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Rural and Regional Affairs and Transport References Committee
10/09/2012
Management of the Murray-Darling Basin system

CHESSON, Mr Thomas Scott, Chief Executive Officer, National Irrigators Council

CULLETON, Mr, John, Director, National Irrigators Council

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

McMAHON, Mr Gavin Geoffrey, Chairman, National Irrigators Council

Committee met at 15:17

CHAIR ( Senator Heffernan ): Thank you very much, ladies and gentlemen. I declare open this public hearing of the Rural and Regional Affairs and Transport References Committee. The committee is hearing evidence on the committee's inquiry into the management of the Murray-Darling Basin. I welcome you all here today to the public hearing.

Before the committee starts taking evidence I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee prefers all evidence to be given in public but, under the Senate's resolutions, witnesses have the right to request to be heard in private session. It is important that witnesses give the committee notice if they intend to give evidence in camera. If a witness objects to answering a question the witness should state the ground upon which the objection is taken and the committee will determine whether to insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer a witness may request that the answer be given in camera. Such a request may of course be made at any other time.

Finally, on behalf of the committee I would like to thank all of those who have made submissions and sent reps today for their cooperation with this inquiry. I welcome representatives of the New South Wales Irrigators Council and the National Irrigators Council. Do you have anything to add on the capacity in which you appear?

Mr Gregson : Just for the committee's benefit, the New South Wales Irrigators Council is an independent entity. We are not a member of the National Irrigators Council because it is not a federated body—that is, a direct membership body. As a result, we should be considered as two separate bodies, although I am sure that our views will largely align.

Mr Culleton : Chair, I am also the Chief Executive Officer of Coleambally Irrigation.

CHAIR: Thank you. Would you like to make an opening statement? If you do not, we will go to questions.

Mr Gregson : I will make a very brief opening statement, if I may, particularly with respect to works that have been proposed by the New South Wales government to the Commonwealth with respect to the Nimmie-Caira scheme on the Lower Murrumbidgee. I refer the committee to the National Water Initiative executed in 2004 as an intergovernmental agreement between the Commonwealth and the states, including New South Wales. That was to be the blueprint for the reform of water in Australia and, indeed, was executed by most states at that time, including all states in the Murray-Darling Basin, including New South Wales. That was initially under a coalition government and has been considered as the blueprint for water reform under the current government, and it is stated as such by a number of ministers.

In particular, from the IGA, I would refer the committee to paragraph 25, which is in respect to the issue of entitlements and the recognition of entitlements to water access rights. In effect, the agreement was to recognise existing water rights and to issue statutory entitlements in respect of them. Particularly, in subparagraph (8), those entitlements were 'to reflect the differences in availability of supply'. With respect to the Nimmie-Caira proposal, you are looking at issuing an entitlement to a pre-existing right. That entitlement was scheduled to have been issued, as we understand it, in 2007 but, due to delays within the New South Wales department of water, those entitlements have not yet been issued but they are currently in train. Those entitlements will have a reliability attached to them that will be determined across the long term and water will be available to those entitlements as they are to any other entitlements across New South Wales and, indeed, across the Murray-Darling Basin and Australia pursuant to the National Water Initiative. In that respect, it is our submission to the inquiry that the proposal to acquire entitlements from the Nimmie-Caira scheme is no different to the acquisition of entitlements anywhere else in the Murray-Darling Basin. Thank you.

CHAIR: When I asked the modeller, 'What was the breakup of the water they modelled for 2,750 gigs?' he looked at me with a blank face. What do you think the breakup was?

Mr Gregson : Of 2,750 gigs—do you mean the breakup in terms of entitlements?

CHAIR: In terms of terminal, supplementary, overland flow, high security and general security. Would you agree, for a start, that it could have a seriously different outcome, depending on the balance of the water?

Mr Gregson : It is far from our role to defend the methodology of the Murray-Darling Basin Authority, but—

CHAIR: You represent—

Mr Gregson : Yes, we do. With the opportunity, I will explain.

CHAIR: So what do you think they modelled?

Mr Gregson : Our understanding, and the way that the Water Act is written, is to talk in terms of average annual volumes of water. In that instance, think of it in terms of an entitlement, as an individual entitlement with 100 per cent reliability across that timespan.

