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

CHAIR —Welcome, Craig, and thank you for making yourself available today. We are aware that you do have to be on a plane a little bit later.

Mr Knowles —Thanks, Tony.

CHAIR —We have members of the committee here. Before talking to everyone, I have to go through the formalities, as you would be well aware of. Thank you to all of you for being here. But given your time constraints, Craig, we might start with you, if we could. If you would like to, make a few comments in relation to your new task and how you feel that you are being received in the country and the various issues that you have been confronted with, because I think there may be a lot of common ground as to what we have been confronted with as well. Over to you for a moment. Then, if we could, we would like to ask some questions.

Mr Knowles —Thanks, Tony, and thank you to the members of the committee. I apologise right at the outset for not being able to be with you, but as I suspect you know I am on a fairly extensive move around the basin over the last few weeks and for the next couple of weeks. I am more than happy to catch up again in the future, if that is what you would like to do. I think I should put on the record right at the outset my position as I have explained to people as I go around the basin in relation to the guide and all of the problems that arose out of it.

Whatever failures individuals might think it had, my principal concern was that it showed very little respect to people and their efforts, both historically and indeed their desire to be involved in matters that are obviously very dear to them when it comes to water management. That is why I have said, frankly, that I do not have a high degree of ownership of it and I would like to think that, symbolically, my appointment offers the hope of a fresh start and an opportunity to re-engage with communities and incorporate their wisdom and their desires, as best as they possibly can be, into the work that I will do with the authority over the next little while.

I talk about also the need to better acknowledge history of effort in things that relate to water savings, whether they are various state programs or some of the Commonwealth programs historically. The work that has been done by many of us over many years seemed to be absent from the guide and from the dialogue with communities. I think probably your committee, Tony, is hearing the same things that I hear as I get around the basin and that quite clearly is, ‘Not only do we want to be heard but we want some of the things we’ve done historically taken into account, because we believe that we have made a contribution to this concept of a healthy working basin. We believe if we are farmers that we respect and understand the need for good environmental health of our landscapes and our riverscapes and to be put in a position where we have to defend that knowledge and that history is what rankles a lot.’

Equally, I liken the basin guide to a bit of a blunt instrument. It certainly created the impression, whether it was intended or not, that whatever number you picked it was a big cut all happening on one day and that clearly is not the case. First of all, whatever the number is, the thing I am trying to pursue at the moment is how much have we already done and what is left to do and how much time do we have to do it, because it certainly will not all happen on one day and it certainly will not happen with things like water cuts or buybacks alone. There will be any number of Commonwealth and state programs in infrastructure and the activities of the Commonwealth Environmental Water Holder and the state water holders and all those sorts of things which will make up a more complete set of initiatives over time to achieve the desired concept of a healthy working basin.

With that in mind, I have been talking to stakeholders about how we go about engaging them again, hoping to re-establish relationships where they have been fractured, and that includes also the Commonwealth and state agencies. I am talking about SEWPaC in particular, but of course the state agencies who play a vital role in all of this. In the end, in terms of implementation, they have had well in excess of 100-odd years of doing this and have enormous resources and skills that need to be incorporated.

But the most fundamental thing I talk to people about and I hear back in my journeys around the basin—and, I suspect, nothing different to what your committee has heard, Tony—is the need for much higher levels of localism in the implementation and, indeed, the engagement of the processes to make this work in a far more fine-grained sense in the recognition that what might work in one place almost certainly will not work in another because catchments are different, hydrologies and geologies are different and we have to respect all of that and have structures in place that both encourage localism as best we can and make sure that that fits into the overarching strategic directions.

There are many models for localism. At this stage I have refrained from putting my own views about what localism might look like, but I have certainly been throwing the imagery out there, encouraging individual groups and states and territories to consider what localism might look like to them. I do not think it will be a one-size-fits-all approach, but certainly if I could encourage your committee to consider anything. It is again how you go about devolving as best as is possible opportunity, responsibility, capability and resources, of course with all the necessary accountabilities, to ensure that we go about not having this as my plan or the authority’s plan or the Commonwealth’s plan or the states’ plan, but that people have a far greater degree of ownership in it; so the better alignment of all those Commonwealth and state programs imbued with anything I might do, the concept of a healthy working basin, and creating an opportunity for people to actually genuinely be involved.

You would have all seen, I am sure, as I have after many years away from water policy, the quite excellent efforts of local communities in managing both water for consumption and production and for environmental management. Very frequently local communities are filled with people with diametrically opposed interests but, because they all know each other, they tend to turn up at each other’s cricket matches on Saturdays and things like that, they can sort it out far better than the sort of totemic arguments that take place with the peak groups and lobby groups, as important as they are. But in the end this is about making sure things happen in local settings, recognising local constraints and local needs, and I would obviously seek to impress upon the committee the strong view that I have that this is an important feature of anything we might do going forward. I will stop there because I am conscious that there will be many questions. Thank you for the opportunity.

