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Environment and Communications Legislation Committee
08/11/2012

LA NAUZE, Mr Jonathan, Healthy Rivers Campaigner, Australian Conservation Foundation

[11:05]

CHAIR: I welcome Mr Jonathan La Nauze, from the Australian Conservation Foundation. The committee has received your submission to the inquiry into the Water Amendment (Long-term Average Sustainable Diversion Limit Adjustment) Bill 2012 as submission No. 1. Do you wish to make any amendments or alterations to your submission?

Mr La Nauze : No, but I have just given to the secretariat a submission to the second bill that you are considering which I will table.

CHAIR: Do you wish to make a brief opening statement before we go to questions?

Mr La Nauze : Yes, I do. Thank you for your time, Senators. Before I begin, as I said, I will table formally our second submission which addresses the bill that will create the special account, the Water Amendment (Water for the Environment Special Account) Bill 2012. I would also like to pay my respects to the Kaurna people, the traditional owners of the land on which we meet today.

Regarding the business of Murray-Darling reform, I am sure I will not be the first to say to you that it is absolutely essential that we get this right. The two bills before the committee are part of that task, as is the Murray-Darling Basin Plan itself, which you as senators will be asked to approve most likely in a couple of weeks' time. So, while my opening remarks and the two submissions I have given focus largely on the bills, I urge you to consider their implications for the Basin Plan as a whole.

People say the Murray-Darling reform is about striking a balance, and in some senses that is absolutely true. There is no balance in the current system. We take too much water and, as a result, the river's life support systems are buckling under the strain. The way of life of basin communities is teetering on top of this terribly imbalanced system.

According to the Murray-Darling Basin Authority, 3.4 million Australians, 17 per cent of our population, rely on basin rivers and aquifers for their daily drinking water. In fact, for most of those Australians, it is not just for drinking; it is the only water there is for anything—swimming, boating, fishing and, of course, earning a living. When the well dries up, when salt or algal blooms poison the river, it is catastrophic. There is nowhere safe to swim, there are no fish to catch and, as any grazier downstream of the cotton industry will tell you, the productivity of the land just keeps plummeting. So, while the basin's 19,000 irrigation businesses access to reliable, unpolluted water is an absolutely valid and important thing to balance up, so too are the lifestyles and the very livelihoods of all 3.4 million people who use the basin's water.

To safeguard our shared interest, we must restore balance in the Murray-Darling; we must restore the river to health. As recent modelling by the basin authority shows, that cannot be done with less than 3.200 gigalitres of new environmental flows. Therefore, ACF, the organisation I work for, is concerned that the two bills in question—particularly when read in conjunction with the proposed Basin Plan, amount to a confidence trick on the river Murray, the communities it supports and the Australian taxpayer.

Here in South Australia the Prime Minister, the water minister and the South Australian Premier proudly declared a fortnight ago that they had struck a deal to restore the Murray-Darling to health. The Prime Minister told the assembled journalists that the deal would result in '450 gigalitres of water being preserved for South Australia and a trust fund, a special fund, being set up of $1.7 billion to ensure that that 450 gigalitres can be made available'.

The Basin Authority's modelling had recently shown—and the graph, which I can refer to later on, refers to this— that that extra 450 gigalitres, whilst insufficient to keep the whole basin healthy, could literally mean the difference between life and death in the Coorong. Within a matter of days, legislation to create the promised trust fund was introduced to the House of Representatives, but the promised water began to evaporate from that day on. A trust fund, as the Prime Minister termed it, is exactly what that bill creates—a trust fund for private irrigation companies. The government's stated intention is to spend the majority of this $1.7 billion trust fund upgrading privately owned irrigation equipment at the taxpayer's expense, with the 450 gigalitres relegated to a weak aspirational goal that the government has little hope of achieving.

Why do I say 'little hope'? I say that because the likelihood of recovering an extra 450 gigalitres through water-saving infrastructure is pretty small to begin with, but especially when there is only $1.5 billion to distribute—assuming that the $200 million as announced by the water minister would go to overcoming constraints. The water minister told parliament that the existing $5.8 billion Sustainable Rural Water Use and Infrastructure Program is likely to recover no more than 600 gigalitres of water. So how on earth will $1.7 billion—only a third of that amount—recover three-quarters of the same amount of water on top, especially when you consider that the existing program is likely to have plucked all the low-hanging fruit in the infrastructure basket? You can only save water that is being wasted in the first place, no matter how much money you throw at the problem.