CHAIR: No, you are on the wrong page. What I am asking you is—no, do not roll your eyes—

Mr Gregson : I did not roll my eyes, Senator. I am trying to answer your question.

CHAIR: We want to know from the Irrigators Council point of view what you think the difference would be if half the water, as it were, were supplementary or a quarter of the water were terminal, in terms of the 2,750 gigs and the outcome you would get from that water. Surely there has to be a point where you cannot take terminal water or you cannot take supplementary water—in the case of Nimmie-Caira, floodwater.

Mr Gregson : Each and every entitlement has a defined reliability. The Nimmie-Caira entitlements will have a defined reliability and a suite of entitlements will make up a total volume as required by the Murray-Darling Basin Authority.

CHAIR: But you would agree that, if they bought 2,700 gigs of general-purpose water, it would be an entirely different outcome to, say, the combination of water they bought from Twynam, lot of which was terminal. Would you agree with that?

Mr Gregson : Over the long run, the volume should be, based on long-term cap equivalency, indifferent.

CHAIR: No, the availability of one is seriously different to the availability of another. If you are buying 2,750 gigs and it is only available when there is an off-allocation flow, it is going to be a lot different to buying water that is general-purpose.

Mr Gregson : Well, Senator, each entitlement has a different reliability—and I note now that I am not the only one that has rolled their eyes in response to a—

CHAIR: No, it is because—

Senator NASH: How about you let him finish the answer.

CHAIR: Yeah, righto. Away you go.

Mr Gregson : Each entitlement has a defined reliability, which is determined across a long-run average. If you add up those long-run averages across a long period of time then the volume can be equalised, depending on the total volume of—

CHAIR: So you are saying to me that there is no no-go zone. In other words, is there a point at which you cannot acquire any more of one of the different categories of water to make up the 2,700—if you want to have an outcome that you are aiming for? I do not know what the outcome is.

Mr Gregson : Neither do we, so we have found something that we can agree on. We do not believe that the Murray-Darling Basin Authority has made the outcome particularly clear at all, but you asked me to explain their methodology, which is what I am attempting to do.

CHAIR: But the modeller did not even know. You do not know, the modeller does not know and the department does not know. We are now presented with an opportunity which, behind the scenes, everyone has agreed is a con job. I am aware of the history of this place. I will put it on the record. I have been there many times. I have had a place next door since 1967. I am aware when it started and who started it, and I am aware that every year they put another bank out there and went a bit further and flooded a bit more country. I am aware that there is no licensing; I am aware that there is no metering. I am aware that there is a calculation on heights of the two weirs. You agree, I presume, with the buyback of the Nimmie-Caira water—

Mr Gregson : With the purchase of entitlements per se, no. We have advocated time and again that acquisition should be by infrastructure investment.

CHAIR: Do you agree with the proposition of Mr Harriss and the government to buy back this water, which peaked at 380 gigs?

Mr Gregson : I think the question is: do we agree with the Nimmie-Caira proposal? The answer is a qualified yes. The qualification is in respect of the funding methodology. We do not believe that it is solely an acquisition of water. We believe that there is an infrastructure component of it and as a result there should be a mix of sources of funding.

CHAIR: Do you think the infrastructure component of it is covered in the 2¼ times the value of the water buyback—giving them the water licence for nothing and buying it back for 2¼ times the value? Do we know what the market value is that strikes the median, so that all of Australia can know what we are talking about? No-one has told us. They said, 'It is all commercial-in-confidence; you are not allowed to know'. Do you know?

Mr Gregson : You are asking me to speculate on something that I may or may not know. The answer is, no, I do not know it, and if I did and it was commercial-in-confidence I probably would not reveal it.

CHAIR: But don't you think that the public, the taxpayers, are entitled to know what we are talking about?

Mr Gregson : That is a question for the parliament.

CHAIR: You do not have a personal view?

Mr Gregson : We have not seen commercial-in-confidence documents to which you refer.

CHAIR: That is not what I am asking. Don't you think, as a taxpayer, that the taxpayers of Australia are entitled to know what they are going to pay?

Mr Gregson : Yes. They would be in any purchase of water entitlements.

