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Environment and Communications Legislation Committee
08/11/2012

ANDERSON, Mr Richard, Chair, Victorian Farmers Federation Water Council

BROWN, Ms Melanie, Senior Water Advisor, Victorian Farmers Federation

[12:04]

CHAIR: I welcome representatives from the Victorian Farmers Federation. Thank you for talking to us today.

The committee has received your submission for the inquiry into the Water Amendment (Long-term Average Sustainable Diversion Limit Adjustment) Bill 2012 as submission 14. Do you wish to make any amendments or alterations to your submission?

Mr Anderson : No. We are comfortable with our submission and the second reading amendments.

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

Mr Anderson : Yes, I would like to. Thanks for the opportunity to present to the Senate committee today on these important matters. I just want to say from the outset that I think that it is pretty hard to make considered comments on both these pieces of legislation. I think the main reason for that is the absence of some pretty critical other information that should sit beside this. We have not seen a revised basin plan. Through the ministerial council process there were recommendations made back to the authority; we have not seen any of those yet taken into account. Alongside the Basin Plan will sit an intergovernmental agreement; we have yet to see any indication of what that intergovernmental agreement is likely to look like. As mentioned by previous speakers, there is no water recovery strategy and there is certainly no environmental watering plan. These are important pieces of documentation that should sit beside these amendments, which none of us have yet seen.

From a VFF perspective, environmental works and measures have been our platform practically from day 1, back when this first started in 2007. That has been our position. We have not wavered whatsoever. The adjustment mechanism in the first piece of legislation was at the suggestion of the VFF 12 months ago. We first raised this adjustment mechanism for works and measures with the authority through the public consultation process. It was subsequently taken on by others, including our own state government.

It has been pretty disconcerting here today. Everyone talks about a volume—2,750 or 3,200. I do not think that this is about a volume. It has never been about a volume. This should be about environmental outcomes. It is not about the volume of water; it is about getting the environmental outcomes. If we can do that with less water, that is what we should be doing. We have had all the talk this morning, asking, 'Should it be 32?' We have even heard some say it should be up as high as four. One, we have not seen a watering plan. Two, it is about the outcomes. It is not about pure volumes of water. I think everyone loses sight of this particular fact.

The other thing to note is that, when we talk about environmental works and measures—and I have heard this here this morning from a number of the different groups—we hear, 'Go straight to buyback. Don't do any environmental work; just go to buyback.' The disappointing part and what is often overlooked when you get nine years of drought like we had—I will say it was the worst on record, although it certainly will not have been the worst in history because Australia's only got a very short history that we know about—is the environmental outcomes that were achieved in the drought through some temporary works and measures. What about the pumping of water and the pumps pumping water into Lindsay Island or into the Hattah Lakes to preserve parts or minor parts of these wetlands? You cannot do that without works and measures because, when it does not rain, it does not matter how much entitlement you own; there just is not any water or there is a minimum amount of water. That minimum amount of water can still be used—and we saw it through that drought period—to maintain some critical icon sites. We will not save them all, but we can at least preserve some smaller areas so that the environment can bounce back when necessary.

CHAIR: Are those areas in Victoria or in South Australia—or both?

Mr Anderson : Both. There are areas right up the basin where we can do that type of work. We have proved it already. We have been going 100 years and people are saying we need a plan. Sure, we need a plan. The VFF has always supported a plan, but it has got to be a balanced plan. It is a balance between our community, our environment, the socioeconomics for our regional community and our food and fibre production.

When you look at the predicted population growth for in Australia by 2050 you can see that we will have to feed ourselves. At the moment we are feeding another 150 million people around the world through export and aid programs, but there will come a time when we will need to feed ourselves and support our own population as well. This is why the balance is so critical.

CHAIR: How do you answer the submissions that have been made to us consistently from environmental groups and professors of environmental science that, unless you have a healthy system, you can forget anything else because it will not be sustainable? They argue the science does say you need more water flow.

Mr Anderson : They argue the science; that is fine. I could have a roomful of scientists in here and I do not think any of them would agree with each other anyway. That is what science is. We do not disagree with the science. It is a work in progress. I do not think anyone has the answer. We heard this morning about climate change. People think that we have had it bad for the last 100 years. With the drought we have had, towns did not run out of water. There was no water for irrigation let alone the environment—there were minimal amounts of water—and yet we survived. That was the worst drought on record. We learned a lot. We are doing it smarter. We have this opportunity to do it even smarter again. I think we need to tap into that.