Are we seriously being asked to believe, after $5.8 billion of public subsidies—and that is only the most recent round—that Australia's irrigators are so inefficient, so profligate, that there are still hundreds of gigalitres of water savings out there just waiting to be found, at a fraction of the cost of previous initiatives? I urge you, senators, to press the department on Monday for the information that proves me wrong—and not just costings based on an infinite availability of purely theoretical projects. You need to know if anyone has actually checked whether these savings are there to be made. Otherwise, it is all just a wing and a prayer. And if the 450 gigalitres can be found without buying more water from willing sellers, then there should be no objection to ACF's primary recommendation that the bill be rewritten to make recovery of at least 450 gigalitres a mandatory requirement for that special account. I have probably taken far too much time already, so I will spare you comments on the first of the bills, other than to say that we welcome the amendments passed recently by the House of Representatives to that first bill.

Senator McKENZIE: Thank you very much for your submission. I am just wondering, given your comments around irrigators and finding extra water within the system—and their well-known commitment to finding efficiencies on-farm—if you are happy for the environment to be treated the same.

Mr La Nauze : I do not think now is the time to be starting to ask it to squeeze its belt even tighter.

Senator McKENZIE: I think you are misunderstanding the point of my question. My question goes to this. The water that we have purchased for the environment—as a society, because everybody wants to see a healthy Murray-Darling Basin, not just the ACF—should be treated with the same rigour and efficiency measure that we are expecting of irrigators and their communities.

Mr La Nauze : Absolutely. I agree with the stated premise of that question. I would refer to the table which summarises the outcomes for the Murray and Murrumbidgee systems of the 2,800 versus 3,200. The ability of those two water recovery scenarios to achieve those environmental flow targets are based on extremely optimistic assumptions about the very efficient use of environmental water. The Murray-Darling Basin Authority has assumed that. If we can do better, if we can do it more efficiently—fantastic. But there are a number of assumptions in this that are actually better than the current policy settings, that are better than the ability we currently have to deliver environmental water. So, whilst I agree with the premise, I do not think we should be kidding ourselves that we can actually get a hell of a lot better than the model performance for any less water.

Senator McKENZIE: Can I just ask another question—this moves away from the line of questioning that I was hoping to pursue—in terms of the technological developments and scientific breakthroughs, and the engineering issues that we have seen change over time. Are you now suggesting that we have maximised those?

Mr La Nauze : I am very sceptical about our ability to, if you like, play God, in terms of trying to force the river to live on less than what the ecosystems have adapted to. I certainly do not think we have reached the end of our ingenuity in how to operate the river infrastructure for irrigation purposes and potentially use less water in the delivery of meeting those entitlements of that consumptive use and so forth. I am very hesitant to suggest that, with pumps and concrete and steel, we can replicate the full suite of ecological benefits of overbank flows if that is—

Senator McKENZIE: I think I was suggesting something a little more sophisticated than pumps, concrete and steel. I guess I was talking about the ingenuity of our scientists. Can I get your view on the socioeconomic impact of the constraint removal.

Mr La Nauze : One point I would make up front, which I think is a very important point that got lost in some of the debate when the Murray-Darling Basin Authority released their relaxed constraints model, was that they explicitly relaxed the constraints only to the point that kept flood levels below the minor flood warnings in all of the river reaches they tested. So the constraints that this modelling has assumed to remove would not result in any triggering of even minor flood warning levels, according the basin authority.

In terms of the socioeconomic impacts perhaps you could be slightly more specific. I think I can see where you are going but—

Senator McKENZIE: I am sure you can. I think the objects of the bill go to ensuring that we optimise environment and ecological outcomes for a healthy river in addition to socioeconomic indicators within communities right throughout the basin. Rather than maximising one over the other it is about optimising. I just wanted to get your perspective on that.

Mr La Nauze : I think that optimising the socioeconomic benefits is crucial. And I think the socioeconomic benefits will, in the long term, depend on the ecological sustainability of the river. I am just not quite sure about the relevance directly to constraints in particular.

Senator McKENZIE: I am also wondering whether you—the ACF—have any commentary about the best way to use the dollar amount. I know we have heard people this morning talk about buyback being the best way to use it. I would be interested in the ACF's opinion.

Mr La Nauze : Buyback is certainly widely acknowledged by everyone, from the irrigation industry to the Commonwealth government, as being, in terms of up-front cash, the most cost efficient method.

Senator XENOPHON: And the Productivity Commission.

