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

BOUWHUIS, Mr Stephen, Assistant Secretary, Office of International Law, Attorney-General's Department

FAULKNER, Mr James, Assistant Secretary, Constitutional Policy Unit, Attorney-General's Department

FREEMAN, Mr Rob, Chief Executive, Murray-Darling Basin Authority

PARKER, Mr David, Deputy Secretary, Water Group, Department of Sustainability, Environment, Water, Population and Communities

SLATYER, Mr Tony, First Assistant Secretary, Water Reform Division, Department of Sustainability, Environment, Water, Population and Communities

[15:10]

CHAIR: Welcome. I remind senators that the Senate has resolved that an officer of the department of the Commonwealth or of the 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 the department are also reminded that any claim that it could 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 of the claim.

I invite you to make an opening statement, if you would like and then we will have questions from members of the committee.

Mr Parker : Mr Chairman, we do not have an opening statement other than to note that in our role here today we are not able to provide legal advice to the committee.

CHAIR: Thank you.

Mr Freeman : The authority does not have a prepared statement but it is pleased to answer any questions.

CHAIR: Thanks very much.

Senator JOYCE: Congratulations, commiserations or bon voyage, Mr Freeman. I do not know which one it is! The conjecture around this is all about the understanding of the priorities, so I am posing a question to you so that we can clearly elucidate this. There is a swamp that is a Ramsar wetland. It requires 10 gigs of water to maintain the population of frogs and other wildlife in that area. Just above it is a town that needs the same 10 gigs of water to maintain the industry of the town. Which one is going to get the water?

Mr Freeman : The hypothetical question is probably not how the act works. The 10 gigs of water might be an optimum solution for the environment of that wetland, for that swamp. However, clearly a lesser volume of water would have an environmental benefit, but that would lead to less certainty in achieving the environmental objectives for the Ramsar site. In applying the Water Act, the authority has to take into account the environmental water requirements and those economic and social considerations for upstream. So it is not 10 gigalitres to either/or; it is actually about balancing those three things.

Senator JOYCE: Which one do you consider first?

Mr Freeman : Clearly the authority would have to look at the wetland to determine what its water requirements might be. You cannot deal with the issue with going there. Having considered what the environmental water requirements might be, then you would be looking at the economic and social impacts of those numbers.

Senator JOYCE: If the scientists come back and say they need 10 gigs and you say, 'Hang on, that's all the water that the town has,' what happens?

Mr Freeman : If the scientists come back and say, 'It's 10 gigalitres or nothing for that wetland,' clearly, as an authority member and chief executive, I would be challenging that because science is not that perfect and clearly there are degrees to which you meet these environmental objectives. If it were 10 gigalitres or nothing, if that is the choice that the authority had to make, then the authority would have to look at the economic and social impacts of 10 gigs.

Senator JOYCE: I would tell you that the town would close down.

Mr Freeman : Then the authority would have to determine which of those was more important in the context of the act.

Senator JOYCE: So you are allowed to compromise environmental aspects by reason of social and economic outcomes?

Mr Freeman : We are dealing with a hypothetical; it is not really how it works. But the authority has to exercise judgment; and, in exercising judgment, if you are looking at not meeting that 10 gigs, would you compromise completely the environmental objectives of that wetland?. The answer is you would not meet your Ramsar requirements and, clearly, you would have to go there. But the act is not singular, as you have indicated, and with these things, while they are not linear, there is never a fixed number or no number.

Senator JOYCE: So, basically, you must look after the environment and then you use whatever is left over to optimise your social and economic outcomes as much as possible.

Mr Freeman : No, it is not whatever is left over. In determining what the environmental water requirements are, the authority takes into account economic and social factors. It is a difficult balancing act between meeting the environmental objectives at a level of risk that the authority believes is appropriate and, in considering that, taking into account the economic and social impacts of meeting that number.

Senator JOYCE: How many times did the Australian Government Solicitor speak to the Murray-Darling Basin Authority while you were developing a guide to the proposed Basin Plan? You might say, 'I don't know exactly,' but was it once a week, once a month, once a day, twice a day, terribly regularly, nonstop?

Mr Faulkner : I am sorry; I did not realise that was directed to me.

Senator JOYCE: Anyone can have it. We can do it from both sides. I can ask Mr Freeman: how often did you receive advice from the Australian Government Solicitor? Was it a regular occurrence? Was it once a day, once a week, once a month, continuously—or was there no connection between the Australian Government Solicitor offering advice and the Murray-Darling Basin Authority using it, or the Murray-Darling Basin Authority requesting advice and you giving it?

Mr Faulkner : From the Attorney-General's Department's view, as it were, we do not know what communication there is between the authority and AGS, which is—

Senator JOYCE: Well, I will ask the MDBA.

Mr Freeman : Senator, an Australian Government Solicitor officer is outposted in the authority, so the authority would have sought advice on a regular basis. I do not know whether that was daily, but it certainly would have been on a weekly basis.

Senator JOYCE: Okay. If you were receiving regular advice, then you would have to say that the outcome you came up with in the guide to the proposed Basin Plan is congruous—and I believe it is—with the actual interpretation of the act.

Mr Freeman : The guide does not outline exact policy positions. It puts forward proposals for discussion and comment prior to the authority producing its proposed positions in accordance with the Water Act. So the positions are put forward simply to inform people of the thinking of the authority at that stage but, more importantly perhaps, to elicit new science, new information, that we did not have access to.

Senator JOYCE: Mr Freeman, you are a very competent person; you would not have gone on a frolic. When you came out with that guide to the proposed plan, as you just said you had the Australian Government Solicitor in the office. You would have been tick-tacking with them all the time. When you came out with that guide, they would have said, 'This is the interpretation of the act; this is what you've got to deliver.' You delivered it and then it hit the fan. It is not that you have misinterpreted the act; you interpreted the act perfectly when you delivered the guide to the proposed Basin Plan.