CHAIR —Thanks, Craig. We are hearing similar messages and obviously if we had our ears open we would all be hearing similar messages. The localism issues, the local solutions, as we have moved through a number of the subcatchments, when you do engage with people they do come up with various scenarios.

Mr Knowles —Yes. Tony, it sort of reinforces that concept that there just cannot be a one-size-fits-all approach here. It has to be valley by valley, catchment by catchment and even subcatchment by subcatchment. It does not have to be lowest common denominator stuff. In fact, a lot of the organisations and groups, catchment management authorities and so on are heavily imbued with very competent people who are more than capable of incorporating good, quality information into sensible and appropriate tailor-made approaches to managing their system, both in terms of environmental imperatives and environmental health, as well as strong productive capacity.

Dr STONE —Thanks for your efforts you are now making, Craig. Those of us who work and live in the basin appreciate them. I just want to put to you a particular issue that has been coming up again and again, and today in the submissions made to us we’ve seen it again, particularly in the last submission we received. People say, ‘Look, the act is flawed. It doesn’t give a capacity for a triple bottom line outcome; therefore this legislation issue must be immediately dealt with.’ What is your response to that? What do you say to people who put that to you? Certainly not the majority, but a number of our representations have mentioned this issue.

Mr Knowles —Do you mind if I call you Sharman?

Dr STONE —Please do.

Mr Knowles —Sharman, I have been asked this. I have a number of components to my response, so I will try and be as brief as I can. First of all, importantly, I am comfortable that I have enough room and scope within the act for me to proceed in the way I wish to and I think my public position about not being able to separate or provide precedence to one of the triple bottom line objectives is well recorded. I just cannot conceivably understand how you could not have the balance of environmental, social and economic objectives, and that is the way I wish to work.

I say that for a couple of reasons. One is that the legal advice that has been tabled is highly consistent with anything else I have seen. I think I can assert reasonably that I have done a considerable amount if not a large amount of my own environmental legislating over the years, in forestry, catchment management, native vegetation and water, and I have had all of those various—Ramsar and JAMBA and CAMBA—agreements to wrestle with, and there is no difference with this Water Act.

Importantly, my point that I do make to people is that in many ways it is really not my problem. The parliament, and your work, and indeed the Senate inquiry that Senator Joyce has got up and running, is the place for this conversation, particularly the specific references of the Senate inquiry. Parliaments make the laws. Parliaments change the laws. If there is a view that it needs to be amended, I think the inquiry should work that out, but in the meantime I think somebody has got to get on with the job.

The reason I say that is that I too hear—as you have heard in the evidence you have received from some of those interest groups—the commentary about the act, but it does tend to be limited to the peak lobby groups, the professional lobbyists and indeed—with no disrespect; I was one once myself—the politicians out there on the ground. I rarely hear it raised with me unless those peak groups are with me on the road, and they have been over the last few weeks. Importantly, most people just say to me, ‘Would you please get on with this.’ They are less interested in the lawyers’ picnic that surrounds these arguments, they are more interested in somebody getting on with it, and I think the prospects of success are getting on with it and working on those objectives that I have outlined in as balanced a fashion as I possibly can.

Ms LEY —My question concerns the environmental watering plan. In my electorate, during the authority’s initial consultations and visits, it was raised as a serious concern. The conversations we have had as a committee with both the federal department, SEWPaC, and also with the authority have, I think, indicated a lack of strategic thinking around who is responsible for the plan, who has the big picture and can therefore say, ‘This water will be allocated to this environmental site.’ What was particularly surprising to me was when the environmental water manager said that was not his responsibility: at one point it was the authority’s, at another point it was the federal department’s, and even the National Water Commission got a look-in. If we are to have an environmental watering plan that has not even been really started, isn’t it putting the cart before the horse to have the SDLs coming out first? And who is going to be responsible for that very important process?

Mr Knowles —Perhaps after I have finished with my time, I might invite Mr Freeman to pick up on that question. It is very fundamental, but it sort of goes to the point that I was making in my general introduction. You have identified a number of bodies, who all presumably believe they have got some sort of finger in the pie or want to run a long way away from the pie, depending on their perspectives. I would add into the list of potential people associated with this, of course, the state environmental water managers, who also have a stake.

It comes back time and time again, when you are talking to people on the ground, to the need to better align the work that I might do in the delivery of a draft basin plan into a more holistic plan for the basin, if I can put it in those terms. It has to better incorporate the various features and functions of all of the various players who are associated with water provision and water management in Australia. That is not just SEWPaC, outside of my authority. It is the programs within SEWPaC; it is the role of the Commonwealth Environmental Water Holder; it is the activities of the state environmental water holders—indeed, their programs as well. More holistically, a competent environmental watering plan would have regard to all of those components and therefore all the opportunities that each of those components represent. I think that is where we need to drive towards.

Mr ZAPPIA —Craig, I do not know if you want to answer this question or if Rob does. In the last round of hearings we heard a lot of concerns in respect to the rights of the mining companies to extract water without any controls. Has the authority got a view about what is occurring, particularly with respect to some of those mining exploration licenses and therefore the possibility of underground water being extracted unregulated?

