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Legal and Constitutional Affairs References Committee
18/05/2011
Water Act 2007

GREGSON, Mr Andrew, Chief Executive Officer, New South Wales Irrigators Council

O'BRIEN, Mr Daniel David, Chief Executive Officer, National Irrigators Council

[10:25]

CHAIR: We welcome Andrew Gregson from the New South Wales Irrigators Council and Danny O'Brien from the National Irrigators Council. We have received the New South Wales Irrigators Council submission, No. 12, and the National Irrigators Council submission, No. 19. Do you wish to make any amendments or alterations?

Mr O'Brien : No.

Mr Gregson : No.

CHAIR: We invite you to make an opening statement, after which we will have questions from the committee.

Mr O'Brien : Thank you. I will give a brief opening statement from the National Irrigators Council's perspective. We have long made our concerns known about the act. We have thought for a long time that the act did not give the equal consideration of economic, social and environmental outcomes that the National Water Initiative envisaged and that we think is only fair and reasonable as a policy position. Briefly, I guess it is clear from the guide to the Basin Plan that was released last year that our fears were well founded, because we do not think that it did deliver an equally balanced outcome.

In our submission it is the constitutional basis of the act that is the problem, in particular the reliance on the external affairs powers and the reference to the international treaties, in particular Ramsar. In saying that, we are not claiming that there is no consideration of social and economic outcomes or impacts through the act—they certainly are mentioned—but in our view the act does give primacy to the environment, and that is our fundamental concern. That view is backed up by a number of people with greater legal minds than mine and my organisation's—in particular, Professor Briscoe, who you've just heard from, and Mike Taylor, the former chairman of the authority, who as the interpreter of the act in developing the guide to the Basin Plan had a very clear view that they must focus on the environment first and foremost. The view is also backed up by a number of other legal minds that we have referenced in our submission, and perhaps if you do not believe us then you need to look at the submissions of many of the environment groups who made submissions to this inquiry, who made it clear that they see the act as placing primacy on the environment. If the government and the Commonwealth generally wants to do that, that is fine, but if the intention is in fact to equally balance the economic, social and environmental objectives then in our view the act does not deliver that.

Having said that, from a National Irrigators Council perspective, we acknowledge and welcome the assurances of Tony Burke and Craig Knowles that they can deliver a balanced basin plan. We are prepared to work with them to achieve that, but we maintain our position that we think the act is a problem and that there may need to be amendment or at least change, because the worst outcome for everyone involved in the Basin Plan would be a balanced plan getting up, going through the parliament and then being torpedoed in the High Court. None of us would like to see that because, as Craig Knowles often says, people want certainty and that would not deliver any certainty.

The other issue I would like to raise briefly that is our concern with the act is the focus of the act and therefore the whole reform process at the moment, on water and water alone. We have had 30 or 40 years now of integrated catchment management in this country, which has really been thrown out by this act because it effectively says that the solution is water and water alone. If you look at one of the key scientific bases that the authority used in developing the guide to the Basin Plan it was the sustainable rivers audit prepared by the MDBA between 2004 and 2007. It should be noted that was in the height of the worst drought in recorded history of Australia. But the overall results of the sustainable rivers audit indicated that only three of the 23 river valleys in the MDBA were assessed as being in good or moderate ecosystem health, with the rest in the poor or very poor category. The reality is, though, that on the hydrology measure, one of the three measures that they used as an example of environmental health, the result was almost exactly reversed. Only five valleys were in the poor to moderate category, while the remaining 18 were in moderate to good health. As the guide itself points out, more than two-thirds of sites were rated as being in moderate to good condition in terms of long-term hydrologic regimes. So in our view the SRA highlighted that water is not necessarily the only problem, and yet the only solution to the problem being put forward is water. We think there is a whole range of management activities that need to be pursued, including riparian vegetation, land management, invasive fish species, fish passage—all of those other things that do not necessarily relate to increased volume of water. We think that is another failing of the act, because it specifically precludes the plan from addressing any of those issues. I will leave it at that and I am happy to answer questions on our particular views on other aspects of the act, and I will let Andrew enlighten you on his view.

Mr Gregson : Senator, can I take this opportunity at the outset to acknowledge the state that you represent, and my home state as well, as again contributing to the great democracy that is Australia. It would be extraordinarily conceited of me to attempt to add my voice to that of a professor of law at Harvard. I think from the submissions that this inquiry has seen, and the evidence that it has heard from Professor Briscoe this morning, it is pretty clear that the Water Act is not balanced between social, economic and environmental outcomes. It is in fact completely the opposite of that. It is unbalanced; it favours one above the other. As my colleague Danny has just pointed out, that also is the submission from environmental groups to this inquiry. So the question is not so much whether the act itself is unbalanced; it is more whether it should be unbalanced or whether the act has strayed from an agreed path that not only the Commonwealth and the states agreed to but that the parliament was led to believe was the case. Should it be unbalanced? I think that question is best answered by reference to the National Water Initiative, the agreement between the states and the Commonwealth, that clearly advocated that this should be a balanced outcome, and it in fact advocated that trade-offs would occur between social, economic and environmental outcomes. Given that the National Water Initiative advocated trade-offs, we would have anticipated that the Water Act itself would also have considered trade-offs. It does not, it has not, and in our submission it cannot and will not.