Mr Freeman : I think there are two comments to be made here. The guide was 'legalled' by AGS. However, the guide does not offer actual policy positions. That is why it put forward a range, for instance. It actually exposes the thinking of the authority prior to developing proposed policy positions.

Senator JOYCE: I want to ask you about this double negative kind of approach. Maybe the Australian Government Solicitor can tell me exactly what that means. The Australian Government Solicitor has tabled a summary, and paragraph 23 says:

Neither the Convention on Biological Diversity nor the Ramsar Convention require that the Parties disregard economic and social considerations ...

What does that mean?

Mr Faulkner : There might be a little bit of a misunderstanding here. We are from the Attorney-General's Department. The Australian Government Solicitor is an entirely different agency.

Senator JOYCE: Well what do you see it as meaning?

Mr Faulkner : I am afraid I have no idea.

Senator JOYCE: I have no idea what it means either. What does this mean to you:

The Minister must not give a direction under subparagraph (3)(b)(ii)—

and (3)(b)(ii) refers to directing the Authority, in writing, to make modifications to that version of the Basin Plan and give it to the minister for adoption, so that is communication between you and the minister, obviously—

on any of the matters referred to in:

(i) items 1, 2, 3 or 8 of the table in subsection 22(1) ...

Subsection 22(1) talks about the social and economic circumstances of basin communities dependent on the basin water resources. That is pretty black and white, isn't it?

Mr Freeman : I think it is referring to those issues of fact such as we had to describe the basin through three lenses—economic, social and environmental—and the minister could not give a direction to the authority in regard to a description of the basin.

Senator JOYCE: I know exactly what it means. If the minister says to you, if we go forward with that idea about frogs, Mr Freeman, we are going to shut down Ricetown, and I do not want you to shut down Ricetown so you are going to just have to ignore the frogs. That specifically says he cannot do that. He is specifically precluded from doing that.

Mr Freeman : I do not believe so—

Senator JOYCE: So he can say that to you?

Mr Freeman : What that section says, on page 64, is that the matters referred to that the minister must not give a direction on are items 1, 2, 3 and 8 of section 22—

Senator JOYCE: Which is on page 41?

Mr Freeman : That is correct. Item 1 is a description of the basin, as I have said, through social, economic and environmental lenses—

Senator JOYCE: Read out (d) under 'Specific requirements' on page 41.

Mr Freeman : Item 1 is 'A description of the basin—

Senator JOYCE: Yes and it refers to specific requirements that describe the matters to be included.

Mr Freeman : It says:

The description must include information about:

(a) the size, extent, connectivity, variability and condition of the Basin water resources; and

(b) the uses to which the Basin water resources are put (including by Indigenous people); and

(c) the users of the Basin water resources; and

(d) the social and economic circumstances of the Basin communities dependent on the Basin water resources.

Senator JOYCE: That is black and white. That is basically saying that if that minister rings you up and says you had better change something because of the socioeconomic outcomes of Ricetown or Irrigationtown, he cannot—he is outside the law; he cannot do that.

Mr Freeman : Item 1 is the descriptive element. It is also describing the economic and social circumstances of the basin. Item 1 is not the deliberative step whereby economic and social is taken into account in determining the sustainable diversion limit; it is simply a description of the basin, as I have said, through three lenses. The act is saying is that the minister cannot change the description or recommend a change to the description.

Senator JOYCE: You acknowledge that everybody has talked about this triple bottom line, because that is the terminology used by the Labor Party and the coalition—triple bottom line equivalence. But there is nothing in this whole act that delivers equivalence. It talks about looking after the environment and subsequently looking after other issues that come after that—social and economic outcomes.

Mr Freeman : The issue that you are referring to is actually item 6, and item 6 is where the SDLs are set. The SDLs are where the authority takes into account the environmental water requirements of the ecosystem functions and the ecosystem assets. It considers the economic and social impacts of meeting those environmental water requirements and then determines SDLs in accordance with item 6. The minister could direct in regard to item 6.

Senator JOYCE: Mr Freeman, I remember you from all those meetings we went to. You had the courage of Gunga Din, because it was not really your problem. You were given the act and you had to try and administer it. You were merely there for us to throw rocks at, which everyone did with consummate ease. Has the science changed since any of those meetings?

Mr Freeman : We have got some new science in the northern basin. The authority has continued to do more modelling as well. The guide was very much based on intersystem flows. We have been able to continue the modelling based on more precise environmental water requirements on an asset-per-function basis. So I think it is fair to say that the science has been improved since the publication of the guidelines.

Senator JOYCE: So you can go below 3,000 gigs now?

Mr Freeman : The ultimate long-term sustainable diversion limit is a decision the authority will have to take. But that will be published in the proposed basin plan and there has not been a final decision in that regard.

Senator JOYCE: So what you are saying is that the act has not changed. We heard from Professor John Briscoe that the act is terribly prescriptive. In fact, someone said it is one of the most prescriptive acts they have ever seen in how it actually operates. There is no real latitude there. What has to change is the science because there is no scope for changing and there is no latitude in the act. It is the science that you are really looking at changing. That is going to be a mighty fine trick to try and change the science, isn't it? It is going to suggest that you got it all wrong in the first place—and I know you do not believe that.