Mr La Nauze : And the Productivity Commission—

Senator McKENZIE: But what is the ACF's view? Mr La Nauze, we certainly think that buyback should be prioritised. We think that a national water market was created in order to drive efficiency and create an incentive for private industry, who owns these water entitlements, to invest in their own efficiency. We think that in some respects by providing direct grants to do that, your two programs are competing against each other. You are diluting the price signals sent by a water market by putting in a cash subsidy to upgrade equipment. In some senses that could lead to all kinds of perverse long-term effects. So, in essence, we support buybacks as the primary means. We do not believe that other means should be ruled out 100 per cent, but the primary goal has to be restoring the river to health. If there is a limited budget and we want to get the maximum benefit for that then we would suggest that the socioeconomic impacts of any reduction in the consumptive water pool would be best addressed through applying funding separately to structural adjustment and community support issues rather than pumping it into infrastructure, which then has a long-term capital depreciation and no long-term flow-on benefits to the wider community.

CHAIR: I really have to move to Senator Birmingham. I am sorry. Can you put your next question on notice?

Senator McKENZIE: Okay, I will put on notice my question about the consistency with the ACF in following the Productivity Commission's recommendations, particularly with renewable energy. Thank you.

Senator BIRMINGHAM: Mr La Nauze, thank you for your time and your comments today. In your opening statement you made some fairly damning comments. Within days of the Prime Minister's announcement at the Murray mouth, when we finally saw the legislation related to that announcement you said 'the promised water began to evaporate'. Do you think those who accepted at face value the promises made at the Murray mouth that day effectively were conned or misled?

Mr La Nauze : I can see where you are heading with that. I am not going to comment on any particular individuals being conned or misled, but I think that a reasonable person listening to the announcements made by the Prime Minister and the water minister would not have expected legislation to be put in place that guarantees not a single drop of water for the river.

Senator BIRMINGHAM: Obviously from your comments you believe that the South Australian government or the state more generally should not accept the proposals as they are on the table.

Mr La Nauze : The proposals that are on the table fail to meet the objects of the Water Act. They do not guarantee at least 3,200 gigalitres. They do not even guarantee up to 3,200 gigalitres of water. Is it the aim of the South Australian government to ensure that the Water Act is implemented properly and that at least 3,200 gigalitres is returned to the river? Well this legislation does not do that.

Senator BIRMINGHAM: I want to go to some of the detailed analysis that you do of whether it meets those aims and what they are. In the table you have presented of the achievement of flows with the 3,200 figure the bottom one is for the Coorong, Lower Lakes and Murray mouth and target (8) 'low flows out the Murray mouth' is red. Can you explain to the committee what target (8) is?

Mr La Nauze : Without booting up my computer I cannot explain to you the exact target. It relates to, as it says, low flows, so a minimum amount of water to be provided out of the Murray mouth during dry periods. I cannot remember the specific metrics of that target. It is from the Murray-Darling Basin Authority's modelling. As I am sure you are about to point out, even 3,200 gigalitres under their modelling does not quite provide enough water during dry periods to achieve that target.

Senator BIRMINGHAM: I am assuming that the low flows are from the table in the 3,200 gigalitres modelling undertaken by the MDBA—'Proportion of years 3 year rolling average barrage flow greater than 1,000 GL/y'. Does that sound right?

Mr La Nauze : If that is flow target (8)—

Senator BIRMINGHAM: I think so. It looks like it is (8) to me. They have not numbered them as conveniently. However, the target there is for that to be achieved 100 per cent of the time. It says that under the 3,200 restraints capacity removed scenario it is met 99 per cent of the time, as against under existing arrangements under the baseline it is 91 per cent of the time. On a table like this it fails to meet the target by one per cent, so you can put it there in red, but it is equally a very significant improvement, isn't it, from the 91 per cent current scenario to 99 per cent under what would occur?

Mr La Nauze : Yes, but I think you need to be cautious though in simply interpreting numbers, averages and percentages. There are ecological tipping points and thresholds. Again, I do not have the documentation in front of me, but from memory that would have been over 114 years of modelling. If that target was not met for one per cent of that time then that potentially could amount to a long enough period during which there was no flow out of the mouth to actually cause significant damage.

However, probably what is more significant is that when there is 3,200 gigalitres, in comparison to the 2,800 gigalitres on the other side of that page, the modelled scenario showed, and the other table provided by the South Australian government also shows this, that all those lethal salinities, which caused extraordinary, long-lasting impacts on the Coorong—wiping out, from the bottom of the food chain up, the seagrasses, the fish and so forth—would have been very unlikely to have occurred. Their modelling shows it would not have occurred. I am not suggesting that 3,200 is sufficient, but it certainly provides a vast improvement, as you have said.