The New South Wales Irrigators Council has been around for 27 years. Prior to my appointment to the role, my predecessor spent quite some time working on the early drafts of the Water Bill. Version 61 of the Water Bill was the last one to which the industry had significant input. In our submission, version 61 did deliver that balance that the National Water Initiative advocated. We understand, however, that it was version 72 of the bill which eventually reached the parliament and which, pursuant to our written submission, is considerably different to what was contemplated in the first instance.

So I suppose other than should it be balanced, the secondary question is: will it be balanced? Obviously pursuant to the guide it was not going to be. That said, both the new chairman of the authority, Craig Knowles, and Minister Burke both say that balance can and will be delivered. We have no reason to doubt that. Our question is how one seemingly innocuous piece of legislation can be interpreted in such incredibly different ways to result in, frankly, what is a grotesque outcome of uncertainty. The rule of law, on which obviously the parliament is based and it attempts to advocate, we would submit is completely undermined by a piece of legislation that can be interpreted in such enormously different fashions as in the one instance to threaten to rip the heart out of regional and rural Australia and the communities and businesses that are there and on the other hand in the case of only six months later, can take into account equally those social and economic considerations. For that reason, we submit that the Water Act is fundamentally flawed and needs to be revised by the parliament.

Senator CROSSIN: Thank you, gentlemen, for your submission today. In considering the environmental considerations of the basin, why do you not believe that social and economic factors also need to be a part of that environmental calculation, or why do you believe that is not the case?

Senator O'BRIEN: I guess, Senator, from the National Irrigators Council's perspective, this comes back to the argument that is often put that you cannot have irrigation and healthy communities without a healthy river. We agree with that as a principle and I guess it is akin to the whole 'no jobs on a dead planet' argument. Our submission would be that the vast bulk of the problems confronting the Murray-Darling Basin, particularly in the last 10 years, have been as a result of the drought. That is not to say there is no need for reform, but we simply reject the notion that the river is dead or dying, and we think that a modicum of reform is needed—there has been reform over the last 10 or 15 years. There would be barely an irrigator in the basin who has not lost water to the environment, mostly uncompensated in that period of time, so we have made great strides towards improving the health of the basin, and I think we are getting to a point in the not-too-distant future, particularly with the amount of water delivered through buy-backs, and hopefully in future infrastructure investment, that we will return enough water to the river to make it a sustainable system that is healthy for the environment and healthy for communities. And just on that point I would add that the guide points out that there is 58 per cent of the inflows in the Murray Darling Basin available to the environment. The same figure for the Yarra River in Melbourne is 57 per cent. So if people are saying that the Murray-Darling Basin is dead or dying, then we need to start looking at some of the other rivers around the country as well.

Mr O'Brien : Are these some of the concerns you raised in 2007?

Mr O'Brien : I have to say from my perspective, Senator, unfortunately the National Irrigators Council was not formed until 2008, so I can't answer that question, from our perspective.

Senator Crossin: Are you aware of any concerns from irrigators when the act was put through the parliament in 2007?

Mr Gregson : The NSW Irrigators Council was certainly was around at that time, and in fact my predecessor had significant opportunities for input into the original drafts of the Water Bill, and as we pointed out in our written submission, the input that we had into the bill was effectively negated by the dramatic changes that occurred between version 61 and the final bill that came before parliament.

Senator Crossin: We have got a situation where the Murray-Darling Basin Authority, though, has been publicly reported as saying that the act requires a focus on environmental issues first, with limited attention to social and economic factors—that is their view, and it's well-known that's their view—the minister, however, in October of last year categorically refused that, and goes to great lengths to highlight how the Water Act actually does demand what's called a triple-bottom-line approach. Are you saying that that is not working practically, or that the act is not clear enough about how those three issues need to be integrated to work better?

Mr Gregson : We certainly appreciate that that is the minister's perspective, and we understand that the minister's perspective was predicated on advice from the Australian Government Solicitor, which unfortunately has not been released in full. I think in the interests of transparency and understanding around this issue it would be very useful if that advice were available in full, at the very least to this committee, if not publicly. And I have no reason to disagree with the advice that senior counsel for the Australian government provided to it. Nor do I have any reason to disagree with the advice that Professor Briscoe of Harvard University gave, nor of a number of barristers that have provided public commentary on this issue. I think it goes to the heart of why we believe that the Water Act is the problem. What we have ended up with is massively different interpretations of the outcome of one piece of legislation, which in our submission completely undermines what that legislation was designed to achieve in the first instance, and it is for that reason that we have asked this committee of inquiry to consider whether the act itself is the problem—and in our submission obviously it is.

Senator Crossin: It is well known, though, and it has been the practice of all governments, in fact even when Mr Ruddock was Attorney-General, legal advice to the government is not made public—is not given publicly;. That is not just particularly the current government's view; it is the custom and practice about release of legal advice consistently across governments. It would be not uncommon to not get that legal advice; in fact, it is not possible to get that legal advice because it prejudices the position of the government.