Mr Knowles —You certainly get this in a lot of places and, most particularly, in the last few days up in the Queensland part of the basin it is very much a live issue. I will get Rob to take the committee—if you do not mind, Rob—through some of our current conversations and where they are up to.

Certainly the authority has a statutory role, as I understand it, particularly as water comes up, both in quality and impact on flow regimes. Rob might want to give you more of a detailed answer that relates to the interrelationship that I believe needs to exist between ourselves as an authority and, indeed, the state regulatory authorities. I used to do quite a bit of mine regulation—Tony, you would recall this from previous lives—when I was minister for planning in New South Wales. The complexities and the conditioning should of course start with the states because of the nature of the application’s processes, but, once developed, we certainly do, and I think appropriately so, have a role.

Mr McCORMACK —Craig, I welcome you to Griffith and Coleambally on Monday in advance. I cannot be there because parliament has been recalled.

Mr Knowles —I am sorry about that, Michael.

Mr McCORMACK —No, that is all good.

Mr Knowles —Can I just interrupt your question to let the committee know that we try and make sure everyone who wants to be there can be there. It is sort of a ‘take all comers’ type approach. It is the only way I can learn. Thank you for letting me know you cannot be there. I will try and catch up with you elsewhere.

Dr STONE —Can I say, Craig, I will not be able to be with you when you are at Echuca later in the week. I had a pre-organised, not able to be got out of, event.

Mr Knowles —I did say to the chairman I would be more than happy if the committee would like to catch up either formally or informally so that we can deal with some of your particular concerns.

Ms LEY —Can I just say, Craig, that I do not know when you are coming to my electorate because your office will not tell me!

Mr Knowles —I will find out for you.

Ms LEY —Thank you.

Dr STONE —Your office did not tell me. A local person told me.

Mr Knowles —All right. Thank you.

Mr McCORMACK —I am sure that the growers and farmers down the MIA way and Coleambally irrigation way will suitably step in for me and tell you how good the food and wine they produce is, which I am sure they will be able to let you sample. Your socioeconomic study was due on 15 March, as I understand it. I am just wondering why it is late and when it might be released.

Mr Knowles —It was late because of the Queensland and northern Victorian floods. The consultants we employed were in the middle of their consultations when the floods hit and they suspended their consultations. I understand they are back up in Queensland at the moment—in fact, I think I tripped over them in Goondiwindi a couple of days ago. So they will get through their work. The board will then get some completed work to digest and will go forward from there. If members have not been properly notified by my authority, I apologise on their behalf and I will seek to rectify that. I genuinely do not want people left out of the room. I am trying to get everybody in the room.

Mr McCORMACK —You have probably partly answered this in the answer to Sussan: what role do you see for the MDBA in the implementation of the Basin Plan inasmuch as helping the states to develop further water resource plans?

Mr Knowles —I think it has to be a partnership. I have done my fair share of water resource plans—water-sharing plans as they are called in New South Wales—and they are tough and complex instruments. It is interesting to come back all these years later. I have said to communities that I think they have probably got their rose-coloured glasses on when they tell me my process was much better than the current set of processes. I remember them to be fairly tough, hard and robust conversations. Anything to do with water usually is—no surprises there.

But the one thing I am confident of is that, if this process is going to work for local communities, we have to engage first and foremost with the states and territories and their extensive knowledge bases and do the water resource plans as much in partnership as is possible. This is a message that I have already personally delivered to state and territory ministers and, indeed, their basin officials, and I would assert that, despite some dislocation in the relationships as a consequence of the guide and some of the work around that, there is a substantially higher level of goodwill now in place. My hope is that we can use that to good effect, working together. But, equally, on an ongoing basis, those water resource plans need to have a much higher level of local ownership if they are going to be effective on the ground. That is why I harped on as much as I did in my introductory remarks about trying to challenge communities about what localism might mean in particular parts of the basin and catchment.

In the end, when all the politicians think it has been completed, is a job well done and have walked away, those left will be the people on the ground who have to live and work there, and protect their river systems and maintain environmental health. It is those people who we need to seek out at the earliest possible stage and incorporate into the story so that they can take some charge of the ongoing aspects. My strong view is—to repeat it—that the only way we will actually get that is by seeking to provide the opportunity, the resources and the capacity with the accountabilities to ensure that they can do a good and ongoing job.

CHAIR —You have to go in a minute, I think.

Mr Knowles —Yes, I have to get to the airport. But, like I said, I would be more than happy to reconnect. I know everyone’s time is difficult, so I do appreciate the opportunity to talk with you today, and I am sure Rob and his team will happily afford whatever assistance they can.

CHAIR —Okay. Sussan has got a quick question.

Ms LEY —I do not know if we have covered this, but there is a five-year difference between the implementation of the New South Wales plan and the implementation of the Victorian plan. As a previous New South Wales minister you would, I imagine, be vigorously defensive of a position where we would have to enact measures before Victoria.

