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Management of the Murray-Darling Basin system

CHAIR —I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Officers of a department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim.

I welcome the representatives of the Murray-Darling Basin Commission and the Murray-Darling Basin Authority.

Senator HEFFERNAN —Is this the new mob, the new identity?

Mr Freeman —I am the new mob.

Dr Craik —We are the old mob!

Senator HEFFERNAN —So where’s the name tag?

CHAIR —We apologise, the name tags are coming.

Senator HEFFERNAN —I answer to ‘Hey, you!’ Do you answer to ‘Hey, you’?

CHAIR —Hey you: just be quiet and we will get on with the formalities, then you can ask questions if it excites you that much. Dr Craik, I apologise for that interruption. Do you wish to make a brief opening statement?

Dr Craik —Just a brief statement, thank you, and thanks for the opportunity to appear here today. As senators will know, inflows over the last eight years or so, but particularly the last three, have been very low. And in the last three years we have had inflows in the lowest 10 per cent of records and established new record lows on everything from one month to about 10 years. Storages are also very low, particularly when you compare them with the historical long-term average. The outlook is neutral to slightly dry in the Murray-Darling Basin, particularly in the main catchment areas.

The other point worth mentioning is that the infrastructure we have in place is capable of coping very well with a one-year drought, as we saw in 2006-07; but when you have an extended multiyear drought, at some point you run out of water in the storages.

As a result of all that, communities, industries and the environment are clearly suffering. Murray environmental assets are all in very poor condition, except perhaps for the Barmah-Millewa Forest. The last decent flood along the Murray was in about 1993, and vast areas of red gums are either dead or dying. The Lower Lakes, with its sulfidic soils, emerged as a problem in early 2008. In March the ministerial council meeting approved $6 million to pump water from Lake Alexandrina to Lake Albert to make sure we could keep the water level up and avoid soil acidification to September. They also requested the commission to develop risk management strategies and future management options for both the medium and longer term for the Coorong and Lower Lakes, to pick up the best available science, hydrological modelling and climate change analysis and to strike a balance between the environmental, economic and social values of the site. We had to report by October. Then in May, with the report on the conditions, the council noted that if dry conditions continued we might have to provide some interim options and recommendations to the council.

We have focused on managing the risk of acidification in the Lower Lakes. The objectives that we have used in focusing on managing the risk of acidification—and these objectives have been agreed by ministerial council—are, firstly, to avoid irreversible damage, particularly acidification of the lakes system; secondly, that actions taken must not adversely impact on water quality for the major supply uptakes; and, thirdly, use treatments that as far as possible do not compromise the long-term options. So what we have done is develop a real-time management strategy that is currently with the ministerial council for approval. That involves the development of thresholds for water management when we actually start to do something. Those thresholds, when we actually start to do something, are above what we call acidification thresholds—the point at which we believe the lakes will start to turn acid.

Under the worst case scenario a relatively small amount of water could be required to avoid acidification before next winter. Given the rainfall and the reduced evaporation, we believe that we only need a relatively small amount of water to get through to next winter. Under anything less than the worst case scenario the lakes are at a low risk of acidification before the next winter inflow period.

This situation is unprecedented. We have no historical record on his to go on. The acidification triggers are based on the best science, and may change as we learn more about the situation. We are constantly monitoring the situation and getting our thresholds peer reviewed to ensure that we have got the best science that we can. It is really an adaptive management approach.

CHAIR —Would you like to make an opening statement, Mr Freeman.

Mr Freeman —Perhaps by way of background to explain the authority’s and the commission’s roles here, the Murray-Darling Basin Authority was established under the Water Act 2007 with the goal of managing the water resources of the Murray-Darling Basin in the national interest.

I guess it is fair to say that the centrepiece of the authority’s responsibilities is the creation of the Basin Plan, which will manage the basin’s water and other natural resources by specifying the volumes of ground and surface water that can be taken, environmental requirements that must be met and other objectives such as water quality and salinity. The Basin Plan will seek that delicate balance between optimising economic, social and environmental outcomes. In undertaking this planning role the Murray-Darling Basin Authority is independent of basin states, but clearly the role has to be undertaken in partnership with states that will have responsibility for implementing consistent water resource plans.

The COAG decision of 3 July 2008 broadened the scope of the Basin Plan, determined the time frames for the delivery of the Basin Plan and agreed to transfer the current roles of the commission into the authority. COAG has agreed that they would use best endeavours for these arrangements to commence on 1 November and for the first Basin Plan to be available in 2011.

The authority commenced on 8 September with my appointment as the acting chair and chief executive. It currently consists of nine employees and is focused on planning for the first Basin Plan. There is also considerable effort going into recruitment for the new authority and to manage the transition of the Murray-Darling Basin Commission.

Particular emphasis has been placed on identifying the contents of the Basin Plan and the sequencing that is necessary to ensure that all the components are fully integrated. I think it is fair to say that, while the Basin Plan aims to be more adaptive than the current state plans and better placed to deal with the current drought, climate change and the legacy of past decisions, there are risks of it becoming the mechanism for delivery of short-term tactical responses to assist in the Coorong and Lower Lakes. Addressing these issues would direct attention from the strategic objectives of the Basin Plan.

Senator HEFFERNAN —I would like to clarify something from the opening statements. Dr Craik, you mentioned in your opening statement something about reduced evaporation. In what context are we looking at reduced evaporation in the next little while?

Dr Craik —In the Lower Lakes when we have had some rainfall in recent times we have not only had water coming in through the rain but we have had a reduction in evaporation at the same time. Compared to the scenarios that we are working on, that means that we have had less evaporation now than we would have had under a worst case scenario. The combination of those two factors has meant that the level of the lake—

Senator HEFFERNAN —Cooler water or less sun? What is it all based on?

Dr Craik —When it is raining, it is usually not very sunny.

Senator HEFFERNAN —That is very temporary relief from evaporation. Is that what you are referring to?

Dr Craik —Yes. That all makes a difference.

Senator HEFFERNAN —I bet it does. But it is only this much difference.

Dr Craik —But it is very big area, and the Lower Lakes have risen by about 20 centimetres since about May or June.

Senator HEFFERNAN —I was curious.

Dr Craik —That is what is about.

Senator HEFFERNAN —Can you explain to the committee just when your organisation melts into Mr Freeman’s organisation? What happens? How does this all happen?

Dr Craik —That will happen once all six jurisdictions have passed the legislative amendments to the Murray-Darling Basin agreement and legislation that refers powers to the Commonwealth for the Murray-Darling Basin Commission. Then all the staff will transfer over.

Senator HEFFERNAN —When that happens, what happens to you?

Dr Craik —I go find another job.

Senator HEFFERNAN —That simplifies that. We were told the other day by the department, in your absence, that you are the chief advice line for the government. Is that right?

Dr Craik —On this issue?

Senator HEFFERNAN —Yes.

Dr Craik —That is correct. We are providing advice to all six governments.

Senator HEFFERNAN —We were also told that you were not consulted on the Toorale purchase.

Dr Craik —That is correct.

Senator HEFFERNAN —Why would that be if you are the chief advice line?

Dr Craik —We are the chief advisers on this particular subject, but we do not provide—

Senator HEFFERNAN —But I would have thought that they would have rung up and said, ‘Dr Craik, what do you reckon?’ But they did not.

Dr Craik —That is their choice. Not every government seeks advice from us on every issue that is to do with the Murray-Darling Basin. That is fair enough. We usually look after the issues that deal with the shared water resources of the basin that jurisdictions cannot deal with individual.

Senator HEFFERNAN —Are the water resources of the Murrumbidgee River and Goulburn River excluded from the Commonwealth Water Act?

Mr Freeman —No, they are not. They will be subject to the Basin Plan.

Senator HEFFERNAN —Are they presently?

Mr Freeman —They are included in the Basin Plan presently. That is correct.

Senator HEFFERNAN —They are excluded presently?

Mr Freeman —No. They are included in the Water Act 2007, so they will be part of the Basin Plan. That does not mean that the current water resources in those tributaries are included. The Basin Plan is a long-term, strategic—

Senator HEFFERNAN —Is this why Victoria is playing silly buggers?

Mr Freeman —You would have to ask Victoria that.

Senator BIRMINGHAM —While they are included in the Basin Plan, what authority will the Commonwealth have over implementation of the plan in those tributaries?

Mr Freeman —The water resource plans that apply to those tributaries will have to be consistent with the Basin Plan.

Senator HEFFERNAN —But that is not saying that you will have control of them.

Senator BIRMINGHAM —That is not answering my question.

Senator SIEWERT —That is the same for everybody, though, isn’t it?

Mr Freeman —That is correct.

Senator SIEWERT —So the same rules apply to all the catchment areas—

Mr Freeman —That is correct.

Senator SIEWERT —as apply to the tributaries, such as the Goulburn River.

Mr Freeman —Yes, that is correct. Schedule 1 to the Water Act outlines the time frame within which the water resource plans must comply. The Victorian plans have a longer date.

Senator SIEWERT —2019.