I just want to turn to something that I understand Dr Sharman Stone said last October, and I am going to ask you whether you agree with this statement. She said:

In Part 2 of the legislation under Subdivision B section 20 it says that the purpose of the Basin Plan:

"is to provide for the integrated management of Basin water resources in a way that promotes the objects of this Act, in particular by providing for … the use and management of the Basin water resources in a way that optimises economic, social and environmental outcomes …"

That is her view about the act, so that would also be a view that you would disagree with?

Mr O'Brien : Yes. I think there are a number of excerpts of the act that you could take and say, 'Well, this says that all three must be optimised.' Very clearly in the objects of the act, object (c) says:

… to promote the use and management of the Basin water resources in a way that optimises economic, social and environmental outcomes …

Unfortunately, it is when you get to the detail of how the Basin Plan is to be developed that is our concern, and I give a particular example: section 21 in part 2, 'Basin Plan to implement international agreements'. Subsections (1), (2) and (3) all talk about the environment and the international agreements, Ramsar wetlands, key environmental sites et cetera. Subsection (4), subject to subsections (1), (2) and (3), is the first subsection that actually mentions economic or consumptive uses or the National Water Initiative, all of which are subject to the above requirements. So, in our view, whilst it says, 'Yes, you need to look after the social and economic,' it is only after you have done the environment in the first place. That can be further backed up in section 23 of the act, which is the most explicit directive to the authority on the long-term sustainable diversion limits. It says:

A long-term average sustainable diversion limit for the Basin water resources …—

et cetera et cetera—

must reflect an environmentally sustainable level of take.

There is nothing in that that suggests that this must be balanced by economic or social considerations, so that is our concern: whilst the act has some positive words about balance at the front, the implementation of the Basin Plan itself does not reflect that.

Senator CROSSIN: All right.

CHAIR: Mr Gregson, do you want to add to that?

Mr Gregson : Just briefly, if I may. Senator Crossin, I think your question goes to the very heart of the issue, and quite cleverly so. Interpretation of the act is like an enormous game of a pea under a coconut: it depends which coconut you pick up as to what definition you get from which section of the act. I think that there is furious agreement from all sides that the Basin Plan should equally treat social, economic and environmental outcomes. I think the question is whether the act (a) allows and (b) requires that to be the case. The 'allows' question is probably answered by which coconut you pick up. There are various sections that do point to equal treatment of social, economic and environmental outcomes. Equally, as my colleague Danny has just pointed out, there are sections that do not require that to occur, and in our submission that results in a very convoluted piece of legislation that does not give any long-term certainty that the outcome that we all agreed and sought, equivalent treatment, is to be delivered at each iteration of the Basin Plan. It is for that reason, we submit, that the parliament needs to reconsider the act.

Senator JOYCE: Do you believe that the people who—whether we agree with their outcome or not—came up with the draft in the first instance were competent in their capacity to understand an act?

Mr Gregson : I certainly have no reason to believe otherwise. We are also aware, obviously, that the Murray-Darling Basin Authority took legal advice from the Australian Government Solicitor.

Senator JOYCE: So, their being competent to understand an act and, as you state, having taken advice from the Australian Government Solicitor, do you think that the outcome they came to in their draft was one that complied with the act?

Mr O'Brien : Complied with the act or complied with the intention of what the government was trying to do?

Senator JOYCE: Complied with the act.

Mr Gregson : I will answer the question directly. Did it comply with the act? Yes, I believe it did.

Senator JOYCE: Do you believe that the act is very prescriptive in what you can and cannot do?

Mr O'Brien : It is certainly prescriptive on one interpretation of it, but again potentially—particularly given what has happened in the last six months—there are certain people in decision-making capacities who do not believe it is so prescriptive, and to our way of thinking that is part of the problem.

Senator JOYCE: I want to direct you to one thing in the definitions section, section (4), where it says:

environmentally sustainable level of take for a water resource means the level at which water can be taken from that water resource which, if exceeded, would compromise:

(a) key environmental assets of the water resource; or

(b) key ecosystem functions of the water resource; or

(c) the productive base of the water resource; or

(d) key environmental outcomes for the water resource.

Can you please direct me to what section of that actually talks about socioeconomic circumstances?

Mr O'Brien : In our view there is none. Even in the interpretation of the authority of 'c) the productive base of the water resource', they do not refer to that as the productive base as you and I might think of the productive base of an economic region—it is the capacity of the water resource to actually deliver productive outcomes. So I would suggest that there is no social economic impact in there.

Senator JOYCE: I have just been looking at the Australian Government Solicitor's advice which has been tabled and it talks about how the international agreements themselves, which this whole act hangs over, recognise economic and social factors and their relevance in decision making. I imagine this hangs off, I think, the Ramsar convention, a migratory bird convention and then some other international biodiversity convention. Can you please direct me to any section in the Ramsar convention which talks about the socioeconomic fabric of towns as we would perceive them—that is, to maintain their economic base—or is does it understand human needs merely as, 'If the river runs then the people feel good?'