Mr Knowles —Please let me assure the committee that, as much as I know where I was born, I have learnt the hard way that water does not actually respect boundaries, particularly state boundaries. It goes where it will go. My approach is to take a basin-wide approach, and I assure the committee that I will. That is my job and I think my track record, particularly with the NWI and John Anderson, might reinforce that for you.

As far as the dates are concerned, I do agree that alignment is necessary. It is not essential but I think it is necessary to facilitate the transition from a historically state based regime into a more holistic plan that is less interested in states’ rights niceties, if I can put it in those terms, than it is in the health and viability of the basin.

The other point I would make is that I live in the real world and I understand that, when states and territories get together, this will be an important topic of conversation because I do think they will expect there to be a closer degree of alignment. Equally importantly, I think communities expect that there should be a closer degree of alignment around those things. But the alignment is only one thing. It is the quality—the practical, sensible, understandable nature of the water resource plans—that is going to be the critical thing. The best way of achieving those objectives of practicality and ‘capable of being implemented’ type images is for the states to be working more closely together, and that does imply a higher degree of alignment than may presently exist.

Ms LEY —It is going to be difficult, because we had legal advice presented to the committee that it in fact would not be possible to change that five-year differential between New South Wales and Victoria. That advice was quite alarming to me.

Mr Knowles —Yes. That is probably a conversation for another time.

Ms LEY —Sure.

Mr Knowles —Mr Freeman may wish to add something further, but I do not feel so constrained.

CHAIR —Thanks, Craig. We will let you catch your plane. Thanks very much for joining us today. We may take you up on your invitation to get together as a group somewhere over the next month or five weeks or so.

Mr Knowles —Okay. Good on you.

CHAIR —Thanks very much.

Mr Knowles —All the very best.

CHAIR —Now we have got ‘live’ people again. Thank you, gentlemen, for taking the time to be here today. Are there any introductory remarks, Rob, that you would like to make in terms of some of the things that have been talked about this morning or would you like to pick up on some of the comments that the chairman made?

Mr Freeman —I did have a prepared statement, but I will not go there because I think the chair has said most of those things in different words, so I do not think it would be constructive. Perhaps I will just try to talk to each of those issues in a little bit more detail. As an overarching comment, one of the biggest challenges for the authority is that there is no template for a basin plan and most people are expecting the Basin Plan to be a water resource plan for the basin, because they know what water resource plans are—yet, clearly, that would take away the ability for localism and all the things that the chair talked about. I think that is one of the biggest challenges.

It is a challenge internally, too. Staff do not have a template or an example here and, therefore, perhaps tend to duplicate some of the water resource plan requirements. It has generally come back in submissions—with one major exception which I will talk about—that people are looking for something that is more akin to a water resource plan, yet the authority is clear that we must leave plenty of room for states to develop water resource plans that accommodate local circumstances and allow for that local ownership as well.

I mentioned one exception. People are looking for a lot of detail in the environmental water plan, yet it must be principles based. We cannot put out a prescriptive environmental water plan. It must provide flexibility to allow, for instance, the Commonwealth Environmental Water Holder to trade water out of a catchment that is well watered because it has rained in that catchment, and acquire water in a dry catchment. So it has to be principles based, but there was almost universal feedback that people are looking for something with more detail than the principles we outlined. That has driven the authority to consider: is there a communication document that sits below a principles based environmental watering plan that would describe how it might have been done, looking back? So, say, ‘For this five-year or 10-year period, this would have been an appropriate environmental water plan.’ It is an application of the principles. We are working through that issue, but it is a big challenge. People are looking for detail.

On mining, the authority was clear and remains clear that, where mining is intercepting water that is water resources within the province of the Basin Plan, then clearly that must come into the water balance. If they are groundwater resources that are within the scope of the plan, they will have to be taken account of as part of the SDL. If the mining is intercepting water resources that are outside the scope of the authority in the Basin Plan—and the Great Artesian Basin is the obvious one, with all those groundwater resources below it—then the authority does not have jurisdiction as far as its extraction goes, but once the water is brought to the surface it certainly must comply with the water quality and salinity elements of the Basin Plan.

We met with Queenslanders on Wednesday, and the Queensland landholders are saying they really want a far more integrated response than that one. The authority does not have jurisdiction, but it is looking at how it might give communities a more integrated response than ‘not our business except when it comes to the surface’. But mining, certainly where it intercepts water resources that are within the basin as far as the definition goes, is well in our scope and would need to be dealt with. Whether they have a licence would be an issue for the states, but they have to be part of SDL.

The social and economic work I will probably leave to Tony Webster, who is running those projects, to talk about in a little bit more detail.

On the water resource plan involvement, the authority is really working hard to leave plenty of scope for the states to write resource plans that are state specific. The proposed guidelines for accreditation—we had some 150 requirements in the guide. The authority has decided that is far too many and they are far too prescriptive, and we will be trying to define those in more principle based terms to give states the ability to vary water resource plans further. Perhaps I can answer questions there.