Mr Freeman —However, they must comply with the basic plan.

Senator HEFFERNAN —We were told, and we have been given advice over a period of meetings of this committee, that there is about 35 gigalitres for sale in the system at the present time. That was last week. Some of that was locked up with a cap in places like Coleambally. To the best of your knowledge, if the government were to go into the market now to find the 60 gigalitres—which is a rather reduced figure on 400 gigalitres, I have to say—would they find it?

Mr Freeman —That question is certainly not within the scope of the authority.

Dr Craik —It would depend on the price, I would imagine. I am sure that there is water there, but it would depend on the price.

Senator HEFFERNAN —But isn’t there a danger in playing around with the price, especially when you play around with the price of buying back entitlements? There has been some suggestions from members of this committee that you should double the price for a short period to get a bit of spike in interest in the market.

Dr Craik —That is possible. Certainly when we—

Senator HEFFERNAN —But isn’t there a danger that if you did that and those people sold their entitlement and then went into the allocation market and operated out of the spot market you would totally corrupt the spot market for users who do not have the benefit of a double the price entitlement buyout?

Dr Craik —There is that possibility, but I would have to say that, when the commission ran our pilot water purchase project last year, we were oversubscribed and we could have got a lot more than we did. We compared what we paid with market price every week, and there was really no difference in market price at the beginning and end of our exercise. I guess what I find interesting is that, every time the government go into the market, in the same week they are accused of pushing the price up and pushing the price down, so it is not clear to me that they do actually push the price up a lot.

Senator HEFFERNAN —Do you know what the price is supposed to be for the CG2 water?

Dr Craik —CG2?

Senator HEFFERNAN —The second stage of the Goulburn savings water.

Dr Craik —No. I cannot remember.

Senator HEFFERNAN —The value of the market impact is alleged to be something like $15,000 to $18,000 a megalitre.

Dr Craik —I honestly cannot remember. I have seen it, but I cannot remember the figure.

Senator HEFFERNAN —Could you provide that to the committee.

Dr Craik —Yes, we could find that and provide it to you.

Senator HEFFERNAN —There are a lot of questions, Mr Chair, but I will come back in a minute. I just want to ask a couple, with your indulgence, at the moment.

CHAIR —Actually, Senator Heffernan, I would rather you keep going, and then we can go to other senators afterwards.

Senator HEFFERNAN —This is going to be an interesting ride.

Senator SIEWERT —That is to stop you coming in and out all the time.

Senator HEFFERNAN —Yes, I know, but it won’t.

Senator SIEWERT —We can try!

Senator HEFFERNAN —Can I just go to the principle of buying water to return water to the system. Would you agree that the science prediction for the future is saying that there could be a reduction of between 25 and 50 per cent run-off in the Murray-Darling Basin?

Dr Craik —Yes.

Senator HEFFERNAN —And that equates to somewhere between 3,500 and 11,000 gigs?

Dr Craik —Yes, that would be right, I think. That is the consensus of science.

Senator HEFFERNAN —So, to the best of your knowledge and to the best of Mr Freeman’s knowledge—I do not know what your background is, but I am a wool classer and a welder, and I have got to know a bit about water—do you think the community, the people and the bodies that you deal with are starting to take ownership of what all that means in reality for the future?

Dr Craik —I think some of them are. I think those in bodies that we deal with, like the community advisory committee, the community reference groups, the Living Murray, the sort of—I suppose—quasi-official bodies that we deal with, the irrigation companies—

Senator HEFFERNAN —But do you think the bloke down at the end of a channel at Finley has figured it yet?

Dr Craik —I think there would be a different view about those people. The people who are kind of linked into the system I think are taking ownership of it, but—

Senator HEFFERNAN —Blokes like me are hoping that the history of the past is going to be the future—

Dr Craik —That is right.

Senator HEFFERNAN —but science is telling us that ain’t so.

Dr Craik —I guess the message we have been trying to get out is that it would be great if the history of the past is what happens in the future, but they need to plan in case it is not.

Senator HEFFERNAN —On the decision on the 75 gigs savings out of the efficiency of that Goulburn system to go to Melbourne for single-flush toilets, and given the science predictions of the future, do you really think that the Murray-Darling Basin system can afford to lose that water?

Dr Craik —Victoria have always had a good history of not exceeding their caps on any of the valleys in the system. They have been quite responsible in all that. I do not imagine they are proposing to do that at the moment. Certainly, with the new Basin Plan, all the water in the system will be taken into account in terms of extractions.

Senator HEFFERNAN —But the highest-security water in the system will be toilet water or coffee or whatever for Melbourne. Given the science of the future and the reduction in run-off that is predicted, do you think that the system will stand it?

Dr Craik —The commission does not actually have a view on the pipe to Melbourne.

Senator HEFFERNAN —I am not asking you to have a view on the pipe. Do you think we can afford to remove 75 gigs, and 150 with the savings back to the irrigators, out of a system that is allegedly going to lose 3,500 gigs, say, at the best of the worst?

Dr Craik —At the end of the day, under the Basin Plan, all the extractions are going to have to be sustainable, so the level of extractions will be adjusted to what is determined to be sustainable.

Senator HEFFERNAN —Are you saying there in code that the 75 gigs might only be 30 at some stage in the future? Will that be a possibility?

Dr Craik —No, I am just saying that whatever—

Senator HEFFERNAN —Do you think it should be?

Dr Craik —Whatever happens—

0Senator Birmingham interjecting

CHAIR —Senator Birmingham and Senator Heffernan, we mentioned it earlier: ask a question, have the decency to wait for an answer, and then ask another question.

Senator HEFFERNAN —I have got the answer.

CHAIR —We do not need other senators jumping in.

Dr Craik —What I am trying to say is that whatever is extracted it is going to have to be sustainable from the basin and the plans for each valley will determine that.

Senator HEFFERNAN —But for these 3,500 gigs—

Dr Craik —I understand what you are saying, but what I am saying is whatever is extracted—and it is others who have to make the priorities about what the extractions are, not me.

Senator HEFFERNAN —Yes, I accept that; it is a government decision. But wouldn’t it be sensible to expect that in the future, if we lose somewhere between 3,500 and 11,000 gigs out of the system, the lazy political decision to send that water to Melbourne instead of Melbourne sorting out its own affairs—you would have to give consideration, if you were responsible, to the validity of being able to take 75,000 megs out of the system for the next 100 years against the science of reduced run-off. It would be a reasonable—

Dr Craik —Victoria has done the scientific assessments and the history of Victorian assessments is pretty accurate, but we cannot really comment on the policy decision at all.

Senator HEFFERNAN —No, and I am not wanting you to. I understand—

Dr Craik —I guess all I am saying is I think that in the future—

Senator HEFFERNAN —I will put it to you a different way: in that political decision, do you think part of the modelling for that included this huge reduction in run-off for the future?

Dr Craik —I would be very surprised if it did not, because right now they have a northern region water strategy.

Senator HEFFERNAN —Have you seen that modelling?

Dr Craik —I have not seen the modelling for the pipe.

Senator HEFFERNAN —Could you get it and provide it to the committee?

Dr Craik —I can give you the modelling from the northern regional water strategy, but you will have to go to Victoria for the stuff on the pipe itself.

Senator HEFFERNAN —Righto. I just want to briefly touch on the Warrego. I understand you were not consulted on this. I have only just got to know about this, but my understanding is that the Webb, McKeown and Associates’ July 2008 Warrego River scoping study, combined with the CSIRO’s Water availability in the Warrego September 2007 study, show that if the sleepers, and we are talking about saving 20,000 megs at the end of the river—or 80,000 in some oblique observation of overland flow, given that the storage is 13½ thousand megs, I do not think it adds up—implement the licences that are in the system now then there will be a 1.5 per cent reduction in flow at Wyandra, a 16 per cent reduction in flow at Fords Bridge and a 44 per cent reduction in the flow at Toorale, which has just been purchased at approximately double its market value. The people who were negotiating with the Commonwealth for the client could not believe how easy and what a sucker the Commonwealth was. If that is the case, wouldn’t that say that it is an odd sort of psychology that would say, ‘Let’s buy this place to return water to the bottom of the system’? If the water resource plan for the Warrego, which was built, as I understand it, with no environmental science—I know there are a couple of other things associated with the ROP. Presently there are 93,000 megs in the plan. Does it make sense to expect savings at the end-of-system flow when you really have not done anything about the environmental impact of waking up licences that are going to reduce end-flow by 44 per cent? Do you think that is sound thinking?

Dr Craik —I would need to check all of those figures because honestly I am not sure about that. My understanding is that the Warrego was not in too bad a shape.

Senator HEFFERNAN —You could say that about the Paroo as well.

Dr Craik —Yes, the Warrego and the Paroo—

Senator HEFFERNAN —But the Paroo is about to be pillaged by a quaint, looking-the-other-way political custom in Queensland. Can I just tell you about what is happening at Cunnamulla?

Dr Craik —Yes.