Mr Freeman : There are issues. You heard me admit in the St George RSL hall that I believe some of the judgements of the authority, with the benefit of community consultation, would be varied. One of those, which you have heard me talk about, is the connectivity, or not, of the Warrego. In making water savings in the Warrego for downstream benefit, when it is a relatively disconnected river system, you have to worry about the economic and social impacts of that for minimal environmental gain. So I think it is fair to say that there is improved science. I think the authority members gained a better understanding through the public process that we have had with the guide. So I see that the content of the proposed basin plan can be varied on both of those factors, one of which might not be science but simply a better understanding to inform the authority members' judgement.

Senator JOYCE: I am going to ask you a very succinct question. Can you go below 3,000 gigalitres on social and economic conditions alone?

Mr Freeman : At the time of publishing the guide, 3,000 gigs was the lowest threshold the authority believed would satisfy the environmental water requirements. As I have said, that could be varied either through new science or a better understanding of some of those issues by authority members.

Senator JOYCE: You know what I am asking. Can you go below 3,000 gigalitres not on environmental conditions but just social and economic conditions alone? Can they force you below 3,000 gigs?

Mr Freeman : As I have said several times the 3,000 was based on the science at that stage. I guess what you are implying is if we just assume the science does not change and that the authority members' judgement does not change. If 3,000 was the minimum number to satisfy the environmental water requirements beyond which authority members believe that you would be taking an inappropriate risk with the environment and therefore not satisfying the environmental objectives, then that could be correct. But there are a whole lot of qualifications to the answer I have just given. As I have indicated, some of those things have shifted. if authority members—and I can only speak on behalf of myself—had a better understanding of the Warrego, for instance, it would vary that number. There was a contribution to downstream water requirements—

Senator JOYCE: But that is not social and economic conditions, that is based on science.

Mr Freeman : The science has not really improved. I guess what I am saying is that the authority members' understanding has, and therefore the authority members' judgement has.

Senator JOYCE: But they are weighted by environmental factors, not socioeconomic conditions, aren't they?

Mr Freeman : The numbers can be varied by an increased understanding of social and economic factors but, as you are implying, eventually you hit a lower threshold beyond which you would not meet the environmental objectives of the act.

Senator JOYCE: It is just logic. Everybody has to understand that it is about the environment and that is it—it is an environmental act—and then subsequently look after socioeconomic conditions. I can quote to you from your own foreword:

The Water Act requires the Authority to determine the volume of water required to maintain and restore environmental assets, using best available science and the principles of ecologically sustainable development. Subsequently the Authority addressed the optimisation of environmental, social and economic outcomes.

Optimisation does not equal equivalence. This is in your own foreword from your own document. It is quite clear that you cannot go below a certain level of socioeconomic conditions alone. Therefore, there is not equivalence of environmental, social and economic conditions.

CHAIR: Is that a question or a statement?

Senator JOYCE: That is a question.

Mr Freeman : Yes, those elements are not equal, which I have expressed before.

Senator JOYCE: Thank you very much. I just want to read another section. The act's section 4 defines environmentally sustainable levels of take as:

"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.

For the sustainable diversion limits, there is nothing in there about socioeconomic conditions. It is all about environmental aspects. I will pose this as a question. Can you direct me to any socioeconomic considerations in that statement?

Mr Freeman : The consideration of what is 'key' is an environmental consideration. So what is a key environmental asset or a key ecosystem function? They are environmental considerations. The determination of the water requirements, however, takes into account economic and social factors. Those international conventions provide for that. We could not compromise key environmental assets; however, there is the ability to consider economic and social issues in determining the water requirements.

Senator JOYCE: Do we have access to all the legal advice so as to have a transparent understanding of what the Australian Government Solicitor said to you compared to what we have been led to believe the Australian Government Solicitor said to you? Is there anything out there that you believe is pertinent that we should be aware of to give us a greater understanding of the exact advice that was delivered to the Murray-Darling Basin Authority?

Mr Freeman : The authority has chosen not to release its legal advice, as you are aware. The authority has said though that the legal advice that the minister has released is entirely consistent with its advice.

Senator JOYCE: And complete?

Mr Freeman : Sorry?

Senator JOYCE: Has anything been omitted in such a way such that what he said was true about the section that has disclosed but was not a balanced view in its entirety? That is, if you saw the entirety of the advice would your view would be different to what has been disclosed to the Australian people thus far?

Mr Freeman : I have not recently read the advice released by the minister but I believe that it was complete. To answer your original question, I am not aware of any other document that would explain all that completely to the community. The guide, I guess, attempted to do that in a layperson's sense.

Senator JOYCE: I do not believe for one moment that you were trying to pick a fight and thought you would release this document just because you wanted to go around the countryside being pilloried by everyone. I believe that you released this because that was the guidance of the act and the Australian Government Solicitor had been in your office. You had been in direct consultation with them daily sometimes, as you said, and sometimes more often and maybe some days you missed. Therefore, what has happened is that it has hit the fan and then we have gone out and said, 'What on earth can we change?' They do not want to change the act so we have to go on this desperate search to try and change the science to get around the fact that we have said that we will not amend the act. Because changing the science is the only way you are going to change the outcome, now, isn't it? If you are saying we cannot change the act then we have to, I suppose, desperately change the science. The problem there, of course, is that if the science changes again we end up back where we started.

Mr Freeman : The authority was well aware of the impacts of some of these potential policy positions. That is why the authority made the decision itself to release a guide. The act does not provide for a guide. The authority was deeply concerned about the impact of the proposed policy positions in the guide and therefore felt that the extra step, even though it was going to take some extra time, was essential in order to flush out new science and new information. The guide is an additional step. It was entirely of the authority's decision making that there was such an instrument created. It was purely put out there so people could probe the science, could challenge it, because the impacts of the Basin Plan are so significant.

Senator JOYCE: Have you read the legal advice that has been released by the minister?