CHAIR: But not in this one. We have been told it is commercial-in-confidence. This committee has sat here with the department and they have said, 'No, it is none of your business. It is commercial-in-confidence'. But they have said that they have agreed to up to 2¼ times the value of the water in the buyback. My understanding—and anyone can have a crack at this—about the max flow down that system is that I remember well when Torry Plans first started. It gradually spread and spread, and there was no environmental plan. Eventually they put an acreage fee on them, not knowing how much water the various classes of land absorbed—no idea. Is 380 gigs max your understanding of what the max flow out there was?

Mr Culleton : In '92.

CHAIR: 392?

Mr Culleton : No, 380 in 1992-93.

CHAIR: Okay. What sort of water was that? How much of it was supplementary water and how much of it was floodwater?

Mr Culleton : Senator, I think your point is largely irrelevant, and I will tell you why.

CHAIR: Go for your life.

Mr Culleton : These farmers have had an entitlement to access water under a rules based arrangement since 1945.

CHAIR: Yes, I am aware of that.

Mr Culleton : Under a rules based arrangement, they have extracted, on average, 173 gigs per year. Sometimes it has been as high as 380,000; sometimes it has been as low as 30,000.

CHAIR: I accept that.

CHAIR: And that water has come to them via a regulated flow, out of Maude Weir.

Mr Culleton : Not correct.

CHAIR: The notion that this is somehow fundamentally different is not a notion that is—

Mr Culleton : Not correct.

CHAIR: The 'supplementary flow' is an artificial diversion of in-river water—right? It is not a supplementary flow; it is in-river water diverted with the weir. Agreed?

Mr Culleton : It is a diversion of a regulated flow.

CHAIR: Yes, so it is not supplementary water.

Mr Culleton : Correct.

CHAIR: It is regulated water which, for the purposes of this licence, is defined as supplementary. What I am trying to find out is this: in 1992, when did supplementary water become flood water?

Mr Culleton : Unless Andrew has an answer to that, I think that is a question that you might want to direct to the commissioner for water.

CHAIR: No. You are representing the interests of irrigators. We have asked the department; they don't know.

Mr Gregson : The reason that there is an average annual reliability associated with entitlements is to get past exactly this confusion and to be able to talk to them on a one-on-one exchange rate basis. So whether this is supplementary, or whether it is regulated, or whether it is Victorian sales water, is, as my erstwhile colleague puts it, irrelevant. We are able to judge what the average annual volume of water will be from those entitlements.

CHAIR: Yes, but the average annual volume of the water includes, in some years, a fair bit of floodwater. So are we going to buy floodwater back, at 2¼ times the value of the water, to give it back to the floodwater? I accept the proposition, on which I have had private discussions with some of you blokes—I won't dob you in—where I have been told, 'But Bill, this is the only way New South Wales and the minister can see our way out of this without losing water with the irrigators upstream.' Michael McCormack, the local member, said, 'Bill, but it's good for upstream.' We are actually buying some of this water, which is floodwater, to take it off a flood plain, where it is going to go back to in a flood, to somehow return it to the environment?

Mr Culleton : No, that is the construct you are putting on it.

CHAIR: It is.

Mr Culleton : The construct I would put on it is that these people have an entitlement, under a rules based regime—

CHAIR: Yes, I accept what you are saying—

Mr Culleton : which is being converted to a normal water licence, under a water sharing process—

CHAIR: Yes, I absolutely accept that.

Mr Culleton : And that process of converting their rules based entitlement to an individual licence is one that was in-train, that was mooted in the Murrumbidgee water sharing plan—so they had an entitlement.

CHAIR: You are missing the point.

Mr Culleton : Please hear me out. The water that they extract is water that does not go to that local environment. They extract it and put it to commercial purposes. Now there is the proposition that they will be paid for water that they will forgo that can go back to the environment.

CHAIR: I am sorry, but to get the average of 173 gigs you have to include floodwater. So I have 15,000 acres under water now, for instance, out on the Lachlan. I do not consider that water that I can get a licence for, because it is a natural flood plain and it is floodwater. And when the river floods, unless you have banked the river, it is going to go over the flood plain—as this water is going to go over this flood plain, except they have buggered it for a natural flood because they have gotten rid of all the lignum and it will become a poverty-bush plain if you take the water off.