Senator HEFFERNAN —There is about 93,000 megs out there and there is bloke called Dunstan—do you know who he is? He’s at Cunnamulla.

Dr Craik —No.

Senator HEFFERNAN —He has accumulated something like 40,000 or 43,000 megs of licences from various sources in the system and my understanding is he is planning to grow 30,000 acres of cotton. He is a cotton grower from St George who went out there and decided he would do, probably on a mini-scale, what Cubbie has done. If all of that is true—and I am sure there will be a response if anyone is listening to this broadcast—wouldn’t it be senseless to think you are going to save the water that is being presented in the media as a saving out of the Toorale sale?

Dr Craik —I think before I comment on that I would really want to have a look at all the—

Senator HEFFERNAN —My understanding from the CSIRO study—which is really just a guess at the future and future flows, with no environmental impact study—and from what I can gain from the reports is that about 40,000 megs of overland harvesting capacity was not taken into consideration in the study. The CSIRO might choose to come back on that. Has the Murray-Darling Basin studied the CSIRO reports of September ‘07?

Dr Craik —Yes, I have had a look at them, but I have decided not—

Senator HEFFERNAN —Have you got any comments you want to make on the contents?

Dr Craik —I cannot say that I commit them—

Senator HEFFERNAN —Is there anyone in your organisation—

Dr Craik —all to memory.

CHAIR —Senator Heffernan, it is like a machine gun coming at Dr Craik. Ask one question at a time, let her answer, then go to the next one.

Senator HEFFERNAN —I get the answer; I don’t need the explanation, because we have not got much time.

Dr Craik —What strikes me is that I think the CSIRO ones illustrate in more detail a lot of the information we put out early on water flows and risks to shared water resources. The veracity of their predictions—I think they are the best that you can possibly do, but I suppose what has really struck me is that if you look at the average inflows in the Victorian Murray for the last decade, and in fact the CSIRO extreme climate change projection for 2055 is at the point that the average inflows we have had for the last decade—

Senator HEFFERNAN —Where we are now—that is exactly right.

Dr Craik —Yes. So it is like we missed almost 50 years and we are out there now. So I think CSIRO is certainly on the right track. By the time you build in to sustainable extraction plans groundwater, climate change and all those things, I think there will be quite significant reductions in some areas.

Senator HEFFERNAN —Has your commission referred itself to the Webb, McKeown and Associates Warrego River scoping study?

Dr Craik —I am honestly not aware of it.

Senator HEFFERNAN —It presents in data form this 44 per cent reduction in end-of-river flow. I guess you are not prepared to answer those questions, because you are not informed on them. It would be fair to say that, if the science is right, we will have to dramatically reconfigure the way we are using our water in the Murray-Darling Basin.

Dr Craik —I think that is right.

CHAIR —We will now go to questions from other senators.

Senator HANSON-YOUNG —Do you know what the entitlements and the allocations—two separate figures—are for water that is used for MIS schemes?

Dr Craik —No.

Senator HANSON-YOUNG —Why wouldn’t we know that?

Dr Craik —Because the Murray-Darling Basin Commission provides information to the states on their share of the water that is available. The states make the allocations to the entitlement holders. The commission is not involved in that process at all and we do not keep a record of the entitlement registers, so it is a matter for the states.

Senator HANSON-YOUNG —So there is no central database of that?

Dr Craik —No. But the MISs would have the same level of allocations as anybody else in the same system at the moment.

Senator HANSON-YOUNG —Yes, I am wondering what the total usage would be of MIS schemes across particularly the southern basin.

Dr Craik —I do not know.

Senator HANSON-YOUNG —I think it is something that is actually quite an important figure to find out in the scheme of things, to be honest. But perhaps we will need to figure that out elsewhere.

Senator NASH —Where would we find that information?

Dr Craik —The states would be the place to start.

Senator NASH —So we would have to go state by state by state?

Dr Craik —Yes. But you would also need to know what all of the MIS systems are called and under what name they hold their water entitlements.

Senator SIEWERT —We have tried and can’t, so far.

Senator HANSON-YOUNG —Can you explain to me what you see the role of the water audit to be and how far down the track you think it is?

Dr Craik —What the commission did was put together information from all of the states on water available in public storages and in private storages in each of the states—how much is committed for critical human demands, how much is committed already for allocations and losses in the system. We put that together on the best estimates from the states that have been available. We compiled all that and had it checked by the states. Now, as part of our further looking at this audit, we are preparing a word summary of the kinds of information they have tabled, because some of it is, I suppose, not immediately intelligible if you do not deal in water all the time. So we are updating the information on a quarterly basis and we are putting together a better explanation of all that information.

Senator HANSON-YOUNG —Can you explain to me what the categories are? We have just found out that there is no way for you to be able to know what water is held by MISs, so that is obviously a category that is not in there. How is the audit being categorised?

Dr Craik —What we have—and I think there is a copy in the submission that we prepared for you—is the valley and the storage; the capacity of the storage; the current level in the storage, how much is there; how much of the storage is dead storage—in other words, how much you cannot access; active storage, which is what you can access in the storage; critical water requirements—that is, critical human demand; total allocated water, including individual carryover from last year to this; losses; end-of-system flows; private storages; current balance in public storages; and a series of comments down the side.

Senator HANSON-YOUNG —So it is not particularly forensic. You are saying what is there, what is not there, what can be used and what cannot be used.

Dr Craik —That is what we were asked to prepare.

Senator HANSON-YOUNG —And you have simply pulled this information from what the states have given you?

Dr Craik —That is correct.

Senator HANSON-YOUNG —One of the next questions that was coming to my mind was: do we know the types of percentages we are talking about in terms of what allocations are used for permanent plantings? I guess we cannot even figure that out, because we do not have that level of detail in the audit.

Dr Craik —We certainly would not do that. It would be work that the states would do. But you can probably get a bit of an estimate of how much is used for permanent plantings by whether it is high security or low security, but that is not a complete guarantee because obviously people might buy low-security water to add to their high-security water. But you certainly could get more detailed estimates of areas planted to permanent plantings from the state departments of agriculture. I think they have that information reasonably readily available.

Senator HANSON-YOUNG —Given that, would you foresee an advantage in having an audit that was able to be more detailed or forensic, to borrow Senator Xenophon’s terminology, in terms of that information being handed over from the states? Do you think it is perhaps that the states do not know?

Dr Craik —I think the states do know how much area is permanent plantings. I think they have a fair idea of how much water is required to keep those permanent plantings alive—all those sorts of issues. The state departments of primary industry would have all that information. That is the sort of information they collect. It is not the sort of information we collect, because our role is looking at the shared water resources of the basin and providing information to the states on water available. So that sort of information would be there.

Senator HANSON-YOUNG —Obviously all of these questions are in the context of trying to find available water that perhaps can be allocated to the environment, because we know that the Lower Lakes and the Coorong are in a dire situation. Coming straight back to that, what is the commission’s view of the state of the Lower Lakes and the Coorong at the moment?

Dr Craik —The state of the Lower Lakes and the Coorong is deteriorating. It is a little bit better than it was a month or two ago because we have had some rain and evaporation. However, what I would point out is that the other icon sites along the Murray, other than at Millewa, are also in a bad way: the extent of red gum death along the Murray River and the problems with the lack of water and the lack of flooding at the icon sites. Most areas have not had a good flood since 1993, and of course they need a reasonably regular flood. We have been pumping very small amounts of environmental water over the last couple of years, when we have had it, into the icon sites and that has done almost miraculous things, but I think you would say that, other than the Barmah-Millewa Forest, all the icon sites are in a pretty bad way. Many other sites as well are in a pretty bad way throughout the basin.

Senator HANSON-YOUNG —I am not advocating that we need to trade off any more of the wetland areas. We heard earlier today that we have already lost 80 per cent of them. It is almost a responsibility that we have to ensure that we do not lose the last 20 per cent, frankly. I am not suggesting that other areas are not as important as the Coorong, but this inquiry is about the Coorong and the Lower Lakes. How much water do you think we need over the next 12 months to ensure that the situation does not deteriorate any further?

Dr Craik —For a 12-month period you probably need in the order of 700 to 750 gigalitres. There has been a slight improvement in rainfall and things. I note that the minister from South Australia gave an estimate of about 60 gigalitres to get through to winter—that was from early September. We got some information last night from South Australia that indicates that we might need about 30 gigalitres based on the improvements that we have had. I should stress that that is based on the assumptions that underpin the constant monitoring that we do, and these things can fluctuate.

Senator NASH —Could I just ask you to clarify. What were the figures of 700 to 750 you just used referring to?

Dr Craik —How much water you would need for a 12-month period.

Senator NASH —So where do the figures of 60 or 30 that you were just talking about come into it?

Dr Craik —To take you through to winter. We have a constant monitoring program so that we can keep an eye on things. We get fortnightly monitoring. One of the things that we are doing that is really important is getting a peer review of the threshold levels that we have set. This is the first time this has ever happened. We are getting everything checked thoroughly. Those threshold levels might change. We have been conservative in our estimates, but it really is an adaptive management strategy. What I am saying is that that is our best estimate at the moment but it is possibly subject to change.

