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

KERR, Ms Deborah, Manager, Natural Resource Management, National Farmers Federation

LINNEGAR, Mr Matt, Chief Executive Officer, National Farmers Federation

[12:10]

CHAIR: Welcome. Thank you very much for being here. We appreciate it. We appreciate your submission and your evidence. We have your submission numbered 38. Do you wish to make any alterations or amendments?

Mr Linnegar : No, we do not.

CHAIR: I invite you to make an opening statement, after which we will have questions.

Mr Linnegar : Thank you for the opportunity. We will go straight to questions, if you like. We have made many a statement in this house on this issue.

CHAIR: Thank you very much indeed. Senator Crossin.

Senator CROSSIN: On the sort of triple-bottom-line issues we have been talking about, the environmental, social and economic impacts, it has been put to us that some people believe the act is not clear in the way those three interact. It has been put to us that the act is clear but there needs to be a matter of flexibility and discretion when it comes to actually implementing the objects of the act. Can you explain to me whether you believe that it is the interpretation and the practical application of the act that is the problem or whether the wording and the intent of the act need amending and altering?

Mr Linnegar : Thanks for the question. The first thing to say is that neither Deb or I are legal experts. There has been plenty said and I guess some conjecture about exactly what you are referring to. I can reflect back to the National Water Initiative in 2004, which was the predecessor to the act. I would have thought from my involvement there that the intent of the act was to achieve the balance that you refer to between those three factors. Whether the act that we see from 2007 delivers that or not, as I say, has been open to some conjecture since that point. From an NFF perspective, we are looking towards a draft basin plan that delivers the balance that you are referring to. We have been told by the government, both by the minister and the chair of the MDBA, that they believe the act provides them enough room to deliver that balance and from an NFF perspective we will be seeing what lands on the table in terms of the draft plan and making our own assessment about whether that balance is achieved or not. If it is achieved and it can be done within the confines of the act, well and good. If in our view that is not achieved then we will be looking towards changes in the act to resolve that, to achieve it.

Senator CROSSIN: Sure. But if at the end of the day the object is to actually look at the productive base of the water, even if we are talking about SDLs or extraction, surely you cannot isolate the concept of productive use of the water unless you also consider the economic factors. Then that would feed into the conclusion about the environmental health of what is happening.

Mr Linnegar : I would agree with that statement.

Senator CROSSIN: All right. But you have put to us that you do not believe the current act defines that enough or is clear enough in its application for that to occur.

Mr Linnegar : All I am saying is that there are many views about it and conjecture about whether it does deliver that or not. We will simply be looking to the results at hand in terms of the draft plan. If we believe it delivers it then well and good. If it does not then clearly we need to look at the pathway of review and changes to the act.

Senator CROSSIN: Can I just follow up on that, though. I have just one last question. At this point in time do you believe it does or does not do that?

Mr Linnegar : Whether we believe it does or does not do it is probably of no import in terms of the issue. The proof is in the pudding. If it is delivered in the draft plan then that is great. If it is not, then we will be seeking changes.

Senator CROSSIN: All right. Thanks.

Senator JOYCE: I have to be honest. Sometimes I get a sense that we are going around and around and around in circles on this. I am an accountant. I do not care if you end up with no water. In fact, my family would be quite happy, because we live below irrigation farms. So, if they lose their water, it suits us fine. We get more. Now, you have said in your submission that you believe that:

… there was sufficient scope within the Act to ensure that social, economic and environmental matters were treated equally in the Basin Plan.

Can you please point me to where in the act it actually says that?

Mr Linnegar : What we have said in the submission is that the advice from government is that they can provide that. It remains to be seen whether they do or not.

Senator JOYCE: It is a bit late if you do not get it right now, though. This is it. If we do not get it on the table now, if we are not dealing with it now during this inquiry, you're going to have Buckley's and none of trying to get this back again.

Mr Linnegar : That may be the case. From our perspective, we are interested in the outcomes at the end of the day. If those outcomes provide the balance we are seeking, we all move along merrily. If they do not, then changes will be required.

Senator JOYCE: Are you aware of what they said in the act would provide the premium environmental outcome—how many gigs would have to come out?

Mr Linnegar : In the act?

Senator JOYCE: In the guide.

Mr Linnegar : Very much aware.

Senator JOYCE: Seven thousand, six hundred.

Mr Linnegar : Yes, I am aware of that.

Senator JOYCE: Would you be happy with 7,600 gigs out?

Mr Linnegar : No, of course not. Not on the evidence we have seen to date, no.

Senator JOYCE: Is there anything in the act that says it has to be capped at between 3,000 and 4,000?

Mr Linnegar : No.

Senator JOYCE: Is there anything to stop someone from taking it to court and saying: 'Well, it says 7,600; that's on the record. That's the premium outcome; it doesn't matter what you say. Seven thousand, six hundred is what you should have delivered.'

Mr Linnegar : We were talking about where people might go with legal cases or not. I am not going to comment on whether they will or will not or who those groups may be, but, if people wanted to take that to court, I imagine that there would be nothing stopping them.