Mr Culleton : Well, I can tell you that—

CHAIR: What they are proposing to do is to take the water off this flood plain. Then they said, 'Oh, well, we might want to lease some of it back, and we're going to try and shepherd some of this water through to the back of Yanga'—I mean, they are not going to get it back to the river. And do you know what will happen to the flood plain, if they take the water off it? Do you know?

Mr Culleton : I am sure you are going to tell me. I don't agree with anything you have said so far.

CHAIR: All right. If you—

Mr Culleton : Not a single word, Senator.

CHAIR: If you land-plain, like they did down on some of the lower Lachlan stuff, and you take the lignum off it and then you take the water of it, all that will grow on it is poverty bush.

Mr Culleton : I don't know how long it is since you have been down into that area. I was there two days ago—

CHAIR: This week.

Mr Culleton : and I can assure you that all the lignum has not disappeared.

CHAIR: This week I was there.

Mr Culleton : Okay, well you may—

CHAIR: But you see, the bit you are missing is that it gets the water at the present time—

Mr Culleton : No, what I am challenging is your proposition that there is no lignum in Nimmie-Caira. That is just a myth.

CHAIR: No, that is not what I am saying.

Mr Culleton : Well, don't say it!

CHAIR: Where you have cleared the land, like on Torry Plains, if you do not sow something back there, nothing will grow there if you take the water off it—because it is a natural flood plain.

Mr Culleton : We are not talking about taking the water off that environment; we are talking about returning the water to the environment and returning the opportunity to have more lignum.

CHAIR: What, are you talking about buying the water off that particular environment and giving it back to that particular environment?

Mr Culleton : No.

CHAIR: Oh, no?

Mr Culleton : We are talking about the Nimmie-Caira landholders being paid to forego a right that they have to access, on average, 173 gigalitres a year—and that is a pretty fundamental proposition.

CHAIR: I hear what you are saying, but in amongst that average is a lot of natural floodwater. That is how you get the average.

Mr Culleton : The water is coming via Maude Weir. It is a regulated flow.

CHAIR: In a flood it does not need the Maude Weir, it goes over bank.

Mr Gregson : With respect, Senator, the same thing could be said right across the Murray-Darling Basin. There is no basin plan in effect at the moment but just about the entire basin has flooded.

CHAIR: But the average they have achieved from 390 whatever it is to get the average of 173, to get that average you have got to include the natural flood flow. Do you agree?

Mr Gregson : Right across the Murray-Darling Basin.

CHAIR: But we are talking about the specific site where we are proposing to buy this water at two and a quarter times the value. To get the average volume of water for an unknown price, but it is two and a quarter times whatever the market is, you have to include the flood flow. If you get four inches of rain and Gundagai and you get a supplementary flow and it is off allocation, it is supplementary water, the next night you get another four inches and suddenly that converts to flood water. In the plan for this 173 gigs no-one can tell me how they have calculated what is flood and what is not.

Mr Gregson : With respect, parliament passed a Water Act which worked on the basis of average annual flow. This proposal fits exactly within those parameters. If the acquisition of water is the problem of the committee then the committee needs to turn its attention to the Basin Plan as a whole.

CHAIR: This is buying a proportion of floodwater off a flood plain—do you agree it is a flood plain?

Mr Gregson : Not necessarily, no.

CHAIR: What, the Lower Murrumbidgee flood plain is not a flood plain now?

Mr Gregson : That is not what I said and I am not content to have words put in my mouth—

CHAIR: Not necessarily, so what is necessarily?

Senator NASH: Hang on, Chair, I would like to hear from the witnesses.

CHAIR: So what is it if it is not a flood plain?

Mr Gregson : At the moment it is a series of farms, as I am sure you are well aware. There is a portion of it which is a flood plain area. There is a large portion of it which has been determined as an environmental asset as part of the Murray-Darling Basin plan and this is a proposal to acquire a volume of water from the Murrumbidgee River for use both in stream and downstream. In respect of the price, I would encourage the committee to understand that there is a social and economic responsibility on the government in implementing the Basin Plan to find those volumes of water and entitlement at the least possible social and economic damage, which I can assure you the New South Wales government and indeed the Irrigators Council believe the Nimmie-Caira process can deliver.