Senator XENOPHON: You heard Mr McKenzie's evidence about Lindsey Island as an example of where you can maximise benefit in terms of water for the environment by being smart about it. Can I go back to the issue of buybacks. You have heard what the Productivity Commission has said about that. Is it fair to say that, during the drought, in terms of your members' and your direct experience, those buybacks were supposedly voluntary? I have spoken to irrigators who basically had a gun to their heads from the bank saying that they had to give water back and sell their water because otherwise they were going to be foreclosed on. Is that something that needs to be taken into account—that any buyback needs to be genuinely voluntary and not a forced sale?

Mr Anderson : There definitely were instances of that. There is no question about that. We do not support just an open slather buyback. We never have. Strategic buyback is something else again. I heard mentioned before that there comes a critical tipping point where, if you lose too much water out of the system, water becomes unaffordable. I heard it mentioned before that that critical tipping point is 50 per cent. I would not like to guess what that critical tipping point is.

The other thing we must keep in mind, if we are doing modernisation of irrigation systems, is that in northern Victoria in the GMID we have $1 billion of state money and we have $1 billion under the federal program out of the $5.8 billion. We are spending $2 billion. We have an obligation to spend it wisely. If we just stick to buyback, we will get that Swiss cheese effect, wasting some of that—

Senator XENOPHON: The Victorian Auditor-General was quite critical about some of the processes of that in previous years, wasn't he, in terms of the openness and transparency?

Mr Anderson : The Auditor-General's and ombudsman's report was more to do with the process. I do not think it was to do with the outcome. Through what we have done with that—and obviously we are only part way through; we are not due to complete that program until 2018—we have seen huge benefits already. When we talk about socioeconomics, you have to remember through that drought period the amount of work created in our rural and regional towns to run the program. Had that program not been in place through that period the federal government would have still been paying probably at the Centrelink office for most of those. So it had huge spin-offs to the greater community and not only our rural and regional areas.

Senator XENOPHON: A final question: in relation to environmental assets, you say that some should be saved and some should be sacrificed—or I think you said—I just want to get some clarity from you in terms of what you meant about environmental assets that can be kept in whole or in part. The view of a number of scientists is that if you have got a healthy Coorong, if you are above sea level in terms of the Lower Lakes, that they are the benchmarks of a healthy river system because it means there is water flowing through and flushing through nutrients and salinity. Do you agree with that as a general proposition—that it is important to keep the mouth open as much as possible as part of that flushing process?

Mr Anderson : I am not an engineer for a start but I think we should be looking fairly hard at—and also for engineering solutions—down at the Lower Lakes. It is not just a matter of putting a volume of water out. If there are engineering solutions, they should be considered as part of this process. I have heard you, Senator, talk about efficiencies of different districts and who is efficient. I think we all have an obligation, whether it be the environment, the irrigators or any of the consumptive users, to use water efficiently. If there are engineering solutions down there, they should be considered.

CHAIR: But surely if there are inefficiencies unaddressed upstream, the capacity for efficiencies in South Australia and downstream are limited.

Mr Anderson : I think we are all in this together, not just the southern basin and the northern basin. I think we have got a responsibility anywhere within the basin to be looking at water efficiencies. It is not just farmers. I think towns, environment and everyone else. It is a limited resource. It was probably a wake-up call through that last drought. Rightly or wrongly, the first five decades of the last century were dry. The second five decades of the last century were relatively wet. We do not know exactly where we are at and whether a new one starts tomorrow, next year or ten years away—we will not know. We have learnt a lot and we are in that process now of raising that efficiency to use those limited resources.

Senator XENOPHON: My last question is this—and you may want to think about it—as a general principle, you do not have any objection to there being some independent, objective and fair benchmark to determine which areas are efficient, have already received efficiencies compared to other areas in terms of their use of water and their productivity?

Mr Anderson : I often hear these arguments of who—

Senator XENOPHON: I am not arguing with you; I am just asking in principle.

Mr Anderson : are the most efficient farmers. I would put to you that there have been efficient farmers in a lot of different areas. Some have been able to cash in on money that has been made available for on-farm efficiency but there are a lot who have done that work. I fall into that category myself where I already did that work 25 years ago, so I am automatically excluded also. We are all in this together and, if some can take advantage of that, then I think it is probably more that you look at the rules surrounding that package of funds and what else can possibly be done. I think we have all got an obligation. I do not think it is just up to any particular group or commodity group or whatever.

