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NSW lifts embargo on water entitlements -

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ASHLEY HALL: The New South Wales and Commonwealth governments have kissed and made up over a water
dispute that has run for much of the year.

New South Wales stopped its irrigators on the Murray Darling River system from selling their water
entitlements to the Commonwealth because of concerns that other states weren't pulling their

A memorandum of understanding has now resolved the dispute.

Irrigators are pleased that progress has been made but they say it's far from a perfect

Timothy McDonald reports.

TIMOTHY MCDONALD: The New South Wales Premier Nathan Rees put the brakes on the purchase of water
entitlements earlier this year because most of the water was coming from his state.

NATHAN REES: Ultimately what we had was a situation which in the worst drought in 100 years, water
being purchased for the environment is in effect taken away from agricultural use.

That hits hard in towns in rural New South Wales. And they came to me. I received a number of
representations at different times and as former water minister I was pretty familiar with the

We said, well based on where we are at the moment we believe it is appropriate to press pause.

TIMOTHY MCDONALD: Mr Rees says Victoria in particular wasn't pulling its weight and until more was
coming out of the river elsewhere he was reluctant to give up more entitlements in New South Wales.

The Victorian Water Minister Tim Holding declined an offer to comment for this story.

Today under a memorandum of understanding signed with the Commonwealth, New South Wales will lift
the embargo but a cap will be placed on how much water the Commonwealth can buy.

Andrew Gregson is the CEO of the New South Wales Irrigators' Council.

ANDREW GREGSON: New South Wales and the Commonwealth have now negotiated an agreement where the
embargo will be lifted in New South Wales and instead will be replaced with a volumetric limit in
the vicinity of 890 gigalitres.

TIMOTHY MCDONALD: He says the move will be broadly welcomed, but it's not ideal.

ANDREW GREGSON: Well irrigators have been concerned throughout the entire process. They want a free
and open market, particularly those that we represent here in New South Wales.

But they recognise that if it was a free and open market in one state but not in another then
obviously New South Wales stood in the firing line to be decimated in terms of its regional
productivity. So there needed to be some equity across state borders.

And whilst this is not an ideal outcome it's by far the best we could have hoped for - to now have
some equity between New South Wales and Victoria.

TIMOTHY MCDONALD: The Acting Prime Minister Julia Gillard says it will deliver significant
environmental benefits and is crucial to protecting the river system.

JULIA GILLARD: We want that water to be directed to environmental flows through the river system to
make a difference to the stressed wetlands and stressed parts of the river system.

TIMOTHY MCDONALD: She says part of delivering those benefits will be a commitment to a practice
called water shepherding.

JULIA GILLARD: What it means is that the water that is purchased for environmental flows is
safeguarded so it makes a difference for the environment.

TIMOTHY MCDONALD: But Mr Gregson says irrigators aren't completely happy about that either.

ANDREW GREGSON: At the moment the MOU says it would only be available for an environmental
environment and wouldn't be available to other entitlement holders. We don't think that's fair.

The Commonwealth gave an agreement that the nature of an entitlement wouldn't change when it was
purchased into Commonwealth hands and as a result, if there is to be any shepherding through
unregulated systems it must be available to all entitlement holders.

TIMOTHY MCDONALD: But if there are misgivings among irrigators, there's outright opposition
downstream in South Australia.

South Australian Independent Senator Nick Xenophon was particularly scathing. He says it will take
too long for water to reach the lower Murray Darling Basin.

NICK XENOPHON: It is the worst form of compromise. When you have a situation when you have New
South Wales irrigators saying that this is a good deal then you can smell a rat.

TIMOTHY MCDONALD: And the Federal Opposition says the approach is all wrong.

The environment spokesman Greg Hunt says 600 billion litres of water could be saved by spending
$5.8 billion set aside by the Coalition Government to re-plumb and modernise farms.

ASHLEY HALL: Timothy McDonald.