Mr Gregson : I certainly cannot. I will refer to the advice of the Australian Government Solicitor at paragraph 23:

Both Conventions establish a framework in which environmental objectives have primacy …

Senator JOYCE: You just heard Professor John Briscoe say that this act, more than any one that he has seen, seems to almost have this sort of pathological devotion to the Ramsar convention more than other nations have attached to it. Are you aware of any other act throughout the world where a government has absolutely sworn their soul to the Ramsar convention?

Mr O'Brien : Not that I'm aware of.

Mr Gregson : No, we are certainly not. In fact, as part of our written submission we did include as appendix 3, our briefing note on the Ramsar convention which points out that Australia has been far more strident in approaching the Ramsar convention, particularly in respect of this act, than any other country.

Senator JOYCE: Do you envisage that there is a capacity for an amendment to the act to clearly spell out a promise that was delivered by both Labor and the coalition for a genuine triple bottom line?

Mr O'Brien : Yes, I think there is. I think it can be done relatively simply, although there would be the constitutional capacity of the Commonwealth to do this. I guess I would make the point that all past reform of the Murray-Darling Basin, much of it successful, was done without the need for legislation or a legislative instrument of any sort; it was done by cooperation.

Senator JOYCE: Did the National Water Initiative receive the sort of opprobrium that this has received?

Mr O'Brien : Sorry, I misheard the—

Senator JOYCE: The National Water Initiative or water initiatives prior to this draft. Has it been possible in this nation to bring about water reform without basically burning down the show and almost having riots on the street?

Mr Gregson : Absolutely. Significant reform has occurred over the course of the past three decades, right across the Murray-Darling Basin, with the cooperation of the states, the Commonwealth and indeed with the cooperation of water users, of people that relied on those water users and of those who are concerned with the environment.

Senator JOYCE: Do you think that Mike Taylor would have had a fair understanding of the act?

Mr O'Brien : Yes, I think so. Whether he read it as carefully as he might otherwise have when he first took the job, I am not sure. One of the frustrations—going back to Senator Crossin's question earlier in relation to interpretation of the act—is that Mike Taylor had a directive interpretation of the act from the Australian Government Solicitor. Minister Burke released advice also from the Australian Government Solicitor that apparently came up with different solutions and different answers, and to our mind that confuses the hell out of irrigators and our members.

Senator JOYCE: Can you think of any reason, when the coalition that wrote the act are prepared to investigate it to see if amendments are made to deliver what we promised, that other parties have an almost zealot-like attachment to the act without any amendment?

Mr O'Brien : I cannot put words into the other parties' mouths. I would hope, though, that all parties have approached this in a bipartisan fashion to start with, and that they should be prepared to consider whether the starting point was right and whether we are on the right path to get to the journey that all parties envisaged. If there is a question over that then all parties should be prepared to reconsider it.

Mr Gregson : Water reform did not start out as an across party lines political issue. There were political parties of all persuasions that were signatories to the National Water Initiative. So it would be our submission that there should not be barriers of any sort—physical, political or otherwise—to a simple consideration of whether that National Water Initiative, which they all signed up to, has in fact been delivered by the Water Act.

Senator XENOPHON: Leaving aside issues of legal interpretation, which are obviously important, do you think it is important that we get the policy framework right in the first place as to—in terms of first principles—what we are trying to achieve and what we are trying to deal with?

Mr O'Brien : Certainly from our perspective and from the perspective of the National Irrigators Council we are not opposed to a basin plan. We are not opposed to reform; irrigators have been part of it for a long time. We just want to make sure that it is a balanced reform.

Senator XENOPHON: Sure. In his evidence, Professor Briscoe said that, in terms of outcomes, you need to look at what is most productive for food production. I think that is a fair summary of what he said.

Mr O'Brien : Yes.

Senator XENOPHON: You would agree with that. The Guide to the proposed Basin Plan, from the Murray-Darling Basin Authority, at page 95 makes reference to the average gross value of agricultural production per hectare and the average gross value of irrigated agricultural production per hectare, by basin region. In the SA Murray, irrigated agricultural production was $9,176 per hectare, compared to a basin average of $3,295. Is that a relevant factor, do you think, in determining the outcome of any plan?

Mr O'Brien : From our perspective—bearing in mind that Mr Gregson and I might come at this from different perspectives given our different organisations—the gross value return per megalitre is fairly irrelevant to what a farmer will do. A farmer will grow a crop that is most suited to his or her particular area and soil type, but in particular the crop that will give him the most profit, not necessarily what will have the best return per megalitre.

Senator XENOPHON: I am talking about whether, in an overall basin plan for its precious resource, should there be some weight, some consideration, given to how productive a particular area is in terms of agriculture production per megalitre?