Senator BIRMINGHAM —I would also like to ask for a quick clarification. This is an average expectation or the worst case?

Dr Craik —Thirty gigalitres?

Senator BIRMINGHAM —Yes.

Dr Craik —That is the worst case from now. We are not actually tracking at worst case; we are tracking at actually slightly better than worst case.

Senator BIRMINGHAM —That figure keeps coming down?

Dr Craik —It is slightly positive. That is right.

Senator HANSON-YOUNG —Do you think there are 30 to 60 gigalitres available in the southern basin to do that?

Dr Craik —We know that about 1,400 to 1,600 gigalitres has been allocated and is in carryover to be purchased. It all depends on whether there are buyers and sellers.

Senator SIEWERT —So 1,400 to 1,600 gigalitres has been allocated?

Dr Craik —Yes.

Senator SIEWERT —Could you be really clear about what that is allocated to.

Dr Craik —That is allocated to people who hold entitlements.

Senator SIEWERT —That is on top of critical human need?

Dr Craik —That is correct.

Senator SIEWERT —Thank you. That is the first time anybody has told us that is how much water is there.

Dr Craik —It is in that big table that we just went through.

Senator SIEWERT —Yes—it is in the table, but that is the first time we have actually had it put out here.

Senator HANSON-YOUNG —We have heard from a number of different witnesses and there are submissions about the issues in terms of transporting water at certain times, obviously because of evaporation rates and so forth. Regarding the 30 to 60 gigalitres—bringing in your figures and obviously what we heard from the minister this time last week—and correct me if I am wrong, that is what would need to be sent down over the next few months as opposed to just waiting until September.

Dr Craik —Regarding our constant monitoring, we are monitoring the level of the lake and that is—

Senator HANSON-YOUNG —To top it up—is that what you are saying?

Dr Craik —That is right. We would monitor it and, given the forecasts and the outlook, if it looked as though we were likely to hit that threshold, then River Murray water people would work with South Australia—and South Australia suggested they were concerned—and work out how long before you would need to identify it and let the water go, as it were, and from where.

Senator HANSON-YOUNG —We have heard so many times that we are in such a situation throughout the entire basin that things have to change. There have been suggestions that we have to cut our water use by up to 50 per cent across the basin, which is a huge adjustment. Does the commission foresee that in the future, for the Coorong and the Lower Lakes, we will be giving not just the minimum amount of water that we need to cover those soils and to stay away from the tipping point? Are we ever going to be able to put enough water back into the system for the environmental flows that are needed to keep those lakes not just alive but actually prosperous?

Dr Craik —That is going to depend on the value judgements that are made by governments about where they are prepared to set the extraction limits under the Basin Plan. What the commission are attempting to do at the moment, particularly under our Living Murray program, is to not lose icon sites and to keep them going to get enough water in so that they are not unrecoverable, with the hope that in the future they will flourish.

Senator FARRELL —I will continue in that vein, Dr Craik. Obviously the easiest solution to the problem is rainfall. How much rain do we need to get us back to a typical sort of pattern that would get the lakes back to where they were?

Dr Craik —It is really hard to calculate that. The answer we give, because it is uncertain, is: biblical volumes. We certainly believe it will take some years of above average rain to restore our storages to the sort of level that we are used to.

Senator FARRELL —One of the things that a number of expert witnesses have talked about is the fact that because of the dry conditions the run-off is not sending as much water into the system as typically we might have expected. Firstly, is that your experience? Secondly, have you looked at other areas where this phenomenon is occurring, particularly the south-west of Western Australia? If so, can you tell us anything about that?

Dr Craik —Certainly in south-western Western Australia they have had a significant shift in run-off. It started about 30 years ago, as I recollect. It was a stepped change from reasonable run-off to very low run-off. What we have seen in the last three years in particular here in the basin is a very sudden reduction in rainfall and inflows into the system. The levels of inflow into the system were totally outside anything in the 116 years of records we had to that point. The inflow in 2006-07 was less than 50 per cent of the previous minimum inflow that we have had. So we had about 1,000 gigalitres in 2006-07. The long-term average into the Murray is about 11,000. So it was less than 10 per cent. Last year we had nearly 3,000 gigalitres. This year is more like last year, but the three years are in the lowest 10 per cent on record. So, yes, in that sense we are mirroring Western Australia, but we are quite a few years behind with the very sudden shift to very low levels.

In terms of the relationship between inflows and rainfall, we have been working quite closely with the Bureau of Meteorology and CSIRO. Certainly there is quite a bit of evidence that rainfall patterns have shifted. We have seen a great reduction in autumn rainfall in the basin, particularly in the southern part of the basin, and late winter rainfall. Because we do not get that autumn rainfall, the catchment does not get wet like it used to—so that when it rained in winter you would get lots of run-off. The early winter rains tend to have to do the job that the autumn rains did. So we have had that rainfall shift, which is one thing.

Also, there has been work that shown that, for every one degree rise in temperature—and the basin has got warmer in the last two years—you get something like a four per cent increase in evaporation and a 15 per cent reduction in the inflows. If you look at comparable periods of rain and then you look at the droughts in the past such as the 1940s drought and the federation drought and at the inflows, they are much lower now than they were in that period. The average inflow for the last eight years has been about 4,000 gigalitres. During the 40s drought, it was about 5,800 and during the Federation drought, it was 4,600 or so, so we are seeing less inflow for the same sort of rain. There seem to be some things in this drought that are different from before. Certainly, some of those are, according to the weight of scientific opinion, linked to global warming—things like the strengthening of the subtropical ridge. It is all linked to climate change. So yes, it is different.

CHAIR —I have just a couple of quick questions. There has been a lot of talk about flooding the Lower Lakes and the Coorong with seawater. That is just one of a few suggestions. We have established from this hearing that there is no simple solution. We understand that very clearly. I suppose I should be asking Mr Freeman. I am not sure. You are from South Australia, Mr Freeman, I take it.

Mr Freeman —Originally.

CHAIR —We will not hold that against you!

Mr Freeman —I am from Queensland originally.

CHAIR —I take on board Dr Craik’s statement earlier that we should be all right in the Lower Lakes between now and next September. But if it is not all right, what should the South Australian government be doing to possibly prepare for flooding the Lower Lakes with seawater?

Dr Craik —The other part of what we have been charged by the ministerial council to do is to prepare longer-term options for the Lower Lakes. Right now, we have really just focused on the short-term options and getting a strategy in place that will keep us going for the next six to 24 months. We are now starting focus on longer term options which really address how to deal with it in the longer term. That is the sort of issue that we would be considering in the longer term to deal with the Lower Lakes. At this stage, we have not put a lot of effort into that, but we are starting to commission some work on the impacts of seawater on a system like the Lower Lakes so we actually get an understanding of the likely problems of introducing seawater into the Lower Lakes, which we would need for the ministerial council. Of course, that is going to depend on how much you have to introduce and how salty it gets. Those are the sorts of questions that we are looking at in the future; we really have not got to that problem yet.

CHAIR —So, really, the EPBC process should start sooner rather than later.

Dr Craik —South Australia, as I understand it, will be responsible for applying for an EIS, and I guess they will be covered by the EPBC process, depending on what they—

CHAIR —Sorry, but you would agree that it should start sooner rather than later.

Dr Craik —I think with any process it is always desirable to start sooner rather than later.

CHAIR —Thank you very much.

Senator HEFFERNAN —So, should they pump out that water that is three times the level of salt—is hypersalinity the word?

Dr Craik —Is this from the Coorong?

Senator HEFFERNAN —Yes.

Dr Craik —I think the salt levels are about six times that of seawater in parts of the Coorong, isn’t it?

CHAIR —We do know that.

Senator HEFFERNAN —So, while we are thinking about the rest—

CHAIR —Sorry, Senator Heffernan, you did ask the question. I do not think we got the answer.

Dr Craik —I think in parts of the Coorong the salt is about six times the level of seawater—

CHAIR —We know it is six times, but Senator Heffernan asked, ‘Should they start pumping it out?’

Dr Craik —There is some work going on in South Australia that we have not yet been involved in where they looking at pumping really salty seawater out from the Coorong. We are also funding some work looking at the issue of the drainage channels that come into the southern end of the Coorong, where you could get more fresh water into the southern end of the Coorong. We have a study doing that at the moment.

Senator HEFFERNAN —You would think it would make sense, while they were planning what they were going to do in the longer term, to pump that out and get rid of it.

Dr Craik —We know they are doing some work on that, but we have not been involved yet.

Senator NASH —I want to go back to the issue of the pipeline going down to Melbourne. There are 75 gigalitres, and the previous witness said it was real water. Is that correct? It is real water in the 75 gigalitres that are going to go to Melbourne?

Dr Craik —I am not an expert on the pipeline to Victoria.

Senator NASH —But you are an expert on the basin and what is going to get sucked out of it. I am sure you would be covering it.