Mr Freeman : I have read the legal advice that was released by the minister, that is correct, together with our legal advice.

Senator JOYCE: You have read the legal advice released by the minister; you are aware of the legal advice that has been given to you. Are they the same thing?

Mr Freeman : The legal advice is different, but the legal advice is entirely consistent, as I have said, and we have actually had the Australian Government Solicitor confirm that they are entirely consistent.

Senator JOYCE: It is different, but it is consistent?

Mr Freeman : That is correct.

Senator JOYCE: Why can't it just be the same and consistent? Why can't you just tell us what they told you?

Mr Freeman : Maybe the questions that were asked were slightly different.

Senator JOYCE: Do you understand that it is kind of perplexing watching you at every meeting go through the torment of saying that you cannot below 3,000 gigs, and now all of a sudden you are suggesting to me that you can? I can go to some of the quotes you said to my colleague here, Senator Birmingham, about how you could not go below 3,000 gigs and now apparently we can. Do you understand how we would find that a little bit perplexing?

Mr Freeman : No, I do not believe you should. When I gave a response in Senate estimates I did qualify that response, saying that, assuming there was no new science, assuming no new information became available, and the authority did not change its judgment, then that would mean that the 3,000 position. But it was qualified.

Senator JOYCE: The purpose of the science is to justify the environmental outcome and then you just hope and pray that the socioeconomic outcome is looked after in the same breath—basically. Your science is not social science; it is not economic science; it is environmental science and if you can tick the environmental box and look after rice town or irrigation town above the frog-filled lake then everybody is happy. The essence of the act says that you have got to look after the environmental place. So now we are on a desperate, selective search for science that is going to tick the boxes for us.

This is so important, because we have a problem and we have got to try to fix it up; otherwise we are going to go through all this again. I don't want to do it and you don't want to do it. So, if we need an amendment, we have got to get an amendment. Can you tell is the questions that you asked the Australian Government Solicitor?

Mr Freeman : I do not have those. Certainly there was a series of various questions. It was almost on a weekly basis.

Senator JOYCE: You asked them questions on a weekly basis?

Mr Freeman : We would have been asking questions of the outposted solicitor on a weekly basis.

Senator JOYCE: Obviously they would be surrounding whether you would be compliant with the act?

Mr Freeman : Not all of them. Sometimes it was about expression, but, yes, clearly the authority was keen to make sure that it complied with the act.

Senator JOYCE: If I were you I would be furious if after all that communication with the Australian Government Solicitor—I had come to the end of the day and as far as I was concerned I was compliant with the act—someone then popped up and told me I had done a terrible job. You must have been frustrated when that happened.

Mr Freeman : I always anticipated the sort of response that we got. That is not in any way to devalue the response, given that—

Senator JOYCE: I am not talking from the public; I am talking from the minister.

Mr Freeman : I have never heard the minister say that we got it wrong.

Senator JOYCE: Did the minister not say at one stage that the choice of whether you had your job is a choice for you or something? I remember him saying that on Sky News, basically implying that people should consider their positions.

Mr Freeman : I have never had that discussion with the minister, no.

Senator JOYCE: Because all you are doing is complying with the act.

CHAIR: We might move on, Senator Joyce, and we can come back if we have time.

Senator CROSSIN: Mr Freeman, can I take you to legal advice that I understand the authority received on or around 26 November last year.

Mr Freeman : I do not have a copy of the legal advice.

Senator CROSSIN: I am referring you to the date. Is it correct that the authority received legal advice on 26 November last year?

Mr Freeman : I cannot confirm that. I do not have copies of the legal advice here.

Senator BIRMINGHAM: I can confirm that 25 October is when the minister made his statement in the House.

Senator CROSSIN: I am not referring to that. There was a date last year, I understand, when the authority reportedly sought legal advice from the Solicitor-General. Is that correct?

Mr Freeman : Yes. The authority did seek additional legal advice in mid- to late-November. That is correct.

Senator CROSSIN: How is it determined to seek that advice? Is it through a formal meeting, through telephone chats and through consensus with people? Could I request a copy of the minutes of the board meeting at which there was an agreement that that advice would be sought or does the chair just pick up the phone and ask the Solicitor-General for advice when he wants it?

Mr Freeman : There was a discussion as to the nature of the questions. It was a teleconference, from memory, where there was an agreement that these were the questions we needed to ask the Australian Government Solicitor. I do not recall whether that was actually part of an authority meeting or not, but there certainly was a teleconference.

Senator CROSSIN: So do you as CEO then put that advice to the Solicitor-General or does the chair do that?

Mr Freeman : I cannot recall. I think the chair may have initiated it on that occasion, but it varied from time to time as to whether the chair sought it or I sought it myself.

Senator CROSSIN: What is the delineation, then, in responsibilities and roles when it comes to you and the chair?

Mr Freeman : Clearly there was always communication between us. Sometimes it was simply about availability, and I think this would have been the case on that occasion as we were on the road with those regional visits at the time. I would have to go back and check whether I requested the advice or the chair did. Certainly there was a discussion including authority members as to the nature of the additional questions.

Senator CROSSIN: Would the authority agree with the ministerial statement that the minister gave on 25 October?

Mr Freeman : To the extent that there is any disagreement, there has been the issue of whether equivalence can be applied here. As I have indicated before, it is very difficult, for me at least, to comprehend the notion of equivalence. What we are trying to do here is have an environmental benefit. It is about improving the environment, and of course that has an economic and social disbenefit. So the notion of equivalence is a difficult one, and I think the minister did use the word equivalence, except in that regard the authority would be consistent with the minister's advice.

Senator CROSSIN: Would it be fair to say that a relevant object of the act is to determine which environmental assets can also optimise economic and social outcomes?