Mr O'Brien : In our view, no. That would be akin to picking winners, and we actually strongly advised the authority against that when they released an issues paper on sustainable diversion limits. One of the issues they were looking at was how to share out the downstream requirements—for instance, do you take all the water for end-of-system flows from the Murrumbidgee, or do you take it from the Goulburn, or otherwise? That is akin to picking winners, and I guess, on the basis of what is high-value return, that in itself fluctuates dramatically, as you would be aware. In particular, in the wine industry at the moment what was once a highly profitable per-megalitre return is currently causing enormous angst, frustration and pain for growers throughout the whole basin.

Senator XENOPHON: But isn't the logical extension of what you are saying that it does not matter how productive land is in determining the allocation of a resource?

Mr O'Brien : The question is not so much how productive the land is; it is what use it is put to. Our organisation is a strong supporter of the water market. The water market will decide what the best use for the water is. In many instances it will go to its highest value use, but that is not always the case.

Senator XENOPHON: I go to the issue because, Mr O'Brien, you represent irrigators across the country and you have a constituent body that you represent in South Australia—that is correct, isn't it?

Mr O'Brien : Yes, that is right.

Senator XENOPHON: Do you acknowledge, as head of the National Irrigators Council, that irrigators in South Australia were early adopters—they had to be—of water efficiency measures with respect to irrigation?

Mr O'Brien : Yes, I acknowledge that that is the case, with the capping of entitlements in South Australia from the early seventies—I hear so many different dates but I think the early seventies is the one that is most commonly quoted. Having said that, I think that we need to be careful with definitions of efficiency. There are many irrigators right throughout the country who have adopted the most up-to-date, high-tech systems and approaches to water. It is not just confined to South Australia.

Senator XENOPHON: You represent irrigators across the country. Are you concerned, in terms of a $110 million fund set aside for infrastructure upgrades in South Australia, that of the vast majority of that money only a few per cent of it has actually been allocated because South Australian irrigators are already at a level of efficiency that precludes them from having access to that fund, compared to their colleagues interstate?

Mr O'Brien : Yes, Senator, I guess I am concerned with that, and it is certainly a frustration among members in South Australia that, I think the figure at the moment is about three million of that 110 million has been spent—

Senator Xenophon: That is right. Could that be taken into account in terms of any overall basin plan, in terms of any reductions of allocations, if an area has been early adopters—not necessarily in South Australia, but any part of the basin if you have a particular area that has adopted water efficiency measures early, have not drawn on the $5.9billion fund to the extent that the others have—is that something that you think, as head of a national body, should be taken into account?

Mr O'Brien : Senator, it is not something that we have a policy position on, and as I said, it is difficult to decide on what is efficient—I do not think you can do it in a blanket manner, per state or per region or per industry, because individual irrigators are different.

Senator Xenophon: If there was a way to measure it—if there were a way to measure regions being overall more efficient than others, and that have been early adopters, do you think it is reasonable that that should be given some consideration in terms of any basin plan?

Mr O'Brien : Again, I would highlight we do not have a formal policy position on this, but if you are asking my view, I do not think it is possible to measure that on a region basis.

Senator Xenophon: You are putting it in the too-hard basket?

Mr O'Brien : No, I think it would be very unfair to say to one region, 'Oh, you're inefficient,' to any of those irrigators who are using the most up-to-date technology and most efficient technology for irrigation. So I think you cannot simply brush one region or state or group or industry with that sort of comment.

Senator Xenophon: Finally on this, because I have another question to ask you—you will not acknowledge what South Australian irrigators have done previously in terms of water efficiency measures.

Mr O'Brien : I think I just did, Senator. I did say—

Senator Xenophon: But they should not get any credit or acknowledgement for that, in terms of any basin plan?

Mr O'Brien : Again, Senator, we do not have a formal policy position on credit for this sort of stuff.

Senator Xenophon: Well, hopefully, your South Australian members may insist on one. Can I just go to the issue of page 113 of the guide to the plan. It is headed 'Outcomes for the Murray mouth'. It says there that, while the Murray mouth is an iconic feature of the Murray-Darling Basin, it performs a far more important function in that an open mouth is essential to the environmental health of the basin for a range of reasons. It talks about the export of salt and nutrients from the basin, and it says that without salt export land will salinise and water quality will deteriorate with negative effects on both the environment and consumptive use for all irrigations human water needs throughout the basin. Do you agree with that comment?

Mr Gregson : Do we agree that the Murray mouth is important to—?

Senator Xenophon: I was asking Mr O'Brien, Mr Gregson.

Mr O'Brien : Oh, sorry—

Mr Gregson : You didn't make that clear.

Senator Xenophon: Sorry, I was asking Mr O'Brien as head of the National Irrigators Council.

Mr O'Brien : Do we agree that the Murray mouth should be open?

Senator Xenophon: No, do you agree with the comment that having an open Murray mouth has a key role, that if you do not keep the Murray mouth open you lead to issues. To quote from the guide:

… without salt export, land will salinise and water quality will deteriorate with negative effects on both the environment and consumptive use for all irrigations human water needs throughout the basin.

Mr O'Brien : I think it would be very hard for me to disagree with the statement, Senator, yes.

Senator Xenophon: Thank you. I do not have any further questions, Chair.