Senator BIRMINGHAM: There is a fairly firm view that comes from the environmental sector that we have been dudded, that is not actually 3,200 and therefore it is definitely not good enough. The contrary view to that is that even 2,750 provides some very significant advances. Whilst they are marked as red on your 2,800 gigalitres, or 2,750 scenario, when you go to those salinity targets in the Coorong—for example, the maximum period of days salinity in the Coorong northern lagoon is greater than 50 grams per litre—the current baseline is 604 days. When you go to the 2,800 gigalitre scenario, those 604 days drop to 75 days. Yes, the target is for zero days and 3,200 gets you to zero days. But 604 to 75 is obviously a dramatic improvement and 74 to zero is a step again towards achieving the exact target. Even with the flaws in what is presented, is it a good step forward?

Mr La Nauze : Elsewhere in that document, I am sure the Murray-Darling Basin Authority actually describes the fact that those targets represent thresholds beyond which there is a high degree of certainty that the environmental outcomes will not be achieved. They are not ideal, Nirvana, wilderness scenario targets. They are actually the very minimum that the authority believes, based on the best available science, are required to keep the ecosystem functioning. Not meeting a target is not meeting a target and potentially failing to protect the environment from collapse. Is it an improvement? Of course it is. But I doubt whether it meets the requirements of the Water Act.

Senator XENOPHON: Thank you for your submission and thank you for making a number of specific recommendations. Rather than traversing the comprehensive territory that Senator Birmingham has gone over with you, I want to ask about something that Ms Tregenza from the River Lakes and Coorong Action Group mentioned, and I think others such as Professor Mike Young have made reference to in the past, about the importance of having local communities with local knowledge having a say in saving measures to assist environmental assets. Do you have a view in relation to that—in other words, have direct local input rather than some decision being made by a bureaucracy in Canberra?

Mr La Nauze : I am not an expert in the best, precise mechanics of how to make the final decision. But I agree in principle that local communities have vast amounts of knowledge and a great stake in ensuring that water is recovered in the best way for them. What is important is that any target is set independently on the basis of science for that water recovery. To be frank, the horse has bolted, but if we were to go through this journey again, ideally, we would have said from the start: 'In each valley and in each community, here is the amount of water we are going to find. Now let's all sit down and work out the best way to find it.' It probably would have been a combination of channel shutdown, buybacks and so forth, and we would have probably ended up in a much more harmonious place. However, we have spent $7 billion or $8 billion already. We are halfway towards the authority's targets. Frankly, if we can change course, great, but I doubt that we can really do so to the extent required.

Senator XENOPHON: Can I just go to another issue—perhaps this is a long question, but we will tie it in. You mentioned $5.8 billion has been spent effectively for 600 gigalitres. On my calculation that is about $9,800 per megalitre of water—correct me if I am wrong, but it is pretty pricey.

Mr La Nauze : To be fair, not all of the $5.8 billion has gone to water recovery. I think probably around five. For the purposes of my comparison, neither will all of the 1.7—

Senator XENOPHON: But it is quite expensive compared to what the price of water is on the market at the moment. There is about $1.7 billion for 450 gigalitres so that works out to a bit under $4,000 per meg. How do you reconcile that with the concern that has been expressed by South Australian irrigators—and I think South Australia is a state where both irrigators and environmentalists have worked fairly closely together. There isn't that tension that you have seen in other parts of the basin. How do you give credit or acknowledgement to those irrigators who have been early adopters of water efficiency measures? Right now they are having enormous difficult in accessing that Water Efficiency Fund, because they have not been able to date to qualify because they have been too efficient. They have almost been punished for being good and those who have not been so good—and I am not criticising them—have found it easier to access those funds. How do you weave that into the context of this plan?

Mr La Nauze : I refer to some of my earlier comments that one of the potential perverse outcomes of spending so much money on upgrading leaky and outdated infrastructure at the taxpayers' expense is that essentially you reward those who did not get around to it in the first place. How you do that in South Australia—I think the South Australian government and the South Australian irrigation community are in a better place to answer that question. I am sympathetic to the issue.

Senator XENOPHON: You can see the argument though, can't you?

Mr La Nauze : I see the argument but I do not want to profess to be an expert on how to do it.

Senator XENOPHON: But you acknowledge the equity or the merits of that argument.

Mr La Nauze : Yes. Certainly, there is a massive equity issue. Ultimately, of course, we do use too much water and we need to reduce the water footprint.

Senator XENOPHON: For those who have already done the right thing, there is less scope for them to save more water, isn't there?

Mr La Nauze : There is and there is a real genuine equity issue there.

CHAIR: Thank you, Mr La Nauze, for your contribution today and the recommendations that you have put before the committee.