Dr Craik —We have not been involved in that issue at all and we have had plenty of our own things to do. My understanding is—

Senator NASH —Hang on a second. If somebody is going to take water out of your basin, surely you would want to be across it?

Dr Craik —There are a lot of things that go on in the Murray-Darling Basin that we do not have any jurisdiction over or any involvement in.

Senator NASH —I understand. I am not talking so much about jurisdiction; I am talking more about understanding, knowledge or anything, not whether you have any control over it.

Dr Craik —My understanding is that Victoria has done a significant amount of work on this issue and established that those savings will be available from providing more efficient irrigation infrastructure.

Senator NASH —Okay. I might be missing something here, but given that, and given that we are trying to look at all sorts of options to help the southern end of the basin, the lakes and the Coorong, doesn’t it seem completely stupid to be sucking 75 gigalitres out of the basin for single-flush toilets for Melbourne, as my good colleague said, when for the last few hearing days we have been scrabbling to find whether there is any water actually left in the basin for other purposes?

Dr Craik —I do not know that it is really my role to comment on policy decisions.

CHAIR —You do not have to answer that. That question was asked earlier, Senator Nash.

Senator NASH —It was indeed, and I am just asking it again. In relation to that—it was raised by a previous witness—I will take you to schedule 1 of the Water Act. The wording of it is:

The map set out in this Schedule delineates the boundaries of the Murray-Darling Basin but does not show all of the water resources within the Murray-Darling Basin that are covered by this Act.

Can you advise the committee of what those other water resources are that are not shown?

Dr Craik —Sorry, I am not with you. Maybe that one is too old.

Senator NASH —It is a fairly simple, straightforward question, I would imagine. I can table it so that you can read it if you like. Perhaps I can just let you answer that one in a moment. While we are considering that, I will move on to the issue of buyback. What advice did you give to the minister surrounding the issue of buyback? Did you advise the minister on it?

Dr Craik —The issue of buying water back was a subject of significant discussion at the Murray-Darling Basin Ministerial Council over a period of years because initially, when we started the Living Murray, the council was very keen that we focus on infrastructure improvements rather than going out and purchasing water in the market.

Senator NASH —I will stop you there. What has happened to that?

Dr Craik —To what?

Senator NASH —With the infrastructure improvements. It seems to have been quite a change in focus, if you like, from that infrastructure component.

Dr Craik —Under the Living Murray—which is the part that we are responsible for, not the federal government’s water buyback—we have a number of the infrastructure projects in place at the moment. For instance, with the Darling anabranch rice growers there is a project on farm infrastructure. There is a project at Lake Mokoan. There are a range of projects, and we can send you a list; it is on our Living Murray website. There are a significant number. After the federal government sought applications for a water efficiency tender, the council agreed that we could try a pilot water buyback, which we did and which was quite successful. Since then other jurisdictions have got into water buyback, so we gave a lot of advice to them. We have given them a number of reports, and we have referred to them in our submission on water buyback. So we would see both avenues as still being quite valid. In fact, we have just recommended a couple of infrastructure things to the ministerial council—they are considering them at the moment—so infrastructure is not off our agenda.

Senator NASH —On the buybacks, do you think it has been strategic? It looks rather ad hoc, at best, from a layman’s point of view. Do you think there has been a considered strategy for how the buyback process will work?

Dr Craik —The commission’s effort in the pilot was really partly just to see how it would go, so we were not being constraining about where we would purchase water and what kind we would purchase; it was just to see what the issues were. I think that initially that is a good way to test the system. We would be quite happy about that. It may be that, when you get to the second step with the Living Murray, you want to be more strategic about it. I think that when we started the Living Murray—with a figure of 500 gigalitres at six icon sites; those were the objectives—we had not really done all the preliminary modelling that we needed to do to see how we could most efficiently deliver the water and what structures we would need in detail for each of the sites. We have now got to the point where we have done it, and 500 gigalitres looks as if it was a pretty good guesstimate.

Senator NASH —The buyback and the initial $50 million does not seem to have had any kind of strategic planning around it in terms of the potential effects on regional communities. One of the, I guess, defences put forward that is that there was not really much water in it anyway, so it was not going to be a problem. But we are now looking at the northern one under way and another buyback plan for 2008-09.

In evidence given by the department at the last hearing, they were talking about having commissioned ABARE to do a study on the socioeconomic impact on regional communities. There is no date for that, though, and there was absolutely no indication that there would be any postponement of the continuing buyback plan until we got that report. Isn’t that yet another example of a bit stupidity, really—putting the cart before the horse? In your view, what is the point of doing the report on the potential effects on regional communities, which may well be very significant, if the buyback is going to continue anyway?

Dr Craik —We had some economic assessments done of the impact on regional communities when The Living Murray started.

Senator NASH —When was that done?

Dr Craik —Probably four or five years ago.

Senator NASH —Okay, and when did the $50 million buyback start?

Dr Craik —I think it was fairly recently. It is not our program—

Senator NASH —Exactly. I am looking at trying to get current information. I know all the work you have done on The Living Murray, but it was years and years and years ago.

Dr Craik —I don’t imagine the principles are different.

Senator NASH —No, I understand that, but in your view, would it be better to have more current information and—this cart before the horse idea—if they are going to do this study, why not wait until the findings from the study come out before the government continues with the buyback program?

Dr Craik —That would be a matter for the federal government and not for us to comment on.

Senator NASH —That is a fair call. Has anybody had a chance to look at that?

Mr Freeman —Yes. In regard to schedule 1, the delineation of the basin there is based on the topography, so it is based on the surface water. There are groundwater resources, which are expressed in the basin which actually extend outside the physical surface water catchment. That is the reference to the other water resources—

Senator NASH —That is the reference to the groundwater.

Mr Freeman —because the Basin Plan will cover groundwater and surface water.

Senator NASH —Okay. The Basin Plan is due to be completed in 2011—is that correct?

Mr Freeman —That is correct.

Senator NASH —Is that still on track to be completed in 2011?

Mr Freeman —We are three weeks old. I guess it is fair to say that you can develop a Basin Plan in any time frame. The amount of time will determine the quality, but clearly we have a need for a Basin Plan sooner rather than later. I think it is a judgement as to what the day is, but we will be working towards that 2011 date.

Senator NASH The —Finally, how much has each of the states contributed to the Living Murray and Water for Rivers?

Dr Craik —In terms of water we have actually got on the register, Victoria has contributed 120 gigalitres, and South Australia, 13 gigalitres. That is in terms of ‘real’ water subject to allocations. But we have over 530 gigalitres of projects on the books in total. Victoria has just about reached their target in terms of the projects—not entirely implemented yet. South Australia is, I think, reasonably close. New South Wales is—I cannot remember; can you?

Ms Swirepik —They are further away. Both the major states, Victoria and New South Wales, have about 230 to 240 gigalitres to recover in their states, and South Australia had 35 gigalitres. So the 13 gigalitres that South Australia has already put on the Environmental Water Register contributes to their 35. Victoria has 120 already on the water register out of approximately 240 gigalitres. So that is about halfway there. All of the states have identified projects to deliver against the 500 gigalitres, but there is still going to be a time frame over the next year to deliver on those projects in full. I think New South Wales at the moment has a large purchase project that they are hoping to pursue to make up their target.

Senator HEFFERNAN —How do you gift back to the system, as Anna Bligh did the other day, 8,000 gigs if you don’t put a tag on it? I mean, it is just unallocated water. Isn’t that just smoke and mirrors?

Dr Craik —It would just flow through the system.

Senator HEFFERNAN —That’s right. So you have not really returned anything, because it was going to flow through anyhow.

Dr Craik —Unless someone was going to have it as an entitlement to use.

Senator HEFFERNAN —They did not say, ‘We’re gonna take it off all the sleepers.’ They just said, ‘Here’s a gift.’

Senator XENOPHON —Mr Freeman, it will be three years before the Basin Plan will be completed. It is almost certain that the Lower Lakes do not have three years. Many rural communities and environmentalists are concerned that the finalisation of the Basin Plan is simply too far away. Would you agree with that as a general proposition, given the dire state of the Murray basin?

Mr Freeman —I have perhaps two comments to make. One is around the three years. To satisfy the statutory requirements of the Water Act, we will need to have a draft plan out by the end of next year in order to meet the 2011 date. There are 16 weeks of public consultation; there is statutory consultation with states et cetera. We will have a draft plan to meet that 2011 date developed by 2009. It is the issue about tactics versus strategy, isn’t it? The there is clearly a crisis in the Lower Lakes clearly, and we need to be able to respond. The Basin Plan is a strategic document which is trying to make quite explicit those trade-offs between social, economic and environmental assets. That has never been done explicitly. At the moment, we are seeing environmental assets deteriorate and communities implode. We need to make some hard decisions on whether we can sustain all the environment or whether we can sustain all the economy that is currently reliant on that river system. That is why it is such a long-run issue. To identify in a year all the social, economic and environmental assets of the basin, the water requirements that are necessary to sustain those and then have quite an explicit trade-off process, not only within classes that say, ‘This bit of the environment is more important than another bit of the environment,’ but across classes—between the environment and economic classes, for instance. That is what the Basin Plan is on about. I think it is fair to say that it is a planning task that has never been undertaken at that level of complexity in the world.