Senator Hanson-Young: I guess the point of this entire debate and why we are having this discussion about the interpretation of the act is that people would like to be able to interpret it the way that suits them, in fact, and in the context of this debate we have people saying that the draft guide, regardless of, perhaps, how it was managed, the different scenarios that have been set down are unworkable for the communities within the basin. Correct me if I am wrong, but it seems to be the essence of your submission. If that is the case, where is it that you actually would draw the line as to where you do strike the balance, where it would work both for the environment, both for the communities and ensure that there is sustainability of all users.

Mr Gregson : With respect, you asked me to correct you if the premise of the question was incorrect. To an extent, yes, it is incorrect because that is not the basis of our submission to this inquiry at all. The basis of our submission to this inquiry has nothing to do with what the guide said or what the draft might say in the next six or eight weeks. The basis of our submission to this inquiry is that the Water Act does not deliver on what the parliament was told would be delivered through the National Water Initiative.

Senator HANSON-YOUNG: Where was your criticism of the lack of clarity around the act 12 months ago?

Mr Gregson : I do not think we have all been reticent to criticise the Water Act during the course of the last three years.

Senator HANSON-YOUNG: For the information of the committee can you point us to where you have raised these specific concerns in relation to the inadequacies of the act, the lack of legal clarification in the act, as you are pointing out, prior to the release of the basin draft plan?

Mr Gregson : I most certainly can. I think you will find that it was referenced in our written submission where we referred you to a briefing paper that we had published quite some time ago that was called, The Water Act: how did we end up with this?

Mr O'Brien : From our perspective I can reasonably confidently say that if you have a look at the National Irrigators Council website you would find either media releases or submissions prior to the release of the guide that raised a concern.

Senator HANSON-YOUNG: If you believe that the act is not able to deliver a balance, is a balance what you are after?

Mr Gregson : Yes.

Mr O'Brien : Yes.

Senator HANSON-YOUNG: So if you believe that the act is not able to deliver a balance then where is your clarification for how you actually deliver that? If the act is not doing it, if it is not about the numbers delivered in the guide and you think it is about the way the act has been put together, where is your plan? You will not put any figures on the table. You will not say: 'The diversion limit should be set here. This is what we will cop in each community. This is the consistent approach across the board.' It is a lot of bagging but not a lot of solution.

Mr Gregson : I understand your question and to a certain extent I understand why you are asking it. We do not have the hundreds of millions of dollars of resources that the Murray-Darling Basin Authority did. We do not have the CSIRO scientists to provide us with the advice. What we have criticised, and I think quite fairly so, is not the outcome but the formula used to get to the outcome. The formula used to get the outcome is dictated by the Water Act and as we have advocated for the last three to four years as a minimum, the Water Act is what the problem is. You ask what our solution is. Our solution is pretty simple and it is contained within our submission to this inquiry. It advocates a return to the National Water Initiative and in particular in version 61 of the bill you will find the formula that gives capacity for a balanced outcome.

Senator HANSON-YOUNG: How do you guarantee that it will give a balanced outcome when that does not give weight to the environmental sustainability?

Mr O'Brien : I disagree. I think the National Water Initiative does give weight to the environmental sustainability.

Mr Gregson : In fact it gives equal weight.

Senator HANSON-YOUNG: Why do you think the act does not do that?

Mr Gregson : I think it has become pretty clear in particular in the last six months that it is nigh on impossible to provide a definitive interpretation of the act to give you a single outcome. In fact, one senior counsel has given seemingly two very different interpretations of what is required under the act. We obviously know what the interpretation of the then MDBA chairman, Mike Taylor, was and we have a fairly good indication of what we believe the interpretation of the new chairman, Craig Knowles, is and they are not consistent with one another at all. So again we tell you that is because the act does not provide a clear determinative way forward. What we have said in our submission is that whilst, particularly on the interpretation of Minister Burke and Mr Knowles, it may be possible to approach some kind of balance, it is not a requirement. The act is not clear and definitive on what the outcome should be and as a result we submit it is the problem.

Senator HANSON-YOUNG: That comes back to my original question where I said that this is about the differing opinion of how the act is to be interpreted to deliver the outcome that you want. Whether it is the irrigating communities, the federal government or the various state governments if that is absolutely true, how does that sit with the other submissions that have said that the act is so prescriptive, step-by-step, it clearly gives no ability for movement and yet you are saying it is totally open to interpretation.

Mr Gregson : Those are two different questions. You are asking if there is movement in the final number of sustainable diversion limits, and the second question is if the act is prescriptive in how you get to it. The answer to both of them is yes.

Senator HANSON-YOUNG: Yes, but the act is saying that we need to ensure that there is an environmental sustainability of the river system, that key environmental icons need to protected, and that those need to be balanced with human needs and the ability for users to know the amounts of water they have to work with to give communities sustainability. This is all stuff that is in the act. It depends, from your opinion, on how you interpret it.

Mr Gregson : With respect, if it said it had to be balanced we would not be having this discussion.

Mr O'Brien : Our concern is that the act says 'fix the environment and, effectively, count the bodies later.

Senator HANSON-YOUNG: And how do you suppose that a community can remain sustainable and water users can know what their future usage can be if you do not have a sustainable environment?