The time frames: as the chair has indicated, it would be interesting to see your legal advice, but I guess it is always difficult to share legal advice. We are certainly looking at how we can allow more time for implementation and hence community adjustment within the framework of the Water Act. We think there is some potential to do that. It may not necessarily mean harmonisation of the dates to a common 2019 but it will mean allowing more time for implementation than the time frames outlined in the schedule of the act, which I think it is fair to say are very challenging for those plans that need to come forward. The earliest are in 2012 but some of them are in 2014. Perhaps I could defer to Tony to talk a little bit about the social and economic work.

Mr Webster —We have two major streams of work proceeding at the moment. One, as you are aware, is a consultancy that is looking at the local community effects of the guide and adjustment issues. That project is basically survey based, augmented with some economic modelling as well. The survey basis of the consultancy is basically to go out and identify key informants in the communities. So far, they have interviewed around 600 key informants in small focused meetings of about one to six people. Work in a lot of the flood-affected regions has been deferred. The Queensland flood-affected areas will probably be completed in the next three or four weeks, probably sometime in mid-April, and then we will be looking to bring the report to a conclusion sometime after that.

The second major piece of work we are looking at is a cost-benefit analysis. That is a fairly challenging piece of work, the cost side probably less challenging than the benefit side. On the cost side, we have had a range of macroeconomic modelling undertaken by a range of consultants. The local community impact is largely about costs as well. To some degree, that is really about giving a bit of richness to the costs indicated by the macroeconomic modelling. On the benefit side, it is very challenging as well. Probably key to the benefits is the ecological response from any additional water applied and then we have issues of economic valuation of those responses. Then there are a lot of more standard economic type benefits that we are investigating, ranging from use type benefits such as increased recreation, tourism, that sort of thing, and non-use as well. That is a very high overview so I am happy to take questions on that.

Ms LEY —It sounds as if you are saying that the cost-benefit work is just too difficult.

Mr Webster —No, that is not the case at all.

Ms LEY —Are you confident that it will apply a rigorous economic process such as you would find in any university doing a similar cost-benefit analysis on a similar subject?

Mr Webster —What I am saying is that it is very challenging, but a lot of these issues have actually been dealt with over quite a number of years and there is a great depth of knowledge out there. The challenging thing is to bring it all together into a coherent framework and that is what we are trying to do at the moment.

Ms LEY —What is the deadline for having that completed?

Mr Webster —We are trying to bring it to a point where we can say something sensible with the release of the draft plan. That would be our short-term goal.

Ms LEY —You mentioned also the other research that has been delayed by the floods and that will be ready sometime after April. What date would we expect that?

Mr Webster —I am not sure about that. The last of the interviews we are expecting to be concluded around mid-April. I think the 15th is the last scheduled date. We are somewhat in the hands of the key informants themselves, and the consultants, in respect of that. Then of course we need to give the consultants time to write up their results.

Ms LEY —It seems an extraordinarily drawn-out process, given that that research was being done in Griffith when the committee was in Griffith and has been in quite a few other locations. It does seem to be taking a long time.

Mr Webster —The consultancy was commissioned in November, just before Christmas. There was a long Christmas break in which the consultants worked to put their methodology together and start their interviews in January. The floods have had a major impact on the consultants being able to do that, and the consultants were asked to give every consideration to those flood-affected communities to make sure that they were not interfering in their adjustments to that.

Dr STONE —One thing that worries me, Mr Webster, is that your consultants are doing a cost-benefit analysis on a scenario that I presume is still the scenario that is in the guide to the plan—in other words, those SDLs that were proposed in the plan—and I am sure you are as aware as anyone else in this room that they have been hugely discredited as to where we should be, given the problems with the science, the problems with the lack of consultation with the states in terms of their information and so on. It sounds like the analysis is chasing a rabbit which is already dead and buried. That is a concern.

For example, using the area which I am most familiar with, the guide says 35 per cent of water should be found out of a capacity system. The capacity has already divested itself of its irrigation water just before the drought broke—sadly for them—so that was a complete crock. But you also seem to be having studies out there, asking those people, ‘What do you think about losing another 35 per cent of your water, down to two megs each of stock and domestic?’ See what I am saying? You are spending a lot of money right now on further studies and analysis of a proposal which is still in the melting pot and which has been discredited very often in our inquiries.

Mr Webster —One of the challenges with both these pieces of work is trying to acknowledge the views of the community in response to the guide and on the other hand trying to inform the authority’s decision-making processes going forward. You are right: there is a tension in that and the authority is very much of the view that we need to be thinking about going forward and how we can craft particularly these two pieces of work to help the authority in its decision making around that.

Mr Freeman —I agree with the point that the senator has made: it is sort of taking us back to where we were, in a way. I think there are a couple of points, though. They are crafted on the scenarios in the guide and yet the authority’s thinking has gone a long way forward, based on submissions, based on extra work that we have been able to undertake. So they are commenting on those positions. We are not just sitting waiting for a report. We have had several briefings. The board has had several briefings from the consultants. Notwithstanding it is a lot of money, I guess the findings of the consultancy will not be surprising to yourselves. They are not surprising to us.

Dr STONE —We could write them down now, couldn’t we, from our experience?