Senator XENOPHON —Professor Mike Young talks about a triage approach, where, like an emergency room in hospital, some things need to be done now that cannot wait for a Basin Plan. Do you see merit in the idea that action needs to be taken on some things sooner rather than later?

Mr Freeman —I agree with that.

Senator XENOPHON —But do you have the authority to do that? This also applies to Dr Craik in terms of the MDBC. Is there sufficient authority to do the urgent things that need to be done now?

Mr Freeman —The Murray-Darling Basin Authority does not have the ability to deal with those short-term tactical issues.

Dr Craik —The commission does. That is what we have been doing in terms of the short-term management strategy. If there is a proposal up to ministerial council about the strategy and what would need to be put in place, and we are waiting for them to sign off on that.

Senator XENOPHON —A key issue in relation to that, which was raised by Senator Hanson-Young, is the audit. What is the time frame for the audit that was announced by the Prime Minister a number of weeks ago? When will it be out?

Dr Craik —We have just started the work on updating that. We are writing the information that will go with the table of what is in storages et cetera. We have an update on that in our submission to the committee. It is updated from 31 July. We will be doing them quarterly. The Commonwealth government is also getting an external group to look at the work and the veracity of the figures.

Senator XENOPHON —In relation to the veracity to the work that has been done, you have to rely on the information given to you by the various stakeholders. Is that correct?

Dr Craik —That is correct.

Senator XENOPHON —Do you have a way of establishing veracity? While the audit will be looking at the veracity of the figures that you provide. Is there any way of determining how robust the veracity of the figures that are given to you are?

Dr Craik —We rely on the states. We cannot tell in terms of this, but we can tell in terms of the extractions every year because we get an independent audit group to do it. The auditors that the Commonwealth are getting, as I understand it, will also be talking to the states. The group of people that the Commonwealth is getting to test the veracity of our figures will also be talking to the states.

Senator XENOPHON —Will they test the veracity of the figures given to you, though?

Dr Craik —That is right. They will be talking to the states, who give us the figures.

Senator XENOPHON —In terms of the way in which the minutiae of the audit is operating—that is, in terms of the mechanics of the audit process—is that something that you provide to the committee?

Dr Craik —What I can provide is information on what the commission are doing and the work that we are about to do, but for anything else you would need to talk to the Commonwealth.

Senator XENOPHON —Sure. One other question, with the chair’s indulgence: I made a note earlier that you said whatever is extracted has to be sustainable for the basin. For both the commission and the authority, the issue of sustainability is clearly a key factor, isn’t it?

Dr Craik —That is correct.

Senator XENOPHON —The other note I made was in the context of the north-south pipeline. You said, Dr Craik, that Victoria has done some scientific assessments and their history of such assessments is pretty accurate.

Dr Craik —Yes.

Senator XENOPHON —Does that mean that you consider that the assessment that the Victorian government has done in relation to the north-south pipeline is accurate, or are you relying on their history of such assessments and therefore—

Dr Craik —I am relying on the history of their scientific assessments, so I am not making a particular comment about this one.

Senator XENOPHON —So that means that you have no way of knowing whether the Victorian government’s assessment of the pipeline project, in terms of its impact on the basin, is accurate.

Dr Craik —No—haven’t looked at it.

Senator XENOPHON —Is that something that you can look at in terms of your authority?

Dr Craik —If the commission is asked to by the jurisdictions, we can, and if the state wants to get our comment on it we can; but otherwise we do not buy into it.

Senator XENOPHON —Can I get this straight. So, if South Australia asked for such an assessment or an overview by the commission, could that be vetoed by Victoria?

Dr Craik —Possibly. A state could choose to exercise the power of veto—put it that way.

Senator XENOPHON —Okay. So Victoria could exercise that power of veto?

Dr Craik —It could.

Senator XENOPHON —With the new authority, Mr Freeman, could a similar position arise, for instance, in the context of the north-south pipeline?

Mr Freeman —The authority will have the capacity to ascertain the accuracy of those figures, but at the end of the day our concern will be about the sustainable yield of that valley. If Victoria chooses to use that in Melbourne or use that in some other way, that is really a decision for the people of Victoria and the government of Victoria. But we will have the ability to check those figures.

Senator XENOPHON —So, regardless of what Victoria does, the impact it could have on, for instance, South Australia is something where the authority has to be hands off?

Mr Freeman —Let us assume the figure is wrong, purely as an assumption. The authority would then net that off and say, ‘If that’s the amount of water that’s being taken out of the pipeline then there will be less available water in the balance of the catchment for licence allocations.’

Senator XENOPHON —But you cannot order Victoria—

Mr Freeman —We cannot determine whether it is for domestic, rural or any other use. That is an issue for the community.

Senator XENOPHON —This is my final question, Chair. Doesn’t that go against the grain, against the whole reason for the authority’s existence in terms of looking at the whole issue of sustainability, communities, the environment and the like? Doesn’t that go against the grain—the fact that you are fettered in the exercise of your powers?

Mr Freeman —I see the point that you are making, and I understand it. I think the issue is that determining how we wind this basin system back into a sustainable position—and, clearly, we will need to use less water—will be a decision that looks, economically and socially as well as hydrologically, for the best place to wind that water back. I think, as you are saying, there could be some redistribution of that based on some other social assessment, and that is why the plan is refreshed. We will need to refresh the plan either after 10 years or at the request of the federal minister or the joint request of all the jurisdictional ministers, or the authority itself can decide to refresh the plan. So we will be about the water consumption, but at the end of the day, if there is an issue there that needs redressing, there is capacity under the act.

Senator HEFFERNAN —So in a doomsday scenario, in a 3,511,000 gigalitre reduction, what priority will the 75 gigs for the single-flush toilets have over riparian—whatever Senator Fisher said; what do you call that water again?

Senator FISHER —Critical human need.

Senator HEFFERNAN —Critical human need, yes. So where will the priority be? Will Melbourne get the water ahead of Adelaide, or Wagga Wagga or whatever?

Mr Freeman —We will not be allocating water in the jurisdiction. That is the point that Senator Xenophon was making.

Senator HEFFERNAN —But if the crisis mounts, will anyone have the capacity to say to Melbourne, ‘Sorry, old mate, we’ve got to water these cows and these humans down the river somewhere so you’ve got to go without’?

Mr Freeman —Ultimately, there is a three-tier decision-making process. If we end up in a place where the Basin Plan does not work, there is the ability to trigger what is essentially going on at the moment, where ministers from each jurisdiction, together with senior officials, are setting aside the rules.

Senator FISHER —Where is that process set down that you were referring to in answer to Senator Heffernan?

Mr Freeman —That is set out in the bill which was introduced into parliament yesterday.

Senator FISHER —Were you consulted on the bill prior to its introduction in the House of Representatives yesterday?

Mr Freeman —In my former life, I was part of the development of those arrangements until it was clear that I was coming to Canberra to head up the new authority. At that point, I stepped aside from all those negotiations and discussions. I have not been a party to them since.

Senator FISHER —What about your colleagues? Were you consulted by the government in the preparation of the bill that was introduced in the House of Representatives yesterday?

Dr Craik —Yes, we were involved in some of those discussions.

Senator FISHER —What is your view of the classes of people and things who might be entitled to draw on our water? For example, would you classify it as economic, social and environmental, with some conveyancing water? What are the categories that would be entitled to draw on our water?

Dr Craik —Clearly, there is conveyancing water, there are losses, there are economic, environmental and social. I guess that I would put critical human demand at the top of all the extracted water for what people want. That pretty much covers the range. I might have missed something.

Senator FISHER —Are you familiar with the terms in the bill that was introduced into the House of Representatives yesterday?

Dr Craik —Only in a very general way. I have not been closely involved in it for about five or six weeks.

Senator FISHER —None of us have had much of an opportunity to look at it. But in its current form it does suggest that critical human water needs are the highest priority water use for communities that are dependent on basin water resources. I want to ask you collectively some questions around that. Secondly, the bill goes on to say that to give effect to this priority in the River Murray system, conveyance water will receive first priority from the water available in the system. In referring to critical human water needs, the bill is referring to communities that are dependent on basin water resources. In your view, should it be the case that those that are already dependent on basin resources effectively get priority over those that are not, just because the former are dependent on the basin resources?

Dr Craik —Certainly in terms of critical human demand. It seems to me to be a logical decision of governments that the survival of people is the first priority. So, for critical human demand, yes, that seems to me to be logical.

Senator FISHER —What would be your view as to what should happen after meeting the critical human needs? How you priorities things thereafter? Look at it from the perspective of those from who we have heard today, Plug the Pipe, who argue that they are going to be deprived of water by the Sugarloaf pipeline.