Mr O'Brien : We are not arguing for unsustainable practices. But I defy anyone in this room to agree on what is a sustainable diversion limit.

Senator HANSON-YOUNG: But is this not the point? The act is saying that the environment needs to be looked after so that there is a sustainable water resource. Why would you argue with that?

Mr Gregson : I am very happy to argue with that because in the first instance, the act does exactly what you have just done and treats the 'environment' as objective, when clearly it is not. In fact it was never occasioned to be in the National Water Initiative where it used the words 'trade-offs' between what environment, social and economic assets. The environment is not objective. As I am sure that you recognise from South Australia, this is a very highly modified system; it is nothing like a natural environment and there was never an opportunity to contemplate trade-offs pursuant to the National Water Initiative in the act that allowed a subjective definition of the environment, which is what it should have done to allow balance.

Mr O'Brien : Ultimately, in our view this is a judgment call. The science can tell us roughly what it thinks, because you will never get all the scientists to agree exactly on a level of sustainability, but ultimately—and this is in our view how it should be—the best available scientific evidence should be presented and then elected politicians should make a decision based on the best outcome for the entire community.

Senator HANSON-YOUNG: I still think that your argument is inconsistent. On what hand you want more flexibility; on the other hand you say that the act is far too prescriptive. If the act is saying that environment needs to be sustainable, that is your starting point.

Mr O'Brien : The act is saying fix the environment first and forget everything else.

Senator HANSON-YOUNG: How can you even have a discussion about the amounts of water that other users can use and rely on if you do not know where your base level is? That is just basic mathematics, isn't it?

Mr O'Brien : I think the principle we are trying to espouse here is that, as a policy position, governments generally should be looking at: 'Here is the resource. What is the best way for the community to make use of that resource and maintain a sustainable resource?' That is what the outcome should be. In our view, the act says, 'Just look after the environment and don't worry at all about any of those...'—

Senator HANSON-YOUNG: That is because it is setting the base level.

CHAIR: We need to move on, Senator Hanson-Young.

Senator HANSON-YOUNG: Okay, thank you.

Senator BIRMINGHAM: I want to touch on two areas. Firstly, I want to try to untangle what the environment could or should be in this debate and sustainability. As a first principle, a sustainable system from the perspective of irrigator bodies would be a system where the water quality is reliably one that your members can use and extract from for the purposes of productive agriculture. Yes?

Mr O'Brien : Yes, absolutely.

Mr Gregson : I would certainly add something to that to say that the environment in which they reside and operate is also healthy.

Mr O'Brien : It is not just about water quality.

Senator BIRMINGHAM: That then moves onto the second issue of the environment there. How does one go about defining a healthy environment for the system? I suspect this is where your points around trade-offs come in. Ultimately, in your view, government needs to pick winners about what environment assets are worth saving. Parts of the act talk about key environmental assets. Why can the government not simply decide what those key assets are, work to save those, rather than what you are arguing is a whole too holistic approach?

Mr Gregson : One minor correction regarding the premise of the question of trade-offs is that it is not my words, my concept or even that of my organisation. It is the National Water Initiative. It is the states and Commonwealth who came up with that. In terms of whether there can be a subjective determination as to what environmental assets are, I think you will notice in our submission on page 5 that in the change from version 61 of the Water Bill to what eventually became the Water Act there was the addition of a large range of international treaties and conventions which were required to draw constitutional capacity under the external affairs powers. I have listed them there: the Bonn convention, the Australia and China bilateral agreement on the protection of migratory birds, the JAMBA treaty and the ROKAMBA treaty. All of a sudden the capacity for trade-off, the capacity for a subjective determination of the environment, was taken away on the basis of legal necessity to give constitutional capacity. We would say that that was a fundamental step away from the National Water Initiative that the parliament needs to re-examine.

Senator BIRMINGHAM: So in your mind there is no way that that part of the act that requires adherence to those environmental treaties can be honoured in a final basin plan if the government strips away large parts of the environmental assets of the basin and says that they are not key to its findings?

Mr Gregson : There is also some legal conjecture to add to that on the basis of whether the Water Act, and indeed the regulations drawn for the Basin Plan, must necessarily enforce to their greatest capacity all of those treaties. There seems to be some legal conjecture as to whether the regulation itself would be legitimate if it does not enforce all of those obligations that the act appears to make. So again it clouds things in something of a minefield of uncertainty.

Senator BIRMINGHAM: A good point to wrap up with, because I think it is important to get your concerns about this on the record, is that you have both acknowledged that Mr Knowles says he is going to deliver a balanced outcome and Minister Burke says he is going to deliver a fair and balanced outcome. If that is what they deliver, what is the problem that we are confronting here?

Mr Gregson : In the event that the regulation were perpetual it would not be a problem but it is not. The regulation is to be reviewed on a regular basis. The regularity of that review is not yet prescribed. It was to be prescribed in the regulation itself, but we understand that it will be around the three-year mark. And we cannot ask the good denizens of Griffith and Deniliquin to have to exert their political influence by getting out on the streets in front of a camera to get a reasonable result every three to five years. That makes absolutely no sense.