CHAIR: So this water once it leaves Redbank at Maude, does it get lifted?

Mr Gregson : Once it leaves Redbank at the Maude Weir does it get lifted? I presume that there are pumping schemes on individual farms but through the course of the delivery from the infrastructure scheme no, I do not believe so. But John would know better than I.

Mr Culleton : I do not know the answer to that question. I have not been over the entire 86,000 hectares of it but I have been over a fair amount.

CHAIR: Do you know what proportion of the water is lifted?

Mr Gregson : I can also assure you that water does not get lifted within the Murray irrigation scheme. Lifting it will not determine whether it is a flood plain or not.

Mr Culleton : The land has been laser levelled.

CHAIR: The water has artificially risen except in the overland flood event. To get the 390 whatever gigs, a lot of that was floodwater which was going to go over the bank and will continue to go over the bank in a flood even though we have paid for water not to go over the bank because we bought the licence back. But if the water was not lifted, you would agree it is going down a flood plain?

Mr Gregson : No. By your logic, Murray irrigation is a flood plain.

CHAIR: If it gravitates, it is a flood plain.

Mr Gregson : So by your logic Murray irrigation is a flood plain. We do not concur with your logic.

CHAIR: Anywhere that you do not lift the water, if the water is level with the ground, has got to be a flood plain. Wouldn't you agree with that?

Mr Gregson : I am sorry, we do not concur with your logic.

CHAIR: So what does make up a flood plain if it is not natural flow of the water overland?

Mr Gregson : I am not entirely certain we can be useful in defining scientific constructs to the committee.

Senator NASH: I think you said in your opening statement, Mr Gregson, that Nimmie-Caira was an entitlement to a pre-existing right. Can you give us a bit more information around that? Some of the conjecture has been that this has all been a little bit fortunate in the timing for this stuff. So we have not got much information of how it got to this point. Can you clarify why it is an appropriate thing for them to now get the entitlement?

Mr Gregson : We are aware of that same conjecture, that this is all of a sudden issuing an entitlement at a convenient juncture—which is entirely not true. As I alluded to in our opening statement, a number of water rights existed right across the Murray-Darling Basin well prior to 2004. In that intergovernmental agreement, the states and the federal government agreed that existing water rights that were not based in statute would be converted to a statutory water right as part of the proposal for market solutions to water use within the Murray-Darling Basin.

On executing that agreement in 2004, New South Wales had effectively agreed to take the pre-existing right that farmers in the Nimmie-Caira area had and convert that to a statutory entitlement. They had proposed to have that concluded by 2007. Unfortunately, they were unable to meet that time frame and that process is ongoing. So they did intend prior to this proposal to issue those entitlements and this is merely a continuation of that.

CHAIR: There is a division in the Senate chamber. I apologise, but we do not have leave and we have to attend.

Proceedings suspended from 15:41 to 16:00

Senator XENOPHON: I have asked a general question of all the witnesses. How do you see the best outcome for communities because there is a debate as to how you do that, whether it is water buybacks, whether it is infrastructure upgrades and whether that answer is different for different parts of the river given Mr McMahon's evidence previously before this committee in April this year in Mildura about the difficulties South Australian irrigators have in accessing infrastructure upgrades? In broad terms how do you see you can get the best outcome for communities in the context of this plan and in the context of the $10.8 billion that has been set aside for water reform? Can you give a short response, but you may want to put more of it on notice?

Mr Gregson : With respect, Senator, we notice that your next two witnesses are both environmental activists, so I am not in that much of a rush.

Senator XENOPHON: Sorry, what do you mean by that?

Mr Gregson : I have noticed that your next two witnesses before the inquiry did not get lumped together on the same panel and, as a result, effectively get twice the amount of time.

Senator XENOPHON: I have nothing to do with who gets what.

Mr Gregson : I understand. Your question is: the best way to acquire water as part of the Basin Plan.

Senator XENOPHON: What is the best impact for communities?

Mr Gregson : I understand. First of all I would like to address the $10.8 billion which you say has been set aside for the process. I do not think anybody would claim that the full $10.8 billion has in fact been spent on that.