Mr Freeman —I guess it is reaffirming those issues. To some extent, the discussion points are probably not that critical, although it does take the community back to the guide and implies that this is going to be where the proposed basin plan is and I think that is a big challenge for us. So we have had several briefings, we have seen some preliminary outcomes, but we are very concerned to make sure that all the surveys proceed before you land. There will be differences across the basin here. So it is not as if we are waiting for a report, we are getting updates, but the point that you are making we agree with 100 per cent; that it takes people back rather than from where we are now looking forward.

Ms LEY —Rob, can I just pick up on what Sharman has said and say that one approach you might consider using is to apply a sensitivity analysis to the cost-benefit results that you get so that everyone can see how it would apply at different SDLs, because it is pointless to do it at a fixed SDL. Can you do that? Can you apply a sensitivity analysis?

Mr Webster —You are absolutely right. That is exactly what we need to do to help the authority with its considerations going forward.

Dr STONE —Have you got sufficient funding to do that? For example, when you come up as the authority or the board comes up with a new set of scenarios or adjusted scenarios or whatever, are you going to re-test those in terms of socioeconomic response?

Mr Freeman —The proposed basin plan will have to have a single position. It has to be in final legislative form, so it will have to have a position, not a series of scenarios. The proposed basin plan then goes on a 16-week public consultation. It will be modified, no doubt, through submissions and consultation. The proposed basin plan—and, unfortunately, they are all called ‘the proposed basin plan’—that as a consequence is presented to ministerial council is accompanied by an economic and social impact analysis of that position, as modified. So we have got some time to work through that one. There is a further economic and social assessment that must be presented with the final position that is being put forward to ministerial council.

Dr STONE —By next February?

Mr Freeman —That will need to go to ministerial council. The time line that we are driving towards is to have a plan before federal parliament by early 2012.

Dr STONE —February 2012.

Mr Freeman —Early 2012.

Mr McCORMACK —The socioeconomic study that you are engaged in at the moment that you started last November, or decided to do last November, can you tell me how much that is actually costing?

Mr Freeman —I think it is about $1.3 million. It is of that order.

Mr SECKER —We have had evidence that a better and cheaper way to rehabilitate the mouth and the Coorong, which was one of the drivers of the whole guide and plan, could be with pipes under the sandhills from the sea to the Coorong. Have you assessed that? It has been sent to you. Have you assessed that or done a feasibility on it?

Mr Freeman —No, we have not. I did give this evidence, I think, in camera to the committee. At the 3,000 scenario, there is no specific allowance for the Lower Lakes, Coorong and the mouth, so whilst there is a lot of extra water going out of the mouth, it is actually as a consequence of watering environmental assets further upstream. There is no specific extra water. As you move into those higher level scenarios, there is extra water allocated to the Lower Lakes and the Coorong and the Murray mouth. What we were saying at that stage was that it was the lowest point that actually provides you with the mouth; it is essentially open. At the moment you will have a positive flowthrough about 72 per cent of the time, I think. It moves to about 92 per cent of the time, even at the lowest threshold.

Having said that, the authority took a rather benign approach to works and measures in the guide, where we said in chapter 15 there is the opportunity to reduce this amount of water through investment in engineering infrastructure. The authority is being more aggressive as it pursues the proposed basin plan and will actually put forward projects with what we believe they cost and what the savings would potentially be, rather than simply make the broad statements which we made in chapter 15 last time, which were that it was outside of our jurisdiction to require the states or the Commonwealth to invest in this area, but there was opportunity. We will explore in that some of these projects. To answer you, Mr Secker, I am not sure whether it is actually one of the projects that we will comment on, though, because at the lower bound it is a bit of a moot point.

Mr SECKER —So you will not even look at it?

Mr Freeman —I am not sure.

Mr SECKER —Even though it is sent to you. Okay. Have you taken into account the water sharing plans in New South Wales and the savings that have already been achieved and will be achieved in the future?

Mr Freeman —Yes, we have.

Mr SECKER —And you still want 3,000 on top of that?

Mr Freeman —No, 3,000 was never a decision; 3,000 was a discussion point.

Ms LEY —The SDL comes on top of that.

Mr Freeman —The SDLs come on top of the existing water sharing plan arrangements. That is correct.

Mr SECKER —Have you made an assessment of how much water has been saved through the water sharing plans?

Mr Freeman —I could refer that to Dr MacLeod. But the state water sharing plans or water resource plans have been incorporated into the models that drove the original numbers. But Dr MacLeod is in charge of that area.

Dr MacLeod —Just to respond to the question, we have included within the baselines all of the savings that have been done up until 2009, the point in time in terms of the baseline. It is our understanding that there may have been up to 220 gigalitres of savings with respect to the New South Wales water sharing plans. There is, however, some opportunity for prospective savings not yet achieved on the various plans. There are a lot of things saying that this will happen into the future which have not been included within the baseline modelling and some of those will be available to offset any reductions. We are continuing to work with state jurisdictions to assess the degree to which there are further prospective savings that might be available to make offsets under the existing plans.