Mr Freeman : In the identification of key environmental assets and key ecosystem functions, which was part of the definition that Senator Joyce was talking about before, we have to determine the environmentally sustainable level of take. when you look at the definition, I think it is fair to say that there is a decision on what are the functions that make healthy river systems, and the authority has outlined in the guide the four functions that it believes underpin healthy riparian systems. In determining the key environmental assets I think that that is less subjective because the international agreements actually give us the framework to do that, so we can go through and identify the assets. There is a degree of judgment certainly in functions and that is why we wanted to test that with the guide. The authority has identified some 2,442 assets. To the extent that there are some missing, they should come forward through the consultation process. However, it is likely that they will have relatively minor environmental water requirements, given that the big ones—the Ramsar sites et cetera—are identified. But there is less judgment in the identification of assets.

Senator BIRMINGHAM: Thank you for your time today. Firstly, I want to go to some of the advice that the authority has received that Senator Crossin and Senator Joyce have picked up on. Senator Crossin just established that the authority sought further advice from AGS subsequent to the minister making his statement on 25 October; is that correct?

Mr Freeman : Yes, that is correct.

Senator BIRMINGHAM: And that advice was sought sometime around mid-November?

Mr Freeman : That is correct.

Senator BIRMINGHAM: Did the authority ever consider releasing that advice?

Mr Freeman : The authority did consider at a meeting whether it should release all of its advice essentially, and the authority determined that it should not.

Senator BIRMINGHAM: And the authority only ever considered it at one meeting and came to that conclusion?

Mr Freeman : I would have to refer back. Certainly there was discussion around whether we should or should not. I believe we had only ever one decision point, but that was not just discussed at one meeting; it was discussed over a couple of meetings.

Senator BIRMINGHAM: Was advice ever sought from elsewhere in government on whether such information should be released?

Mr Freeman : Yes, we did seek advice from the Attorney-General's Department on the appropriateness of releasing that advice.

Senator BIRMINGHAM: And what was the recommendation of the Attorney-General's Department?

Mr Freeman : We have officers here, but to paraphrase it I believe it was that the information should not be released without further discussion with the department.

Senator BIRMINGHAM: Mr Faulkner, is that an appropriate paraphrasing?

Mr Faulkner : Yes.

Senator JOYCE: Did they contact you or did you contact them?

Mr Faulkner : Mr Freeman wrote to the secretary of our department seeking our views on the possibility of disclosing a particular opinion and the department responded accordingly.

Senator JOYCE: Why did you say no?

Senator BIRMINGHAM: Firstly, what prompted you to ask the Attorney-General's Department for their opinion when in every other matter you had sought the advice of AGS?

Mr Freeman : There is longstanding conventional protocol that requires us to do that.

Senator BIRMINGHAM: Did you or Mr Taylor ever tell the minister that it was the authority's desire or that the authority was considering releasing advice subsequent to the release of his advice?

Mr Freeman : I do not believe so.

Senator BIRMINGHAM: So there was no knowledge that you are aware of that the authority was going down this path of getting its own advice and/or seeking to release it?

Mr Freeman : I do not believe there was specific advice to the minister. The authority made public its view that it was considering whether it would or would not release its advice, so I guess the minister would have been generally aware of it. I cannot recall specific advice to the minister in that regard.

Mr Parker : We would need to take on notice whether specific advice was requested. We can do that.

Senator BIRMINGHAM: Thank you, Mr Parker. Mr Faulkner, why did the Attorney-General's Department advise the MDBA not to release their legal advice from AGS when Minister Burke had already released his legal advice from AGS?

Mr Faulkner : It is perhaps worth mentioning that, in response to a question from Senator Barnett at last estimates, I think, we provided an answer to a question on notice—it was question No. 60—which set out the letter to the secretary of our department from Mr Freeman, seeking the department's view, and the response from our department to Mr Freeman, explaining why we thought the advice should not be disclosed. It was set out at some length in that letter. But, broadly, our interest in this is rather abstracted. The Attorney-General's Department is always consulted in relation to a question about the possible disclosure of constitutional advice, and it is very rarely done, because of the almost inevitable general implications of constitutional advice. It runs a relatively high risk of prejudicing the Commonwealth's legal position. That is the interest we have in this process. It is not unlike other kinds of questions of that sort that are put to us from time to time. Basically, the difference in the advice that the minister disclosed previously was that in our view it was at a much higher level. I hesitate to say this because it may confuse the issue somewhat, but I think it was referred to generally as a summary kind of advice. We took the view in that case that it was unlikely to prejudice the Commonwealth's legal position. I am not talking about the government's legal position per se but the Commonwealth's legal position. The advice that Mr Freeman sought our views on was much more detailed and therefore potentially more significant legally.

Senator BIRMINGHAM: Mr Faulkner, did the minister seek your opinion prior to making his public commitment around late September? Forgive me for not having the date in front of me. Around late September he made a public commitment that he would seek legal advice on the act and he would publicly release it. Did the minister seek your advice on the appropriateness or otherwise of doing that prior to making that public commitment?

Mr Faulkner : I am afraid I could not say. I would have to take that question on notice. What I can say is that the department certainly was consulted before any advice was released. I can confirm that.

Senator BIRMINGHAM: Perhaps you could take that on notice and advise us when the department was first consulted. Obviously, there is an issue here as to whether the department was consulted about what was released rather than about whether something could be released, given the minister had made a public commitment that he would be releasing some advice, which ultimately became the summary or otherwise. We will look at those answers and we may have elsewhere to go on that at a later time.

