that it ain’t that common.’

Mr Gordon —Isn’t it stupid that we are laughing at that?

CHAIR —Any other questions?

Mr Gordon —Mr Chair, there is one other question I would like to answer that you asked a previous participant, if I may. You asked why he did not think the reforms to the buyback process had worked. I think part of that is clearly, from where we sit—

CHAIR —No, in terms of the—

Mr Gordon —So the changes that Minister Burke introduced to the buyback process?

CHAIR —Yes.

Mr Gordon —You asked Stewart earlier why he thought they were not working. My view on that is it is because they are largely still involving the stakeholders. I think for that sort of process to ultimately be concluded satisfactorily we need some sort of independents coming in from the outside, whether they have got arbitration powers or whatever. They are clearly going to need negotiating powers. The irrigation company is a stakeholder, the landholder is a stakeholder, the federal government, with the bucket of money, is a stakeholder, everyone involved is a stakeholder. So if you look to something comparable maybe, like the National Native Title Tribunal, who are not stakeholders but implement the process through state governments and the federal government and the affected people can actually come to some sort of conclusion, that has been relatively successful. So maybe we need to look for another model to deliver some of those tougher ones that do not necessarily include the stakeholders.

CHAIR —Thanks, Les. On the back of that, what would be the preferred trigger point? Is it an approach from the irrigation district or group of landholders or a combination?

Mr Gordon —Probably a combination. These debates have been going on for a long time and shown themselves to be particularly intractable and there is difficulty reaching a resolution. That is the thing with this debate: everyone wants to conclude it, but they just cannot seem to do it. To me, wriggling the rules a little bit is probably still not going to deliver and you perhaps need to go to a different model, and the different model that we have considered in the past, I guess, has been something like the National Native Title Tribunal.

Mrs Wade —That is just one model and, with respect, that is because I actually sat as a member of that tribunal and watched some of the most complex issues in the country being brought to a table where there were both mediation and arbitration powers, so when it got to a particular point, there was an ability to bring an external decision maker in, instead of letting it just drag on and on and on.

CHAIR —Ruth, could you send us a precis of the other process you were involved in.

Mrs Wade —Yes.

CHAIR —It could be handy in relation to this. We have found similar issues, not only within the irrigation districts but within private arrangements, where—

Mr Gordon —All over.

CHAIR —variations of the theme, in terms of buyback or purchase, the process does not deal with well.

Mr Gordon —Yes. As a member of BCC, in our regional tours we came across the same thing and that was where our thinking started to go. We needed to try and find a different model. We are not the arbiters of all wisdom, by any stretch of the imagination, but I think we should be trying to consider the other models that are out there.

Dr STONE —I presume we are talking about strategic buyback there, Mr Chair?

CHAIR —Yes, absolutely.

Dr STONE —Yes. With the strategic buyback—I remember some of your Wakool rice growers were quite keen to negotiate with one of the tenders, probably two years ago now. That was, of course, during the drought before circumstances changed. Are you aware if they are still interested in a strategic buyback?

Mr Gordon —My understanding is yes.

Dr STONE —So their offer is still on the table?

Mr Gordon —My understanding is yes. One of them still is, yes.

Dr STONE —My response to that is that it is unacceptable, from anyone’s point of view, that two years later we have been unable to broker an outcome that is satisfactory. That becomes extremely destructive for everybody involved.

Mr Gordon —And everyone watching.

Dr STONE —Indeed. There we have a group that had thought it through, who could deliver substantial environmental flow, but who will need an adjustment component or compensatory component—that is, I understand, a sticking point, the dollars involved.

Mr Gordon —I think there are a number of sticking points, but I think we should just step back from that content for a moment and apply ourselves to a process; it does not matter what the sticking point is. If there is a sticking point, we need to find someone that can wiggle through it.

CHAIR —Good advice, Les, thank you, and to you, Ruth. Thank you for coming.

Mrs Wade —Thank you.

Mr Gordon —Thanks for the opportunity.

CHAIR —There will be a transcript of today’s proceedings. Please correct them if there are any errors and let us know, and if there is any other information then you might—

Mrs Wade —I will. Thank you.

CHAIR —That process you were talking about might be handy as well. Thanks very much.

Mr Gordon —Thank you very much.

[2.20 pm]