Senator XENOPHON: I am not suggesting that.

Mr Gregson : Let's not let one slip under the radar. There has been a lot of money spent outside of low impacts for the Basin Plan. In order the lower socioeconomic impact will be caused by a balanced Basin Plan, secondly, by investment in acquisition of entitlement through infrastructure program, thirdly, by strategic purchase of entitlements and least of all by a simple purchase of entitlements. It would be our submission that the Nimmie-Caira proposal represents a combination of (2) and (3). There is an infrastructure component to it but it is also sitting within the strategic buyback realm. As a result it is far better than simply purchasing entitlements in a social and economic context.

Senator XENOPHON: If you want to put more on notice, please do so. I have to get through the other two questions. Can I go to the issue of the Australian National Audit Office, the Commonwealth Auditor-General, in effect, back in June 2012 was very critical of $650 million private irrigation infrastructure program in New South Wales not containing sufficient detail to facilitate a thorough assessment in terms of the cost-benefit analysis. Does the New South Wales or the National Irrigators Council have a view on that, because the Auditor-General's Office was quite scathing of the processes involved in that?

Mr Gregson : I will throw to John in a moment but from our perspective the National Audit Office was critical of the processes engaged in by the department, not necessarily critical of those that were receiving the funds to acquire water and to operate more efficiently. John, obviously, was directly involved in that program as CEO of an infrastructure operator.

Mr Culleton : Coleambally Irrigation Company is a recipient of PIIOP funding in return for water that is returning to the environment. I have read the ANAO audit in quite detail. As Andrew says, the criticisms of the PIIOP are largely around departmental limitations, I would observe, rather than the program itself. In order to secure the funding we had to put up a business case. Part of the business case required that we present a cost-benefit analysis. Within that cost-benefit analysis we had to calculate the local community benefits and spell those out. In terms of our experience I think that we did that. The department was in a position to ask for additional information if it saw fit, and it did do that, and we provided the additional information. So, whilst I think the front end of framing the program could have been done with a little bit more rigour, the actual business cases that had to be presented were ones that were fairly robust.

Mr McMahon : From a South Australian perspective, we do agree with infrastructure upgrades. Our state, unfortunately, has had difficulty accessing those finances. What we as a community have now done is actually go back and put in a proposal which is one that the community would like to see. Also, it needs a broader scope in terms of the rules for the ability for those funds to be released. That is the Water Industry Alliance proposal. It is one that has been put forward by our community, and it is also supported by our state government.

Senator XENOPHON: Mr McMahon, you gave some very powerful evidence on 3 April of this year in Mildura. You had your South Australian River Communities hat on, and that of the Central Irrigation Trust. You are now giving evidence on behalf of the National Irrigators' Council, and you have a very respected position there. Isn't there a problem with the way the rules are structured for those early adopters of water infrastructure efficiency measures, and that would particularly affect South Australia in the context of a national plan?

Mr McMahon : Correct. One of the issues that we are putting forward as a community is for a Water Industry Alliance proposal, which will see significant water handed back to the Commonwealth in response to investment in our communities, and we have put forward a proposal for that investment in the communities. The difficulty we have had with the old rules is that we do not fit within the rules and the guidelines that are there, so we have actually asked for the guidelines to be broadened.

Senator XENOPHON: What is government doing about that?

Mr McMahon : We are in discussion between the state and the federal governments for that to occur.

Senator XENOPHON: Could you give, on notice, because I have run out of time, some more details to the committee on that, because I would find that very useful in the context of a report by this committee.

Mr McMahon : Yes, I can do that.

Senator NASH: I just want to move on from talking about the entitlement to the pre-existing right. Are any other areas in New South Wales yet to be converted? Are there any still in a similar situation to that which Nimmie-Caira is in at the moment?

Mr Gregson : Yes. There are still large-scale projects, in particular in the northern New South Wales part of the Murray-Darling Basin, that are currently being Commonwealth funded to recognise existing entitlements and to issue statutory entitlements for them.

Senator NASH: So it is not unusual. There are obviously others still out there that are waiting for that same conversion to happen.

Mr Gregson : Yes, and in fact over the course of the last decade this has happened on numerous occasions, as was predicated, as I said, by the National Water Initiative—not only in New South Wales but, indeed, across basin states.