I will try to move on. Again, Mr Freeman, these matters have been somewhat canvassed. So that we are all quite clear, as you have highlighted, item 6 of section 22 sets out the definition for the long-term average sustainable diversion limits, aided and abetted by section 23. Is that correct?

Mr Freeman : That is correct.

Senator BIRMINGHAM: Section 23 requires that these average SDLs must reflect an environmentally sustainable level of take.

Mr Freeman : That is correct.

Senator BIRMINGHAM: That brings us right back around to section 4, where we come to the argument over what is an environmentally sustainable level of take. I think it is useful to have on record exactly how the act relates to each section. At this point you say that determining what the key environmental assets are is a relatively precise decision based on the international treaties. Is that correct?

Mr Freeman : That is correct.

Senator BIRMINGHAM: But determining how much water they may need to not be compromised is a judgment call based on science.

Mr Freeman : That is correct.

Senator BIRMINGHAM: Mr Bouwhuis, in your understanding of the treaties in question, is that a fair point—that knowing what the assets are should be a fair thing to derive from those treaties?

Mr Bouwhuis : I am not sure I am able to provide ad hoc legal advice to the committee about the interpretation of particular treaty provisions, so we would provide advice to the department or agency and then they would present the evidence before the committee. That is my understanding of my proper role.

Senator BIRMINGHAM: That is almost a circular response, but perhaps if you could attempt—we may or may not get an answer through this process—to look at the response Mr Freeman just gave to my question and see whether the treaties division has an opinion that it can or cannot offer on that.

Mr Faulkner : It would seem to me that that is in fact seeking an opinion from the department, which is not something I think we can do.

Senator BIRMINGHAM: You have to excuse me for trying occasionally, Mr Faulkner.

Mr Faulkner : Of course.

Senator BIRMINGHAM: We will come back, Mr Freeman. How does the authority believe the key ecosystem functions of the resource are determined—again, by reference to the treaties, or is there greater scope for judgment on what they are?

Mr Freeman : As I said, I believe that that is an area of greater judgment, so there are the key ecosystem functions of water resources. The others are places; assets are places and they have been recognised in these agreements. Functions are less acknowledged. So what do you require to have a healthy ecosystem function? Clearly you would want areas of high and low flow. You would want areas of flow that actually created habitat—deep holes and sandbanks and things are important in river systems. You want above-bank flows to get out on to the floodplain to water those vegetation communities that are part of the Ramsar and other conventions. But I believe that there is scope for the authority to develop those in its own way. We put forward four functions that we believed were critical for the functioning of these riparian systems. If there were science that came forward and said there was a fifth, we would then have to model that and see whether that required extra water requirements, which you would then have to source through SDLs. So I believe there is more scope with regard to functions, as it is not a precise answer like a place.

Senator BIRMINGHAM: In relation to productive base, when considering that there is a very direct consideration of at least the economic circumstances of that base, I assume—

Mr Freeman : Yes, the authority actually took legal advice on the definition of productive base, because it is a term that could be interpreted in multiple ways. It is actually issues such as water quality that underpin both the economic and environmental basis of the water resource. What this is requiring us to do here is determine the environmentally sustainable level of take and, with regard to productive base, it would be water quality et cetera, which is essential not only for the environment but also for economic use of water. It is those other things that may not be volume based that underpin the water resource, and quality is an easy one to relate to.

Senator BIRMINGHAM: Is there a potential within that definition of 'productive base' to argue that, if you reduce the number of rice growers in an area to such a level, in fact you eliminate the potential productive capacity of that region?

Mr Freeman : No. The legal advice that we have is very clear that the productive base is not the economic base of that water resource but actually the broader productive base in both an economic and environmental sense.

Senator BIRMINGHAM: Lastly, on key environmental outcomes for the water resource, are there things that are not ecosystem functions or key environmental assets or factors that relate to the productive base that get roped in under that catchall phrase at the end?

Mr Freeman : I think we have been given some opportunity to express those other things in a broad way. Under the environmental outcomes, for example, there is the need to export salt and nutrient out of the river system. They probably do overlap—

Senator BIRMINGHAM: Although that is just as easily captured under (c) or (b) isn't it?

Mr Freeman : Yes, that is correct. As you are implying, (d) is less definitive than the environmental asset point. But it is there as a very broad term.

Senator BIRMINGHAM: As we have gone through each of those, we have not managed to find an area in which upfront consideration in the definition is given to economic or social factors, have we?

Mr Freeman : What I have said is that the amount of water required that will not compromise those things does allow for economic and social considerations. The identification of assets, functions and the productive base tends to be science driven. The assessment of how much water you need includes a range. As the authority said in the guide, if the Water Act was purely about the environment, the amount of water that we believe needs to be returned to the river system to make it healthy from an environmental perspective would be 7,600 gigalitres. But the act does not stop there. The act allows you to take into account economic and social considerations, and hence the range that was put out in the guide was 3,000 gigalitres to 4,000 gigalitres.

Senator BIRMINGHAM: Is there a capacity within a particular key ecosystem function—let us say that you need the river to run pink once a year or something totally abstract—to say that the economic cost of achieving this one key ecosystem function is too great and therefore we may need to compromise on it?

Mr Freeman : There are degrees of meeting these functions. While it might be optimum to have water out on the flood plain every second year, for instance, the authority has had to look at what the impact on those environmental assets and functions would be if that occurred only every third year in order to reduce the economic and social impacts. The questioning tends to be about where we meet them or not. The authority has to meet them at a level of risk that it believes will not compromise them. But there are clearly decisions that can be taken in there.

Senator BIRMINGHAM: Were any of you involved in the original drafting of the Water Act?

Mr Slatyer : I was involved to a point. But there were a number of officials involved at that time. It was not my central responsibility, but I was partly involved.