Senator McKENZIE: Thank you, Mr Anderson, for you evidence thus far. My question goes directly to the bills themselves. In your opinion, does the bill provide any assurance or protection for irrigation communities, particularly in respect of the higher modelled numbers of 32 and some have suggested wanting 4,000 modelled. If you could briefly comment on your perspective on the impact of that but, subsequently, does the bill provide any protection or assurance for irrigation communities?

Mr Anderson : I do not see any mention in the bill whatsoever of the socioeconomic effects of trying to take that figure of to 3200 gigalitres. I must admit that, from the reading of it, 2750 will be the figure that is in the plan and the plus or minus five per cent under the adjustment mechanism takes you through to 3200. We know that that mechanism allows for an up or down of five per cent.

As to the second part of that, no, it does not cover off the socioeconomic effects on communities if another 450 were to be taken out. I guess this is why we have always supported and been big on works and measures. However, we do believe, as to another $1.77 billion towards that, that any money available should firstly be put towards closing the gap on 2,750, because we are not there yet, before we start worrying about 3,200—so we have not even got to the 2,750 yet. It is out belief that there are about 650 gigs of works and measures, so we would get away with 2,100 gigs of actual held entitlement to give 2,750 of environmental outcomes. I think this is an example of it not being about the amount of entitlement being held; it is about the environmental outcomes that can be achieved with a smaller volume of actual held entitlements.

Senator McKENZIE: Do you think then that the plus or minus five per cent is an appropriate measure? Do you have any commentary around that as a measure of adjustment?

Mr Anderson : I think that, as to the plus or minus, we are reasonably comfortable with the mechanism. We have been arguing for a mechanism. We understand that if you throw enough money into those efficiencies and works and measures you may well get greater than 2,750 in environmental outcomes, and I think that is what this is all about and if that can be achieved with enough money obviously the sky is the limit. We have got to remember that we have here a bill that is committing future governments, of whatever persuasion, to a spending program and I think there are some dangers in that anyway.

CHAIR: Can I ask this on that point. You say there is not enough money to achieve the outcomes which you want, which are a balance of environment and social outcomes, when workers in other industries have been told that their time is over. In fact plenty of industries have, including the automotive one.

Mr Anderson : It is if you put enough money into it. You have got to remember that we are not doing this for one industry. This is not just one industry. This is not just the grape industry or the dairy farming industry. This is about a whole community. We are doing this across a nation more or less. We are doing this not just for any particular commodity group. So I think you need to bear that in mind. This is a basin plan for consumptive users and for the environment—and they are not all farmers or individual commodity groups.

CHAIR: But submissions that have been put to us by some of the environmental groups are that you have got to put the health of the river before anything else, because unless the river is healthy you cannot sustain the communities. You are talking about huge amounts of money. So I suppose governments have to say, 'Well, when is the cost-benefit analysis not there to keep some of these communities going and the traditional industries going?'

Mr Anderson : Perhaps we should have put to some of those environment groups what their definition of the health of the river is. Do you want to make the river like it was 120 years ago when we were supporting a population of less than 500,000 people in the whole of Australia? Do you recognise that it is a working river and has been a working river with irrigation since about the early 1900s? Certainly in northern Victoria it has been since 1912. Where is the starting point? Where is the line in the sand as to what we call a healthy river and where we want to land with the basin plan?

Senator McKENZIE: There was talk earlier this morning up to the 450 and people not happy with the flexibility that that provided. Given the set of unknowns that we have been dealing with—and you have mentioned some of them in your submission today—can you comment briefly on the need for a flexible approach that is outlined in these bills?

Mr Anderson : Our area of disappointment was that there is written into the bill examples of what this money should be spent on. I understand that 450 gigalitres may be only aspirational, and I think the minister has made it that, even though those examples are in there, they will not be legally binding. We obviously see some real danger in having them in there in the first place. Do they belong in the legislation? The world moves on; the world changes. We are talking about 2024—another 12 years away.

Senator McKENZIE: Science will have assisted.

Mr Anderson : Things will have changed. So why lock into the legislation those examples? Don't they rightfully belong in the plan? Leave the legislation alone. Those examples—I think the references are salinity levels, the level of the lake and so on—really belong in the plan itself, not in the legislation.

Ms Brown : As far as the flexibility of the mechanism goes, initially when we proposed the concept of an SDL adjustment mechanism it was to take into account all these environmental works and measures, change in river rules and reviews which we were being told by the authority could be factored in. But we were highly concerned that that was not the case, so we have gone down this path. We are concerned that we have not been given confidence by MDBA that the mechanism will indeed be able to incorporate the environmental works and measure water savings. Our state governments are obviously working hard to come to bit of middle ground on that. It is quite an important point. We are being asked to consider what the impact can be going over 2,750 and we still do not have those other couple of things factored in yet.