Mr SECKER —And you still will not include the 500 gigalitres as part of that 3,000 or 4,000 from the Living Murray Initiative? That is all on top of that still, isn’t it?

Dr MacLeod —The Living Murray was included within the baseline hydrological modelling, so the 3,000 is—

Mr SECKER —On top of that.

Dr MacLeod —on top of that.

Mr SECKER —The inclusion of town water supplies in the SDLs, where it is pretty hard to cut back a household by 30 per cent or whatever it is—and we have been given a lot of evidence that that appears to significantly increase the impact on irrigators because you cannot get much from the town water supplies, so that means more of that percentage has to come from the irrigators—are you doing anything to address that problem, because it is certainly a big issue in South Australia?

Mr Freeman —Yes. There are two issues. One is the inclusion of town water supplies in the SDL, which essentially we are required to do. However, the reductions—and we have talked about this in northern Victoria and other places—when you get a significant percentage of your water use as town water supply—and I guess the most extreme is probably the ACT—that can end with a pretty perverse outcome if it is pushed into those irrigators. The authority has rejected the policy position in the guide, so there will be a new policy position in that regard. However, we have not landed on the final policy position. So we have heard that loud and clear; in fact, the authority raised this and encouraged people to comment on it in the community meetings. So we have rejected the position in the guide whereby the downstream component ends up with this quite ridiculous outcome—to put it bluntly—and we are working through new policy elements.

Mr SECKER —I do not know if this has been asked, but what did you think of the CSIRO’s criticism of the science or, they are saying, the misuse of the science?

Mr Freeman —I have had several meetings with the CSIRO about this. I think it is unfortunate that the CSIRO’s submission is being misrepresented. In fact, there are probably several overarching points I would make. One is that the positions that CSIRO is commenting on are in the guide. It is a bit like the previous comment: they take you back to where you were. However, the CSIRO submission should be put in its right context. I will quote from it. It is quite interesting:

It is not a comprehensive review of the guide. It focuses on areas of improvements. It is inherently biased towards the topics over which we have concern and does not dwell on areas where we believe the guide does well.

So it is actually a commentary around eight points, and those eights points I would not say are at the margins but they are certainly not the majority of the guide.

In general, the CSIRO are suggesting areas of additional science and, whilst we would agree with their areas of additional science, we have to work with best available science within the time frame. So some of those we agree 100 per cent. We look forward to engaging in a future work program with CSIRO, but it will not be within the time frame of the proposed basin plan. We are actually working collaboratively and quite well with the CSIRO. I can address any of the eight elements, because it is very disappointing that it has been purported that CSIRO are critical of all the science in the Basin Plan. That is not their position and certainly is not if people read their submission.

Mr ZAPPIA —I want to follow up on a question asked by Mr Secker to Dr MacLeod about the savings that have been allowed for in the draft. You said up to 2009 whatever savings were made have been included in the draft. Have there been any savings made since, that are clearly known, that have not been now accounted for? I assume that in addition to that there are prospective savings that would be, at the very least, included in your final report perhaps at the end of this year or whenever it is.

Dr MacLeod —Yes, there are prospective savings that could be available for offset. The most significant of those are the water purchases being made by the Commonwealth under the Water for the Future program. All of those are currently available for offsetting any reduction. In the guide it was identified that that represents somewhere in the region of 650 gigalitres of long-term cap equivalent water. In addition to that, there is some water within New South Wales within the RiverBank program. In groundwater terms, there are prospective savings under a number of initiatives that are looking at groundwater reductions in New South Wales and there are some of those other ones as well that we are currently looking into that have been proposed. For example, in Victoria there is the northern strategic water—

Mr ZAPPIA —Yes. My point is: can we quantify that for the benefit of our work—

Dr MacLeod —We are working through that at the moment and we will be quantifying that to illustrate the degree to which existing prospective programs will offset it, and they are quite significant.

Mr ZAPPIA —Thank you.

Ms LEY —Mr Freeman—or anyone—in your calculations of the environmental water requirements for the key environmental assets, what proportion of the sites would be watered?

Mr Freeman —I will say a little and then Dr MacLeod can get involved. What we did was identify the 2,442 potential key environmental assets. One of the CSIRO comments was, ‘You could do further work to work out the water requirements of those.’ Of course, the issue there is that water that is used at one site can be used at the next site, so even if you did that, you cannot add them up. That does not give you the answer. Our methodology said that if you looked at the 18 big assets, together with the 88 function sites—so ‘What sort of flow do I need in the river systems to have a healthy river system?’—we believe that that would satisfy the total water requirements and that gives you that very big band from 7,600 down to 3,000: 3,000 a relatively high level of risk with the environment; 7,600 essentially no level of risk with the environment.

Ms LEY —What proportion of the environmental sites would be watered?

Mr Freeman —We believe that that would provide sufficient water for those assets at different levels of risk. That does not mean that they all get a drink every year or whatever. I cannot give a definitive answer. What it means is that you would be taking a low level of risk with the 2,442 at one end and a high level of risk—Dr MacLeod can probably answer that in a little bit more detail.