Senator BIRMINGHAM: We will see how we go, Mr Slatyer. I know that you will take joy in taking questions on notice to consult with others if you cannot come up with an answer.

Mr Faulkner : I should mention that I was also involved in the drafting of that act in a very general constitutional sense.

Mr Freeman : For completeness, I was not involved in the drafting. However, until I decided to come to the Commonwealth I was involved in negotiations on the part of South Australia in regard to what went into the Water Act.

Mr Bouwhuis : I should also add that our office would have seen the legislation and commented on it as it read through. I could not comment on whether I personally have or have not seen it.

Senator BIRMINGHAM: Mr Parker?

Mr Parker : I am the odd one out.

Senator BIRMINGHAM: The point of my question here is that we have had evidence about how the draft of the bill changed—and people have said dramatically—in the final stages when a determination was made to hinge it on the international obligations. Is that accurate?

Mr Slatyer : I did not hear that earlier evidence, so I cannot speak about how accurate that evidence was.

Senator BIRMINGHAM: But is the statement I have made accurate? I made the statement based on the evidence.

Mr Slatyer : The bill was modified to allow for that approach, but I cannot give you a statement about how accurate other people's evidence may have been.

Senator BIRMINGHAM: No, I am not asking you to. I am taking their evidence and putting it in my words. So the earlier drafts did not rely upon the international obligations but assumed a more complete referral of powers; is that right?

Mr Slatyer : My recollection—and this may have to be corrected afterwards—is that the original bill relied on a range of constitutional authorities, including referrals and the Commonwealth's own powers. We were just policy people, so the actual draughtsmen would be in a better position to answer that question accurately.

Senator BIRMINGHAM: I am sure you will have to take this on notice, but was advice offered to the government at that stage that dealt with what the implications were to balancing economic, social and environmental factors of shifting from those initial drafts of the Water Bill to a draft that was more reliant upon international treaties and, if so, what did that advice say?

Mr Slatyer : I would have to take that on notice.

CHAIR: Is it your understanding that the Water Act does not require the consideration of the environment, social and economic considerations but only allows for the consideration of the environment, social and economic considerations?

Mr Freeman : The act requires the consideration of economic and social factors as well as environmental.

CHAIR: But not on an equal basis?

Mr Freeman : That is correct.

CHAIR: Would you say that the act requires the consideration of the environment, economic and social considerations but that the environment is primary?

Mr Freeman : I have some difficulty with primacy. The authority is required to meet the environmental objectives, so that is correct. The authority is also required to meet the economic and social objectives and actually talks about maximising the economic outcomes for Australia, so the idea of those being exclusive I have some difficulty with. We actually have to meet all of those, but we could not compromise the environmental water requirements.

Senator BIRMINGHAM: No. Noted. I want to go to the answer to question on notice that Mr Faulkner has alerted the committee to. I have a copy in front of me. I asked these questions at Senate estimates on 22 February. They were answered. They are public documents. Thank you for that. You wrote to the minister in December. I do not have the date; you have not dated that. The response was on 3 December, so I think it was on 1 December. Are you aware of that letter? Do you know what I am referring to in terms of that correspondence?

Mr Freeman : I am aware of that correspondence.

Senator BIRMINGHAM: I want to refer to Mr Wilkins' response of 3 December. He refers in his fourth last paragraph:

Any suggestion that these issues may be reduced in significance by release only of the summary advice dated 30 November 2010 would, in my view, be problematic.

He then goes on:

One obvious risk would be that release of that advice would lead to questions about waiver of privilege in the 26 November advice.

Clearly there is more than one piece of advice. So, Mr Freeman, how many opinions did you request of the Australian Government Solicitor, how many did you receive and when?

Mr Freeman : I would have to take that on notice.

CHAIR: Can you recall how many you requested? Clearly it was more than one.

Mr Freeman : Yes.

CHAIR: And earlier in the advice you referred to 'advices'.

Mr Freeman : That is correct.

CHAIR: So how many?

Mr Freeman : I think the formal legal advice would have been somewhere in the order of eight to 10. However, as I have indicated, there was lots of iterative advice, including meetings and discussions with the Australian Government Solicitor.

CHAIR: So there were eight to 10 pieces of written advice that you sought written advice on, and you received that advice back?

Mr Freeman : That is correct, but the eight to 10 may be wrong; it is of that magnitude.

CHAIR: It is of that magnitude, and you will advise us of that on notice, and of the dates of when you requested it and when you received it—are you happy with that?

Mr Freeman : Yes.

CHAIR: When did your AGS officer get put into your authority? When did they commence?

Mr Freeman : Again, I would probably have to take that on notice, but it was very early days—probably December 2008.

CHAIR: Finally, I would like you to take this question on notice. This letter from Mr Wilkins gives the authority an out; in the third last paragraph it says: 'On the same basis it would not be appropriate to take the matter further without discussing it with the Attorney-General's Department as it would be necessary to raise the matter with the Attorney-General.' Well, why didn't you take it further? You had the opportunity to take it further and ask the government to release that advice; why didn't you?

Mr Freeman : The authority received this advice. The authority made a decision that it was not going to release its advice on the back of this and, I guess, the broader convention of not releasing legal advice.

CHAIR: Well, this clearly gave you the opportunity to release it. I am asking you, on notice, to reconsider that matter. I would ask you, on notice, for the authority to provide that advice or at least the advices that you believe would be possible to be released, and if you have to refer to the department please feel free to do so. It is clearly the summary advice with the constitutional issues that are the concern, according to the department, and I would ask you to reconsider that, on notice.

Mr Freeman : That will have to be a consideration of the authority, not just me as the chief executive.

CHAIR: Of course.