Dr Craik —I think the priorities after that, as meeting critical human demand was a priority established by the six governments of the basin—the first ministers, in fact—would be established by governments. We provide them with the advice on how much water there is and what the options and trade-offs might be. That is what we can do. But I think the decision as to who gets what is a matter for government.

Senator FISHER —Fair enough. Do you have a clear view as to what ‘critical human needs’, or ‘human critical needs’—however it is used—means?

Dr Craik —The categories that we have been using in the senior officials group for the last couple of years have been: for human consumption in towns that get their water from the Murray, with restrictions; for stock and domestic use, again, with restrictions; and, finally, where not providing it would cause severe socioeconomic hardship, again, with restrictions. The total amount of water required along the length of the Murray is about 350 gigalitres.

Senator FISHER —I understand that you have not had an opportunity to consider the provisions of the bill; therefore I will ask you to take on notice how you consider that interpretation you have just described sits alongside the meaning of the term now proposed by part 2A, ‘Critical human water needs’, in the water bill introduced in the House of Representatives yesterday. I ask you to take that question at large on notice. I will ask you a couple of more particular questions at this stage. The bill says:

(2)           Critical human water needs are the needs for a minimum amount of water, that can only reasonably be provided from Basin water resources …

If the word ‘reasonably’ were to be legislated, what would be your advice as to how it might be implemented? How would it practically have effect?

Dr Craik —Can I take that on notice, too? I have to admit I have not addressed my mind to that particular issue.

Senator FISHER —Yes; thank you. I guess that suggests that the government did not specifically seek your advice on that aspect.

Dr Craik —They certainly may have sought advice from people in the commission but, as I say, I have not been around for the last few weeks. Just because they did not consult me does not mean they did not consult our staff.

Senator FISHER —The bill goes on to say that critical human water needs are those ‘required to meet’ and it then divides into two subsections. Subsection (a)—

CHAIR —Sorry, Senator Fisher. We are not inquiring into the bill; we are inquiring into the Coorong and the Lower Lakes. So if you do have some direct questions about the Coorong and the Lower Lakes—

Senator FISHER —The second term of reference goes to—

CHAIR —You do not have to get into an argument with me.

Senator FISHER —the Murray-Darling Basin, Chair.

CHAIR —I have just said to you, clearly, that you are quoting the bill, so if you do have some questions go through them. Your colleague is waiting.

Senator FISHER —I will recast my question of Dr Craik and then go to my colleagues. What do you think might be meant by the term ‘core human consumption requirements’?

Dr Craik —I would imagine that is what is required, with restrictions in place, to meet the demands of people living in a town or an urban rural area.

Senator FISHER —So what would be non-core requirements?

Dr Craik —I suppose lawn watering and things like that, which is generally how it seems to have been interpreted for the last couple of years. There have been restrictions on outside watering and things like that, so it is sort of internal domestic—

Senator FISHER —And noting the difficulty that suburban meters do not differentiate between the two. I have a different question and it is my last question. Dr Craik, you referred in your evidence earlier to the effect of government intervention in markets and the affect on pricing. I think you said that it was not clear to you that entry by the government pushes prices up. Can you expand on that? For example, do you analyse before and after to form that view? Can you expand on that observation?

Dr Craik —The commission certainly did in relation to the water purchase buyback that we undertook last year. So we certainly analysed and in fact every week we had advice from an independent source on the price that the market was paying and we certainly did not pay the top price. We paid below the top price. We had a beginning and end of the exercise, how much we paid and what the price on the market was at the beginning and the end. You get conflicting views, often in the same journal or newspaper article, about the government pushing the price up or the government pushing the price down. It seems to me that there is a myriad of views as to what the government’s entry in the market is doing. But it is not clear to me that the government has unilaterally pushed the price up.

CHAIR —Sorry, Senator Fisher, you did say it was your last one. Senator Adams has been waiting patiently as has Senator Birmingham and Senator Siewert has one more.

Senator ADAMS —Dr Craik, how much community consultation have you done in your position on the basin seeing that the jurisdiction of the Lower Lakes and the Coorong comes under you?

Dr Craik —In relation to the Lower Lakes we have a community advisory committee and for the Living Murray Program we have the community reference group and certainly we have briefed them. They meet every couple of months and we brief them on where things are at and then they go back and feed that into their communities. Plus the ministerial council asked the community advisory committee to hold two forums in relation to the Lower Lakes. One was held at Goolwa and one was held at Echuca to get the views from people at the Lower Lakes as well as from people in the upper part of the system about the Lower Lakes on what might be done, what the options were and things like that. Also I guess staff of the commission and commissioners have made numerous visits down there and have talked and listened to the local people and are looking at the system down there. I am aware South Australia has also done a lot of consultation down there.

Senator ADAMS —When was it first leaked to you that there was a real problem?

Dr Craik —About the Lower Lakes?

Senator ADAMS —Yes.

Dr Craik —It was brought to us in early 2008. I think that was formally raised at the ministerial council meeting. We had indicated in our drought updates late last year that the level of the Lower Lakes was falling and to keep an eye on this. Then it was formally brought to the commission as an issue to do something about it in March when the council approved $6 million for pumping.

Senator ADAMS —Can you tell me how much salt enters the lakes every day, that is dispersed from the river into the lakes?

Dr Craik —From the river to the lakes?

Senator ADAMS —An idea of just the amount of salt that comes down the river?

Dr Craik —No, I can’t.

Mr Dreverman —No, I don’t have that number. It is hundreds of tonnes a day.

Senator ADAMS —I know. I realise that. I just wondered if I could get a more accurate amount.

Mr Freeman —We could calculate it. On average of course we have not experienced that for some time but it is 500,000 tonnes per year.

Senator ADAMS —With the construction of the Wellington weir, if that happens, is that going to have any effect on the amount of salt that is accumulated and will it stay in the river rather than being dispersed into the lakes?

Mr Freeman —It is not my area of expertise but clearly if the long-run average salt is not escaping through the mouth of the river, it is accumulating in the system.

Senator ADAMS —The reason I am asking the question is: is the weir going to have any effect in backing up the river rather than dispersing into the lakes?

Mr Freeman —I think it is fair to say when the weir takes effect we will not be under those long-run average scenarios so that is where it starts to become—

Senator BIRMINGHAM —We would prefer ‘if the weir takes effect’, Mr Freeman.

Mr Freeman —I am not responsible for the weir.

CHAIR —Order, senators. We will get back to the questions and answers. We are running out of time. Senator Adams has the call. We have a minute to go but I know Senator Birmingham and Senator Siewert have questions.

Senator ADAMS —Mr Freeman, you were talking about public consultation when you opened that up. How are you going to do that? Do you have a plan as to who will be consulted?

Mr Freeman —I do not have a lot of detail. We are currently thinking about that. There is a 16-week period when we call for public submissions, and I think there will be a lot of submissions. There is enormous interest in the basin. I think the plan generally lends itself to some sort of spatial representation. I think a picture is going to be worth a thousand words here. Therefore, it is likely that that consultation will be more of the community hall type arrangement than sending out a book. They are just my early thoughts because I think this Basin Plan, as I have said, is a world first. It is a complex plan, but I think it will lend itself to a geographical information system type arrangement plus a series of volumes. If that is the case, the consultation will be very much out there in the community.

Senator ADAMS —I hope local government will be involved.

Mr Freeman —Yes, they are part of the community. They are part of government.

Senator ADAMS —I am from Western Australia but I recently visited the Lower Lakes and spent some time travelling up the river and speaking to various community groups. Their biggest concern was consultation. They feel that plans are being made—and we have heard the same thing from the Goulburn-Broken catchment—and that it has been imposed upon them and they do not really know what is going on. So I would suggest to anyone involved at the moment that this is a critical situation. I think it is so important to get the correct message out to the people there. It is really unfair that they do not know what is happening.

Senator BIRMINGHAM —Dr Craik, turning to page 8 of your submission, up the top, under ‘Planned flows to South Australia’ you talk about the 350 gigalitres of dilution flow. There are an awful lot of shoulds, mays and ifs in that paragraph, too many for my liking. Could you tell me, to ensure that the other amount we have spoken of, be it 30 or 60 gigalitres, is as small as that, how certain is the 350 gigalitres?

Dr Craik —South Australia has currently identified—and this has been through the whole contingency planning process—the 350 gigalitres of dilution flow to maintain water quality for the town off-takes in the Murray, and so most of that water will flow through but it will do its job in terms of water quality for the off-takes before it gets to the Lower Lakes. But putting it in the Lower Lakes is a plus because it provides a bit more water for the Lower Lakes.

The issue may be that, should salinity be lower than anticipated, not all the water would be used for dilution and it may also possibly be that South Australia may wish to consider setting some aside for critical human demand for next year as they did this year. Those issues are still on the table. But this is an issue that is being closely watched. All the projections for the modelling for the Lower Lakes are based on using the 350 gigalitres into the Lower Lakes. As I mentioned, we have the regular fortnightly monitoring and we have regular meetings with South Australia. At this stage the intention is, as I understand it, for the 350 gigalitres to go to the Lower Lakes.