Ms LEY —If I can just help you, Dr MacLeod: you would be familiar with the red gum forests along the New South Wales and Victorian Murray River and that strategic decisions have been in the Barmah-Millewa about what proportion of the forest is watered. That is what I want to know. What proportion of the environmental assets would be watered?

Dr MacLeod —In terms of the volumes of water that have been identified at, say, 3,000, there are specific details for each of the large 18 hydrological indicator assets which specify the nature of that site and the targets that would be associated with them. That information has been put together and provided. In general terms, it varies. If it is a Ramsar listed site, we have focused on the Ramsar listed elements of those sites. Where they are not Ramsar listed sites, we are focusing on the current extent of those sites because not everything is a Ramsar listed site.

Ms LEY —How do you define ‘the current extent’? The current extent would be 100 per cent, wouldn’t it?

Dr MacLeod —No, it is not actually 100 per cent. If you take somewhere like the Narran Lakes or Macquarie marshes, it is the current extent of the areas that are currently watered that are under protection or conservation. So they are not the total area of the sites. But we do have specific information about the exact areas that would relate to each of those assets.

Ms LEY —I do not want to take up any more time. Could you provide the committee with a list of the sites and the proportion of each site which would be watered under your environmental watering plan, or the geographic limitations thereof?

Dr MacLeod —I am happy to do that. I would, however, wish to say that the fact that we have based the calculations on looking at the objectives and targets for a specific area does not necessarily mean that those are the actual waterings that will take place, because clearly that will depend on water availability in any one year.

Ms LEY —I understand that.

Dr STONE —This follows on from the same issues that Sussan was raising. We have taken a lot of evidence about the importance of really efficient works and measures around environmental sites that can deliver a right volume of water at the right season with the right quality, the right frequency and so on, which would at the end of the day have you watering—Lindsay Island is the one that comes up almost every time as an example—and which would give you the same environmental outcome but with a lot fewer megalitres or gigalitres used. State agencies have done a lot of this work, of course, and CMAs and so on, and we have asked a lot of them to give us details of those works and measures that they propose, are already in place or can be improved. Are you doing that same work? Are you also going back over your environmental assets and auditing ways that works and measures could be used, what they would cost, that would give you a different sum at the end of the day but a good environmental outcome?

Dr MacLeod —Yes, we are. We have also sought the same information from state agencies and CMAs and we have also written to all parties who provided us with feedback, indicating that works and measures might play a part in the solution. We are currently collating that information with a particular focus on identifying all of those projects that are current commitments under various programs, whether they be state or federal. We are also looking at a series of projects in the context of the degree to which they might overcome operational constraints in the system—flood easements is an example of those—and then also looking at a series of ever more site specific projects that might achieve quite specific outcomes at particular locations with either less water or that make water savings. So we are currently working through that information. I believe we have currently identified or have had nominated to us around 200 different projects and they do vary in the degree to which there is any information or degree of design commitment; they may even just be an idea that might be useful. So we are looking through those to try and give an indication of the likely scale of investment that would be required to turn them into reality, how quickly that could be done, and also to get an understanding of the degree to which they might be able to offset any degree of change within the basin.

Dr STONE —You would see, for example, a very well developed, I will call it project, about to be implemented at Barham. You are probably familiar with the place I am talking about. Was it Kinypanial? It was in the Barham forest area, and they had been left completely out of any consultation or contribution to how that asset may be better supported, yet they had spent 10 years developing up and were just about to implement a whole set of bunds, regulators and whatever to save a lot of box, red gum and wetland.

Dr MacLeod —I would hope that we have picked that one up in the list.

Dr STONE —Yes, just make sure it is there. There is an actual office there. It is Barham-Koondrook perhaps, but it is just there, and the office with the state officials is in Barham itself. We visited them and saw the project in detail.

CHAIR —Yes, they were very good. There are a number of submissions in relation to the northern basin and the southern basin and being treated differently et cetera. What proportion of the reductions, if in fact the guide was applied in the northern basin, would actually impact on the Murray? What sorts of numbers is the authority working on?

Mr Freeman —The numbers for the Darling system were not generated to provide water to the Murray. They were all about making a healthy Darling system. For the actual outflows, only about 17 per cent is the long-term average, so only about 17 per cent of savings you make in the northern basin would appear at Wentworth. It is fair to say that the authority has heard the comments around climate change, for instance. It is universal: do not treat the basin as a whole. The northern basin and southern basin at the very least need to be treated differently. The authority is also looking at a different methodology in relation to some water requirements in the northern basin, so I think we will see quite significant policy proposal shifts in regard to the northern basin.

CHAIR —Thank you for taking the time to be with us again today. We appreciate the work that the authority is doing because we are doing some similar work with not the knowledge background that you people would have. We appreciate your chairman being on the phone today as well. Thank you very much for your attendance.

Resolved (on motion by Mr McCormack):

That this committee authorises publication, including publication on the parliamentary database, of the transcript of the evidence given before it at public hearing this day.

Committee adjourned at 3.43 pm