Senator JOYCE: Just quickly, for the record: Mr Freeman, if I gave you $30 and told you to share it in equivalence with Mr Parker and Mr Slatyer, how much would you give them?

Mr Freeman : I would probably give them $10 each.

Senator JOYCE: And if I said, 'Mr Freeman, you're a jolly good bloke so I am going to give you $25 and I want you to optimise what is left over,' you would still be able to do that, wouldn't you?

Mr Freeman : I do not quite understand the question.

Senator JOYCE: Well, if I told you to optimise the $5 that was left over between Mr Slatyer and Mr Parker, you would still be able to do it—that is absolutely possible and completely legitimate?

Mr Freeman : Yes.

Senator JOYCE: So 'optimising' and 'equivalence' are vastly different terms, aren't they?

Mr Freeman : I think they are different terms. That is correct.

Senator JOYCE: Just like 'integrating'—if I told you to integrate that $5 between Mr Slatyer and Mr Parker, you would be able to integrate it between them. You would be able to optimise it between them. But you would not be able to give them equivalence to what you have got.

Mr Freeman : There may be times when equivalence happened to be the outcome.

Senator JOYCE: Possibly. But only if I decided to give you $10. The reason I say that is because all the way through this legislation are words which mean one thing out there in Deniliquin but which we know perfectly well mean something entirely different here. You said before—and I was interested in this—that you still hold that 7,600 gigs is the optimum amount that the environment should get.

Mr Freeman : No, I did not say that. I was saying at the time of releasing the guide that if the act was simply about the environment then, to the best of our knowledge at that stage, assuming there was no new knowledge et cetera, the answer would have been 7,600.

Senator JOYCE: I will check the Hansardvery particularly, but I will allow you to correct it as that. So are you saying now that 7,600 gigs may not be the optimum position for the environment?

Mr Freeman : The 7,600 would not be, based on new knowledge and new science; that it is correct.

Senator JOYCE: So this new knowledge: when did it turn up? Just in the last month or so?

Mr Freeman : No, it has come from ongoing work of the authority. It has come from ongoing consultancies. And a significant tranche of it has come out of jurisdictions.

Senator JOYCE: So the one thing I am absolutely certain that we have proved there is that advice can change; it can, can't it?

Mr Freeman : That is correct.

Senator JOYCE: So it could go back in the other direction, couldn't it?

Mr Freeman : It could.

Senator JOYCE: If that was the case, we would actually take more away from the socioeconomic considerations because the scientific advice would change again. The most powerful person in the room seems to be the scientist. He is a very good person to know because he can make or break towns up and down the basin. The scientist is the most important person—that is the pre-eminent position. If he says it needs 6,000 gigs, everybody is broke; if he says it needs 2,000 gigs, I do not know what would happen then; and, if it is 4,000 gigs, things are miserable. The scientist is a very powerful person. He is more powerful than the legislators, he is more powerful than you and he is more powerful than the people in the basin.

Mr Freeman : I think the science is giving us a fairly broad band within which the authority has to exercise its judgment. As you say, the science—I do not want to personalise it—actually sets that range; but that range, as we are finding, is incredibly broad. The bigger issue is the judgment that the authority uses in optimising economic and social environmental outcomes in deciding where to land within that scientific range.

Senator JOYCE: The minister said in a statement about why we can look after social and economic conditions:

… international agreements which underpin the Water Act and it’s been suggested that these agreements prevent socio-economic factors being taken into account. In fact, these agreements themselves recognise the need to consider these factors.

Can you please direct me to the form of words in those international agreements which underpin the socioeconomic factors that are obviously of concern to the people of the basin.

Mr Faulkner : That is not a matter that we can have a view on in this forum, I do not think.

Senator JOYCE: Do you have a rough idea of where we might be able to find them? Can someone tell me where we will find them in these international agreements?

Mr Slatyer : The department is responsible for the administration of these treaties in Australia. In the language of the Ramsar convention there are two formulations. One is in regard to wetlands generally which are any kind of place that has water. The principle of the convention there is to promote the wise use of those sites. Wise use has been interpreted through the convention processes in a very broad manner and is set out in the advice that the minister released.

Senator JOYCE: Direct me to your form of words on the wise use that deals with the socioeconomic conditions such as would maintain the economic base of a town by reason of the industry there, such as rice or cotton.

Mr Slatyer : The convention only uses this broad language. It does not prescribe specifically how these terms should be used. What does contain that sort of description, even though for your purposes it is probably still too broad, is the guidance material for the convention which is not binding on any country, including Australia.

Senator JOYCE: Any form of words, Mr Slatyer, which is prescriptive to clearly elucidate for the people in the basin so that they have socioeconomic certainty. They are relying on these international agreements, as your minister said in his statement. If there is no direction to any actual or real phrase or terminology that underpins that socioeconomic certainty, then wouldn't it be wise for us to put it in as an amendment?

Mr Slatyer : These conventions are not written with this degree of specificity. What the Ramsar convention allows is a lot of discretion for member countries to administer them in a way they think is wise and appropriate. That is the language that the convention allows for.

Senator JOYCE: So 'wise and appropriate' can be anything—is that what you are telling me?

Mr Slatyer : As I said, there is guidance material written down, which is referenced in the advice that was tabled by the minister and we can provide you with any detail you want with copies of the guidance material.

Senator JOYCE: Except the form of words that specifically talks of that issue.

Mr Slatyer : The convention language allows judgments by member countries in the exercise of those provisions.

CHAIR: Thank you, Senator Joyce, and to Senator Crossin on the line, thank you for being there. To the witnesses, we have had a good hour and we appreciate your time today. Thank you for being here.

Committee adjourned at 16:19