Senator JOYCE: You represent a business in the basin that produces $15 billion worth of produce. That is a pretty substantial business. You would want to be pretty certain exactly where you were going here, wouldn't you? We heard evidence today from Professor John Briscoe that said this has an almost overwhelming, almost zealot, approach to compliance with the Ramsar convention, more than any other in the world. In your reading of the act, do you believe that it is a very prescriptive act?

Mr Linnegar : In our reading, it is an act that certainly mentions the balance we talk about. On the other hand, there is a lot of detail around the environmental aspects of it.

Senator JOYCE: The evidence also given by Professor Briscoe—and also I have seen it written by Judith Sloan and others, and Josephine Kelly, who is behind you—is that basically this is an environmental act. It has to be an environmental act because that is the way the external affairs power swings off it. If you are not compliant with the external affairs power the whole thing falls over. Unfortunately, the external affairs power relies on a very prescriptive environmental outcome. How are you going to segue social and economic outcomes into a document which does not actually mention social and economic outcomes in its crucial sections?

Mr Linnegar : With respect, that is not an issue for us in that sense. That is an issue for the government to deliver. They believe that they can deliver it. We will wait to see whether they can or cannot.

Senator JOYCE: You are aware of the difference between the Australian Government Solicitor's position—it has been in the media—which was reflected to the authority in the first instance and the Australian Government Solicitor's view as reflected to the parliament by the minister. There has been conjecture about the two. If it were a very prescriptive act with a very competent Australian Government Solicitor giving very precise advice and then competent bureaucrats were to come up with a guide to the draft, how would we end up with a different outcome next time?

Mr Linnegar : A good question. The assurances you talk about are ones that are coming from government that can deliver the balance required. The question is for them to deliver that.

Senator JOYCE: What is the absolute optimum way to deliver assurance—verbally or to actually make it part of the act?

Mr Linnegar : The optimum way to deliver assurance is to deliver something that provides it.

Senator JOYCE: The act is the optimum assurance you get. We are not casting aspersions. Minister Burke might be a top bloke, I might be an absolute ratbag and vice versa. It is really irrelevant. Do you agree that the ultimate assurance, the way that is ultimately challenged and is sustained or otherwise is by what is written in the act so that it can stand up in a court of law, predominantly the High Court, if it were ever challenged?

Mr Linnegar : Ultimately that is the case. An act can be changed and changed again. But as a basic principle, yes.

Ms Kerr : Ultimately the parliament has the ultimate say through its veto pass.

Senator BIRMINGHAM: As to how we go about fixing the act if it needs fixing and if so when it is fixed—and I put this to the Irrigators Council before: if Mr Knowles and Minister Burke deliver, as they say, a fair and balanced plan, is there still a problem?

Mr Linnegar : From an NFF perspective, if they deliver a fair and balanced plan then that is the outcome we are seeking from this.

Ms Kerr : The NFF would also be looking at longevity, so it would be whether or not in this instance the Basin Plan, when it is finalised next year, is balanced. In the weight of it, in the longer term there needs to be some defined assurance to the Australian community and the basin's community. So there is not only assurance short term, 2012, but also longer term.

Senator BIRMINGHAM: As to how we go about comparing environmental outcomes with economic outcomes and balancing those trade-offs, these are fairly non-comparable things in some ways. How do you write an act to deliver something that allows for a fair balance of very subjective aspects?

Mr Linnegar : How that is written into the act we will leave to the legal experts. What we need to see is what we have not seen to date and that is that all of those three aspects are examined and information provided at a similar level of depth, that what is put up in the draft plan and what follows that—as opposed to the guide—passes the test of good public policy, which is again what we did not see in the guide. If those three factors are given equal weighting in the depth to which they are examined, and there is sufficient basis then for the government of the day to make informed decisions—if they are making decisions about trade-offs—they will need to be informed decisions and not ones based on poor or non-existent evidence.

Senator BIRMINGHAM: If you have to trade one aspect of one of those three factors off to achieve a fairer outcome for one of the other factors, is that what you are looking at as the ideal outcome? Is that what you think is prevented in effective trade-offs under the current act?

Mr Linnegar : I am not sure to what extent it is that, but at the moment—and certainly in terms of the guide, which is all we can speak about at this point—those three aspects were not weighed or treated equally in that process, in our view. That is what you would be looking for in any progress from here.

Ms Kerr : And certainly some transparency around how information was derived, and that was certainly lacking in the guide.

Senator BIRMINGHAM: I understand that people throughout the community want some certainty. If this process can be wrapped up in existing timelines and with a fair outcome, then that is probably what everybody wants. Looking at how you would provide certainty beyond that, would there be a benefit in the Commonwealth and the states going back to the table around issues of the referral of powers and the capacity of this act so that it did not have to hinge so much on international conventions?

Mr Linnegar : I think there would be some merit in looking at that, yes.

Senator XENOPHON: I want to focus on the issue of where you see early adopters in the context of the SDLs being determined. I am not sure if either of you were in the room when the previous witnesses gave evidence or not.

Mr Linnegar : Yes we were.