Mr O'Brien : I guess our concern is that whilst the current government and the current parliament might be prepared to deliver a balanced outcome, the act gives us no certainty that that will occur in five, 10 or 15 years time.

Senator BIRMINGHAM: I imagine there is one other area of concern there and that is the uncertainty of legal challenge, which I think you highlighted in your opening statement.

Mr O'Brien : Yes, and we acknowledge that that is always a risk with any piece of legislation and in fact is perhaps another good reason not to have to go the legislative path for this. But we certainly hope there is not going to be any legal challenge, particularly if we get a balanced basin plan, but our concern is that under the act as it stands that is a real risk.

Senator BIRMINGHAM: So obviously the time lines in the act as it currently stands are pretty tight. If the government proceeds and we have a draft basin plan on the table next month, as is apparently the timetable, and they push through the legislative time line from that and finalise it for early next year, if it is a fair plan you will live with it and hope that you do not live with the uncertainty of the courts. But you would still ask the parliament, regardless of that, to consider some certainty within the act to ensure that future plans build upon a starting point of a fair plan.

Mr Gregson : And that certainty is not that it would give the capacity for balance, but that it requires balance. As we see the Water Act at the moment the capacity for balance might be there based on competing interpretations of minds greater than ours, but we do not want capacity; we want the absolute need for balance to be expressed in the legislation itself, so whether the draft plan turns out to be something with which communities can exist and are happy to exist with, the act still needs to be considered by the parliament.

Senator BIRMINGHAM: If I can indulge just with one final bid, because you have reminded me of something there. In relation to that trade-off—and I am quite attracted to the term because the act, in talking about optimising, is all nice and positive—the reality is that everybody is going to have to sacrifice a little bit of something to get a so-called fair outcome from this. But in relation to that trade-off, and that balancing approach, is it really possible to provide that certainty of balance when you are not really comparing apples with apples? Trying to make a subjective call of what the environmental requirements are and the impacts of those environmental decisions against a subjective decision of what the economic impact of reduced water allocations is, against another subjective set of decisions as to what the impact of those reduced water allocations will have on the future of towns and communities. Three very disparate and subjective things.

Mr Gregson : Absolutely, and they will be very, very difficult to make those subjective trade-offs, but in our submission those subjective trade-offs should be determined by the Australian parliament, rather than by the signatories to treaties stretching back 40 years.

Mr O'Brien : But, Senator, I suspect that if the government and the parliament gets this right, everyone will walk away a little bit unhappy.

Senator BIRMINGHAM: That is where I was getting to.

Mr O'Brien : To partly answer your question, my members would not like to see any water go from their systems if they had their druthers, but we acknowledge that it needs to happen and it will happen—and we hope that it is done in a balanced fashion, and I think the environment movement and others also agree that there are going to have to be trade-offs.

Senator BIRMINGHAM: We should get the tax office in here—they live to make everyone a little bit unhappy.

Mr Gregson : And succeed very well!

CHAIR: Do you have a final comment?

Mr Gregson : With your indulgence, if I may, Senator—Senator Xenophon did not give me an opportunity to comment on the questions that he asked, if I could just have 10 seconds. The premise of Senator Xenophon's question was that irrigators in the state that he represents are efficient to the maximum extent possible. I do not have any argument with that, but the premise of his question is that efficiency does not exist to the same degree elsewhere in the system, and I am sure there are quite a number of irrigators who would be only too happy to disagree with that premise—and on their behalf I would say that there is efficient use of irrigation water right across the Murray-Darling Basin, particularly in NSW.

Senator XENOPHON: Per megalitre, Mr Gregson? Per megalitre in terms of the efficiency that South Australian irrigators have achieved?

Mr Gregson : I think I have made my point Senator Xenophon; I missed the start of your question, in any event.

Senator XENOPHON: All right, well—

CHAIR: I think we might have that debate perhaps in another—

Senator XENOPHON: Well, Chair, I do not think Mr Gregson can make assertions like that. I was referring to page 95 of the guide, which set out what the actual values were per—in terms of per hectare. If Mr Gregson says that that is wrong, then he should say so and provide the evidence to support his assertion.

CHAIR: Thanks, Senator Xenophon, for those comments. Do you have a concluding comment, Mr Gregson, before we have to close for a short break?

Mr Gregson : I recognise your time constraints, Senator, but at the same time what Senator Xenophon is relying on is the gross value of irrigated agricultural production, which has absolutely no correlation with profitability of agricultural production, and my point was merely that efficient irrigation practices exist on farms right across the Murray-Darling Basin; they are not limited to one state.

Senator XENOPHON: Show us the evidence, Mr Gregson.

Mr Gregson : I certainly shall, Senator; please feel free to join me on a tour of efficient irrigation practices in NSW as your time permits.

Senator XENOPHON: I look forward to seeing you in South Australia, Mr Gregson.

Mr Gregson : I was there last week.

Senator XENOPHON: Good.

CHAIR: Mr Gregson and Mr O'Brien, thanks for your evidence today.