Senator McKENZIE: I have two other issues. I want to go to the trust for the MDBA that is out there on the ground in the community, which I would imagine the VFF would have a good idea about. Secondly, we have had a lot of discussion about the removal of constraints through this system, and you have touched briefly on it, and we heard about the effects in the Barmah forest et cetera. I am just wondering how that will play out in other irrigation districts, like the Goulburn Valley, and other areas.

Mr Anderson : I will talk firstly about the removal of constraints. These are public documents. If you go to the Goulburn Broken Catchment Management Authority and look at their Lower Goulburn floodplain risk assessment, it is a nonsense to say that you can put 40,000 megalitres a day McCoys Bridge without causing serious flooding of not only public property but also private property.

Senator McKENZIE: Is there any clarity from the VFF's perspective on who is responsible for that flooding in terms of compensation?

Mr Anderson : I think this is an issue that would need to be addressed under the Basin Plan. It would cost a lot more than $1.7 billion to not only lift the constraints but also buy floodplain easement of private land. We are talking about the flooding of these properties probably every two years. That is fine, but you have to remember that 25,000 megalitres a day from Hume to Yarrawonga was set at 25,000 megalitres a day because any greater than that floods private land. That is why it has been at 25,000 megalitres a day for years and years and years—for that very reason.

Senator XENOPHON: We heard earlier from the Conservation Authority and they talked about $5 billion for 600 gigalitres and there is $1.7 billion allowed for 450 gigalitres. Even if you look at the Victorian programs, it worked out to $8,000 to $10,000 per megalitre, this works out to about $4,000 per megalitre. Are you saying that that is not a realistic sum—that $1.7 billion for 450 gigalitres?

Mr Anderson : I was asked a question about lifting the constraints and I was referring to the additional funding that would be required to buy flood easements not only on the Murray; you are talking about on all the tributaries here.

Senator XENOPHON: I hear that, Mr Anderson, but am trying to understand this from Senator McKenzie's line of questioning. One of the key conservation groups implied, I think, that it is not going to be enough money, going on past experience.

Looking at the Victorian food bowl program and what that cost per megalitre, do you think that the government is overly optimistic in terms of the amount of money allocated for the water they want to get back?

Mr Anderson : I do not think we should judge a particular amount of water on that particular parcel of money because there will be some low hanging fruit. You might say that that perhaps the cheapest water has already been taken. I do not necessarily agree with that. I think that there are a lot of works and measures that can get the equivalent environmental outcomes at a lot less cost than those figures—

Senator XENOPHON: So you are saying that it is possible to achieve the 450 gigalitres for $1.7 billion?

Mr Anderson : Yes, from works and measures.

Senator McKENZIE: McCoys Bridge was a good example. I wanted to ask about trust in the process. You have talked about putting the cart before horse today. How would you characterise the trust in the Murray-Darling Basin Authority out there on the ground and in communities around this conversation?

Mr Anderson : It would be true to say that it has probably been a shambles the way it has been handled—an absolute shambles, from right back at day one. It is all right having a consultation process, which has been attempted, but you have to give the appearance that you are actually listening. There is a difference between turning up and actually listening and doing something. Some of that trust has been well and truly destroyed through this process.

A good example is that we have had a number of discussions through the consultation process and yet we have not seen any attempt to resolve some of the issues that have been raised. It goes back to the adjustment mechanism. There was a stand-up argument in Echuca between myself and the chair of the authority. He was saying that he can make those adjustments under the plan—which was never possible—but it took another six months to convince him that it could not be done without the adjustment mechanism. That was just another example of the process. Changing the goal posts at the eleventh hour does not help build any further confidence in the process, either. From our perspective and from the perspective of a lot of our members we were never going to be comfortable with what was first proposed—where the authority would have the final say on this.

Senator XENOPHON: On notice, could you please provide more details about the stand-up argument you had in Echuca and how the authority changed their position subsequent to that. Could you give us a bit of history on that? Not now, but on notice.

CHAIR: That concludes today's proceedings. I thank all witnesses for the informative presentations. Thanks also to Hansard, broadcasting and the secretariat. Can we get an agreement for 13 November as the date for the return for questions on notice? It has been agreed. I therefore declare this hearing closed.

Commit tee adjourned at 12 : 33