Senator BIRMINGHAM —Is that estimate of dilution flow based on best-case scenario, worst-case scenario or average-case scenario?

Dr Craik —The 350 gigalitre dilution flow is based on modelling that was done by the commission in South Australia last year as to what would be required to keep the salinity at a sufficiently low level for consumption.

Senator BIRMINGHAM —Does it assume worst-case salinity levels though? I am trying to ascertain what the probability of getting the actual 350 gigalitres is. If it was based on worst-case salinity levels then the probability of it being 350 gigalitres is less.

Dr Craik —I cannot give you the number off the top of my head. I can take that one on notice if it would help.

Senator BIRMINGHAM —If you could. If you could look into what current salinity levels are in relation to the calculation of that 350 gigalitres, as to the whole possibility of that variance and putting some certainty around that figure, that would be great. Thank you, Dr Craik.

CHAIR —We have gone four minutes over time.

Senator BIRMINGHAM —I will try to get through my questions quickly. What contact have you had with the auditors that Senator Xenophon was referring to before?

Dr Craik —Where the states have provided us with the information, obviously we have regular contact with the people who are doing the rounds and verifying the information. They have been in touch with us at least once. I was away, so I am not sure—but I know they have been in touch with us at least once.

Senator BIRMINGHAM —What deadline are they working to?

Dr Craik —You would have to ask the Commonwealth.

Senator BIRMINGHAM —I want to go back to Senator Heffernan’s questions at the beginning about how Goulburn and Murrumbidgee are treated under the Water Act et cetera just for the sake of clarification, because we had different ideas coming from this side of the table to that side of the table. How are they treated differently in the total concept of the Water Act, in the IGA that has been signed and in the amendments that are being proposed to the Water Act?

Mr Freeman —I think that was probably two questions—one of which I need to answer and one of which needs to go to Dr Craik. They will be subject to the Basin Plan. The water resource plans for those catchments must be consistent with the Basin Plan, and the schedule determines when that has to occur by. I think where your question was going was about how much of that water is part of the shared resource. That is the part of the question that needs to be referred to Dr Craik.

Dr Craik —Under the Murray-Darling Basin Agreement that is in place now, water and tributaries belong to the states. Under the contingency planning arrangements, different arrangements will come into effect about water and tributaries, if it is agreed to. But, under the normal operation of the Murray-Darling Basin Agreement, water from those tributaries belongs to the states.

CHAIR —Because these are very important witnesses we have in front of us, what I will do—with the indulgence of Hansard and Broadcasting—is chop a little bit into afternoon tea. It is either that or we will lose a few minutes with the next couple of witnesses—but we will be finishing at four o’clock on the dot.

Senator SIEWERT —I want to go back to the 1,400 and 1,600 gigalitres that has been allocated. I am sorry, but I am having trouble with your big table. Even with my glasses on I cannot read it very well! In the actual written submission, you say that, as of 31 August, 1,850 gigalitres had been allocated to users across the basin.

Dr Craik —That is right. Sorry—1,400 was the previous one, at the end of July.

Senator SIEWERT —So now there is 1,850—is that right?

Dr Craik —That is correct—and a bit more has been allocated since then.

Senator SIEWERT —That covers the whole basin, I am presuming. Is that correct?

Dr Craik —Yes.

Senator SIEWERT —So how much is in the southern basin? I am sorry, but I just cannot read the table.

Dr Craik —I apologise for the size of the table, but we were asked by the secretariat to make it—

Senator SIEWERT —I appreciate that. I am not having a go—

Dr Craik —We are happy to do an addition—

Senator SIEWERT —If you can give it to us on notice, that would be really—

Dr Craik —We are happy to answer that one on notice to make sure we get it right.

Senator SIEWERT —I am obviously interested in the water that is available for the Coorong in the lower basin.

Dr Craik —It is approximately 1,500, but we will come back to you.

Senator SIEWERT —I think this question may also need to be taken on notice as well. How much of that is in Victoria and would be subject to the four per cent cap?

Dr Craik —Again, we would have to come back to you on that one.

Senator SIEWERT —Okay. How many districts are you aware of where water is that is now already inaccessible because of the operation of the cap?

Dr Craik —For that information, you would have to go to Victoria. We can only tell you how much of that is water is in Victoria; we cannot tell you—

Senator SIEWERT —How much?

Dr Craik —That is right.

Senator SIEWERT —That would be appreciated, thank you.

Senator HEFFERNAN —As the run-off declines in future years, have you modelled—because farmers want to know the answer to this—the disproportionate water that has got to be returned to the freight work of the river or away from the farming work? If farmers expect run-off to decline by 25 per cent, they might say, ‘I am going to get 25 per cent less water.’ But in fact they will get a lot less water than that, won’t they, as the work of the river becomes a bigger proportion of the water available? Have you modelled that?

Mr Dreverman —CSIRO did.

Senator HEFFERNAN —What is the answer? You are the blokes that are advising the government.

Mr Dreverman —It depended on which valley. It tended to be that the biggest reduction was in flow at the end of valley; so in the case of the Murray the biggest reduction was in flow to the sea.

Senator HEFFERNAN —So the flow at the sea was the victim of the disproportionate return rather than taking it away from irrigated farms?

Mr Dreverman —Yes. If the total flow to the rivers may have fallen, say, 14 per cent, water availability to irrigators may have only fallen four. What fell in the biggest number was the flow to the sea.

Senator HEFFERNAN —Isn’t that a flawed argument if we are talking about what these people here are talking about—getting water to the end of the river for the Coorong and others? Isn’t that back-to-front thinking?

Mr Dreverman —No. We have these very large storages. When you get reduced run-off we tend to be able to manage a bigger percentage of the water within the storage rather than have it spill and go through the system as a flood. So the flood flows are getting less.

Senator HEFFERNAN —Are you saying that under the present scenario, where there is a catastrophic—more than 25 or 50 per cent—decline in run-off? What would be the figure now compared to the mean average decline in run-off in the last, say, 10 years?

Dr Craik —If you look at the Victorian Murray, for the last decade their average inflows are 40-odd per cent lower than the long-term average. In the Victorian Murray there is a reduction in allocations of about 10 per cent but a reduction in environmental flows of about 33 per cent. So the environment has already—

Senator HEFFERNAN —So that is not sustainable, is it?

Dr Craik —Not for the environment, it is not, no.

CHAIR —Senator Nash, did you wish to put a question on notice?

Senator NASH —Very quickly, there might be a very simple and practical answer to this. I think you said Victoria had put 120 gigs into the Living Murray. Can that not be made available for the Coorong?

Dr Craik —It is 120 gigalitres and I said it is subject to allocation. So whatever kind of water is applied on the register, the actual volume of water in any one year depends what allocation that entitlement gets. The 120 gigalitres was Victorian sales water. There have been zero allocations in sales water last year and so far this year.

Senator NASH —But if there were a 10 per cent allocation, could that be available?

Dr Craik —Correct. And certainly under our planning for environmental watering this year, the first consideration we have for using the environmental water that is available this year is: would it make a material difference to the Lower Lakes? We consider that first before we consider any of the other sites. We only have 1.2 gigalitres available at the moment and that would not make a material difference to the Lower Lakes.

Mr Dreverman —It is unlikely that there would be any sales water this year.

CHAIR —Senator Hanson-Young, do you want to clarify something very quickly?

Senator HANSON-YOUNG —Yes. We were talking about the water needed for the lakes. You have said it would be 30 to 60 gigalitres to keep the levels at the right level—

Dr Craik —No, to keep it above the threshold through to winter.

Senator HANSON-YOUNG —Absolutely. You have also said that we need 700 to 750 gigalitres over the 12 months.

Dr Craik —Over the 12-month period, yes.

Senator HANSON-YOUNG —Then on page 8 you are talking about 350 gigalitres dilution flow. On notice, can you set out very clearly for this committee what amounts we need in terms of what is going into the lake currently, what is needed for the dilution flows and what is needed to ensure that we can maintain that level over the summer period?

Dr Craik —Okay; we will do that. In figure 1 in our submission we tried to give you a figure that would give you an indication of how much water you would require to a certain period of time, based on worst case and average case. If it says 350 then you could say, ‘If South Australia provides all the 350 dilution flow to the Lower Lakes then you probably do not need any more.’ That is what we tried to do with that figure but we will write it out so it is clearer.

Senator HANSON-YOUNG —If you could, so that we have actually got the understanding of what those different amounts of water are for. We have heard from the South Australian government that they have already guaranteed 350.

Dr Craik —If they have guaranteed it, then that is fine.

Senator HANSON-YOUNG —But I want to know what your figures are in terms of saying what is the amount and for what purpose, then we can actually match it up and figure out the water that is actually there—that would be great.

CHAIR —Senator Hanson-Young, that was a very good question. Dr Craik, how soon can we expect that answer back on notice?

Dr Craik —We will try and get those things to you early next week.

CHAIR —Thank you very much. And thank you again to the Murray-Darling Basin Commission and the Murray-Darling Basin Authority for appearing before the committee today.

[2.50 pm]