Senator NASH: Very simplistic question: where is the environmental benefit of this going ahead? Given that that is the target under the current plan and all that sort of stuff—take that to one side—where do you see the benefit as being?

Mr Gregson : Agreed. So the current plan proposes for the Commonwealth to hold a suite of entitlements to deliver a long-term average annual volume of water. This provides part of that suite of entitlements. I am very happy to concur with Senator Heffernan that these entitlements sit lower on the reliability scale than other types of entitlements, be they high-security or South Australian entitlements—or, indeed, even general security entitlements on the Murrumbidgee. But that does not mean that they are therefore negligible in terms of value. For each megalitre of entitlement in a wet year that is used from a Nimmie-Caira entitlement, it is one megalitre of entitlement that does not need to be used from a regulated system that can be carried over. So it certainly contributes to the full suite of entitlements that the Commonwealth seeks to acquire.

CHAIR: How do you redirect to an overbank flow? You say the 390 gigalitres of water did not include any floodwater. Where did you get that information from?

Mr Gregson : I said this to you during the break, so I might need to say it again for the benefit of the full committee. It is our understanding that the calculation of 380 gigalitres in the long-term average extraction limit of 173 gigalitres does not include any over-bank flows. That was confirmed for me this afternoon by one of the proponents of the proposal, and I am more than happy to provide further information on notice should you request that.

CHAIR: Yes, you had better give us that on notice.

Senator NASH: Chair, I think Mr Culleton wanted to say something.

Mr Culleton : I just wanted to come to the question of benefits. There has been a lot of focus on over-bank flows, so we seem to be talking about circumstances where we have over-bank flows all over the place. But where this proposal comes into its own is particularly in low to medium years of allocation and water in the system, because this infrastructure system allows water, in relatively small volumes, to get into the really critical areas across the Nimmie-Caira, to the extent that New South Wales irrigators, the National Water Commission and the New South Wales Office of Water have used the infrastructure under current arrangements to get water to where it is needed to support, for instance, bird breeding events. So it is a system that is already used for environmental watering purposes. What this system will allow you to do is to direct water into particular areas, in particular during seasons where you have low or medium flows. That is the first thing. It also allows you to coordinate the flows across that whole area and to divert water around certain choke points. So there are multiple benefits to the use of this infrastructure.

CHAIR: They have not actually been able to describe to us how they are going to reconfigure the infrastructure to do what you have just said, but they said it might take several years.

Senator EDWARDS: Very briefly, a week or so ago the NRC came out and were very critical of the benchmarking. Effectively you were asserting that shifting the goalposts again, will reduce the responsibility of the authority on water that they have bought, and increase the impost on irrigators in the future. That is your assertion in that press release.

Mr Chesson : No, the assertion was about the way the SDL was calculated and the model that was used. They were talking about changing that benchmark modelling run. They were talking about making it, I guess, more sensitive to constraints or how the river runs. The issue around that was not so much that they may change the benchmark modelling run—it would be odd to change a benchmark anyway—the issue was around transparency: how they are going to change it, when they are going to change it and why are they going to change it, and making sure that people actually know that they are changing it.

Senator EDWARDS: Subsequent to that, and you have raised that, have they been in touch and said, 'We're here to help; we're going to try and allay your concerns,' and—

Mr Chesson : Before I put that press release out I did check with the MDBA whether they were actually looking at changing it. They said they were. Again, as I said, if they can make the model more sensitive to real-life conditions, we do not have an issue with that. The issue is around transparency. So I have not had that conversation since, but I understand it is in the mix with the negotiations between the states and—

Senator EDWARDS: And when we all caught up in Mildura the National Irrigators Council was relatively new and getting some momentum. Have you been engaged with the Wentworth Group and the Australian Conservation Foundation in trying to pursue everybody's collective goals? Have those groups been engaging with you as a legitimate stakeholder in this process?

Mr Chesson : My predecessor tried and invested a lot of time with the ACF. I guess we are diametrically opposed and have different views on the river. For example, one of the areas where we have some issues is how they are going to physically deliver the 2,750 gigalitres of water that we are talking about, particularly onto floodplains—down in South Australia, for example. If they could not deliver water this year or last year onto those floodplains down in South Australia, when can they actually do it? We have had two very wet years.