Senator XENOPHON: So you understand my concern. Section 22, item six of the Water Act says:

The maximum long-term annual average quantities of water that can be taken, on a sustainable basis, from:

(a) the Basin water resources as a whole; and

(b) the water resources, or particular parts of the water resources, of each water resource plan area.

How do you get it right in equity terms for those communities and for those irrigators who have already done the hard yards in water efficiency measures but who cannot, by virtue of their efficiency, get access to the $5.9 billion water efficiency program?

Ms Kerr : It is probably a controversial issue with or without the $5.8 billion, and if you look at programs at a state or federal level—

Senator XENOPHON: Sorry, did I get it wrong? Is it $5.8 billion and not $5.9 billion?

Ms Kerr : I believe it is $5.8 billion, but I could be corrected.

Senator XENOPHON: Okay, I apologise for that.

Ms Kerr : So there is a range of programs over time that have been in place at a state level and at a Commonwealth level. I think part of the issue with the early adopters is that a lot of it was with their own capital investments, so they used their own funds—

Senator XENOPHON: And they borrowed heavily for that and they have that debt.

Ms Kerr : Absolutely, but on the other side of the ledger they have retained the savings so that they can use those for productive use themselves on farm or in the delivery systems of which they are shareholders in most cases.

Senator XENOPHON: But how? If there is a determination saying, 'We're going to cut this across the board', that means that those who have done the right thing in the past could be proportionally affected as much as those that, for whatever reason, did not implement water efficiency measures. So where does that leave them from an equity point of view?

Mr Linnegar : Are you suggesting that there are going to be cuts across the board?

Senator XENOPHON: No. If you look at what the guide suggested it was talking about cuts for each particular area in varying percentages. In South Australia—I do not have the percentage in front of me—it was a significant cut. How do you work out the equity aspects of this in the context of determining the plan and what would the view of the NFF be in balancing issues of equity, sustainability and productivity for areas? Those areas are already quite productive, or relatively more productive, than others.

Ms Kerr : I think there has been lots of efficiency investment, as you point out, not just in South Australia but across the basin. I think the bigger issue over sustainable diversion limits is the implication in the guide that there was going to be 27 to 37 per cent cut, depending on where the SDL ended up being. The issue that NFF identified quite early on when the guide was released was that that assumed that every water user would be equally treated. The bigger equity issue, in our view, is that that is not the way it would happen. State governments would not apply an SDL to town water supply. They would not apply an SDL to interception because there are too many of them and the uses are too small. They would not apply it to stock and domestic users or basic landholder rights. So, if you take those uses out of the equation, the SDL would be applied primarily to those irrigators who had entitlements. If you look at that—and we released a lot of information about that post the guide in the media and made media statements about it—you are looking at a range of cuts to irrigators of not 27 to 37 per cent but sometimes as much as 90 per cent. To NFF, that is the bigger equity issue.

Senator XENOPHON: I understand your position on that, but if someone has already been an early adopter and they have already invested their own money—and I know irrigators in the Riverland who have borrowed hundreds of thousands of dollars from the banks; they have been left with a huge debt because they wanted to keep going during the drought—there is nothing in it for them, in the sense that for any water buybacks they are getting the same value water buyback as someone upstream who has not put in the same investment. Isn't there an equity issue there to do with early adopters?

Mr Linnegar : I think the issue there is that there are early adopters everywhere. I do not think you can restrict it to one area or one—

Senator XENOPHON: No, but there might be some areas that have a disproportionately higher number of early adopters than others, for a number of reasons. You would acknowledge that?

Mr Linnegar : Look, I am not sure where this goes. It is a complex issue. You can look at equity and adoption—

Senator XENOPHON: Of course it is complex, but you understand the distress I get from Riverland irrigators who say that they did the hard yards earlier and they will be treated the same as those who for whatever reason did not do the hard yards.

Mr Linnegar : I speak to a number of those same irrigators, so I am aware of that—

Senator XENOPHON: Have the NFF got a blind spot to those irrigators who were early adopters?

Mr Linnegar : I do not think it is a blind spot. I am saying that there are early adopters all across the basin, so I do not think we can restrict it to one area. In terms of that—

Senator XENOPHON: Should consideration then be given to early adopters wherever they may be, who with their own funds, largely, undertook water efficiency measures and therefore are not eligible for grants to any real extent under the $5.8 billion program?

Mr Linnegar : I do not know where you want to take this or where this is going to.

Senator XENOPHON: I am asking you the question. I do not want to 'take' it; I am just asking you the question. I am trying to get a response from the NFF.

Mr Linnegar : I think, on the broader issue of whether we need to consider matters of equity generally in consideration of the Basin Plan, the answer is yes. The issue of early adopters is not one that has been part of discussions at NFF, so we would probably have to take that on notice.

Senator XENOPHON: If you could, understanding that it is of key concern to many farmers in South Australia.

Mr Linnegar : Yes.

Senator XENOPHON: Thanks very much.

CHAIR: Thanks to the NFF for being here today.

Mr Linnegar : It is a pleasure. Thank you.