Senator EDWARDS: This is my point. You talk about being diametrically opposed. Don’t all the adults have to stand in a separate room, work out something and come to the table with the authority and say, 'This is what we think we can go forward with'?

Mr Chesson : You would like to think so, and I think we have had five years now, since 2007, when the act was passed—so five years, and only two weeks ago we had a key milestone where the states handed over what they thought to the feds. We now have a couple of weeks extension to that, so that the states can all come to the table. At the end of the day, who are the adults?

Mr Gregson : Only last week, I was fortunate enough to celebrate five years in this job. It was before the NIC was formed that I started in the role. I spent some time assisting the NIC in its early days of setup. I can assure you that, particularly with the Australian Conservation Foundation, the irrigation sector spent quite some time working on a mutually acceptable solution. We do agree on a large range of points. There are obviously some on which we do not agree to, but knowing they will be giving evidence to the committee this afternoon, you may ask their preferred method of recovery and whether that has changed over the course of, particularly, the last few years.

Senator EDWARDS: Thank you.

CHAIR: Can I just go back to the details of the 173 gigs of water. I am very familiar with the landscape, but can you explain to me how many years in the last 10 years the bottom half of the system has not had any water?

Mr Gregson : I do not know the answer to your question. I am aware that there has been a drought of record across the last 10 years, as I am sure you are.

CHAIR: What is the mean flow variation midstream for the Murrumbidgee?

Mr Culleton : I do not understand the question.

Mr Gregson : No, I am sorry, we do not know.

CHAIR: The Condamine-Balonne is 835 per cent. What is the mean variation in the flow midstream for the Murrumbidgee?

Mr Culleton : I do not know. I know what that e average level of reliability across the Murrumbidgee is, year in and year out, and that really is what should be relevant.

CHAIR: Tell me what you think that is.

Mr Culleton : Sorry?

CHAIR: What figure is that?

Mr Culleton : About 72 per cent.

CHAIR: The variation is 230 per cent.

Mr Culleton : I would not disagree with you—

CHAIR: It is just that you did not know.

Mr Culleton : but the 173 gigs that you have been talking about—that we have been focusing on for so long—is the long-term average.

CHAIR: To get that average with the supplementary water it does include floodwater. I will be interested to see how you shepherd the water on a flood plain. No-one knows. The department does not know. They said, 'Originally it was going to be a national park.' We said, 'Yeah, we need another Yanga—and all the wild pigs and shit that is in there.' Do we? And so they said, 'Maybe we will do something else with it'—this is decision-making on the run. They are now saying, 'We might be able to lease some of it back, depending on where the water goes.' There is some natural flow in all of this. It is not all lifted from the weir. I do not know the answer.

Mr Culleton : Senator, do you believe that that irrigation system down there serves no environmental benefit at all? Do you believe that that system cannot be used to bestow an environmental benefit to Nimmie-Caira during medium and low floods?

CHAIR: The sad part about this committee is, we ask the questions, you don't. We are aware of the make-up of the flow. We are aware of the proposal, which is to take water off a flood plain and to send it back to the environment. We are aware that that same flood plain, in a flood, is going to get the floodwater.

Senator NASH: One of you gentlemen said before, I think, that the water that will then go back would otherwise have been utilised. So, by now it not being utilised by the irrigator, that water is now freed up to go back to the flood plain—is that correct?

Mr Gregson : Correct.

Mr Culleton : On average, 173 gigs.

Senator NASH: Thank you.

CHAIR: How do you shepherd that to another flood plain?

Mr Culleton : You can pass that water utilising the existing irrigation system to a number of the key areas in that system. You can also use it to divert around various choke points.

Senator NASH: Just to clarify again for me. There are environmental assets within the Nimmie-Caira, are there not?

Mr Culleton : It is one of the key iconic sites in itself.

CHAIR: Some of the lakes that are currently getting water because we are not getting water down below are lakes out from Balranald where water is going where it never normally goes in any flow. You are aware of that, are you Mr Chesson? We will come to that. There is a lot to learn. Anyhow, if you get away with it, best of luck, boys, and thank you for your evidence.