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Meeting the future challenge of water: speech to the 5th Annual Australian Water Summit, Melbourne.



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Speech by

Anthony Albanese MP

Shadow Minister for Infrastructure and Water

Manager of Opposition Business

5th Annual Australian Water Summit

Hilton on the Park, Melbourne

26 February 2006

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5th Annual Australian Water Summit “Meeting the Future Challenge of Water”

Anthony Albanese MP Shadow Minister for Infrastructure and Water Manager of Opposition Business

26 February 2007

Check against delivery

Thank you for the invitation to speak today about the nation’s water challenge, and the need for sustainable water solutions for Australia.

Addressing Australia’s national water crisis is an urgent task, requiring constructive leadership and action from all levels of Government, particularly from the Commonwealth.

Federal Labor welcomes the agreement reached on Friday on the Murray-Darling.

Australia is confronting a national water crisis, it needs a national water solution, and the Agreement is clearly a positive step in the right direction.

From day one, Federal Labor has played a constructive role in assisting to bring together the States with the Commonwealth. To this end, Kevin Rudd met with Premiers around the nation over the past fortnight.

Today I want to take this opportunity to discuss the context of the current water debate; the outlook for the Murray Darling system; and present an outline of Labor’s forward vision, not just for the Murray Darling but for securing urban water supply.

My starting point is the recognition that, with the exception of our people, our natural resources are our greatest asset.

Labor strongly believes the Commonwealth has a leadership role in helping ensure every Australian - whether they are in rural or urban Australia - have a sustainable supply of water.

The current debate

As a nation we have never really valued water.

Our water supplies have been taken for granted: overallocated, undervalued and misdirected.

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As our population has grown, competition for water has also grown, from the agricultural sector, from urban development, and from industry and mining sectors.

As a consequence, the health of water supplies and their environments have suffered, and we have squandered the water resources of the nation.

It was Samuel Taylor Coleridge who famously wrote in the Rime of the Ancient Mariner:

“Water, water, everywhere, and not a drop to drink”.

Technology and engineering has certainly changed in 200 years, but the fundamental need for access to clean drinking water has not.

Australians live in the driest inhabited continent, with the greatest variability of rainfall - a land of droughts and flooding rains.

Australia’s water resources are highly variable and range from heavily regulated rivers and groundwater resources, to rivers and aquifers in almost pristine condition.

Over 65% of Australia’s water run-off is in the sparsely populated, tropical north.

But Australia’s large urban areas are in southern Australia and irrigated agriculture is principally located in the Murray Darling Basin, where only 6.1% of the national run-off occurs.

This raises real challenges, and climate change has increased the intensity of the challenge now and into the future.

Australia’s State of the Environment report, released on 6 December 2006, outlined that climate change is happening right now.

The report indicates that greenhouse gas emissions are set to rise by 22 per cent of 1990 levels by the year 2020.

The report outlines the recent lower than average rainfall over eastern Australia.

It documents what is happening in our cities, including that Perth’s water supply catchments are yielding 50 per cent less water than in the years before the mid-1970s.

It confirms the significant pressures on Australia’s inland river systems.

Last Wednesday it was revealed that inflows to the River Murray have slumped further, falling to just 30 gigalitres in January 2007.

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That figure for January was well below the long-term median inflow for January of 246 gigalitres and was almost half of the previous record low of 52 gigalitres in January 1983.

It meant total inflows for the past eight months had been 660 gigalitres, compared to the average annual inflow of 11,200 gigalitres.

Southern Australia and the city of Adelaide are moving into uncharted territory in terms of the amount of water available to irrigators and for domestic and industrial use.

And the coming months may not be much better, because even with average rainfall, there will not be average run-off because of extremely dry soil in the catchments.

Total storage volumes of the Murray-Darling Basin are now at 16 per cent of the total capacity.

Your presence here at this Conference suggests you are very aware of these issues, but unfortunately recognition of these facts is not universal.

The National Party Member for Page, Ian Causley stated in Parliament on 18 October 2006 that:

“In fact, the quality of the Murray River downstream is now better than it was 10 or 15 years ago.”

If Ian Causley thinks the Murray River is healthy at the moment, I’d hate to see his definition of a sick river.

The Murray is thirsty for a drink, but Mr Causley and many of the Nationals just can’t see it.

Mr Causley’s comments highlight that whether we like it or not, the water debate is a political one.

My view is that water and climate change are integrally linked.

The Howard Government’s attempt to compartmentalise water from climate change is delusional. It is the latest example of a Government looking for a short term political fix, rather than a long term solution.

Addressing our water crisis requires taking action on climate change.

Practical immediate action and long term vision on both water security and climate change - that’s Labor’s agenda.

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The National Water Plan

There is no doubt that the decision last Friday for NSW, Queensland, South Australia and the ACT to refer their authority over the Murray Darling Basin to the Commonwealth represents a very significant reform.

Bilateral discussions between Victoria and the Commonwealth will take place over the coming weeks.

Given the particular challenges faced by Victorian farmers and irrigators and the maturity of their existing water management systems, those discussions are likely to be quite detailed. Federal Labor looks forward to a positive outcome.

At a Federal level, Labor has consistently called for a national approach including: • Commonwealth leadership on water; • the appointment of a Minister for Water,

• the creation of a single Commonwealth water authority, • the commitment of more funds for water management and efficiency programs right across Australia, • the development of water trading and economic instruments to drive

reform; and • the existing $2 billion Australian Water Fund to be used on practical projects.

The Prime Minister’s response in January was consistent with many of these objectives and therefore received Federal Labor’s support.

We welcomed the Government’s adoption of proposals for a Minister for Water, the creation of a single Commonwealth water authority, and the commitment of more funds for water management and efficiency programs in rural Australia.

However, it was reasonable for all the stakeholders to scrutinise the National Water Plan and continue to ensure that the details are got right.

We want strong and lasting reform of water use and management in Australia.

That requires long term vision, not just short term reaction to political imperatives.

It is clear from the evidence that more effort went into the writing of the Prime Minister’s speech than into the governance, finance and timelines of the original National Water Plan.

Let me outline just a few examples of that overwhelming evidence.

1. It is extraordinary that the plan didn’t go to Cabinet.

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2. There was no economic modelling by Treasury or Finance.

3. The Department of Finance was asked to “run an eye lightly over” the costings.

Surprisingly, the cursory review by those key agencies was dismissed by Senator Minchin, who said that $10 billion wasn’t really all that much money.

4. None of the National Water Commissioners were briefed until the morning of the speech.

5. Ian Sinclair has stated the Murray Darling Basin Commission was not asked for advice.

6. The States and Territories were given contrary advice at the time of the Melbourne Cup Day water summit.

7. And finally, the Government had introduced the Murray Darling Basin Amendment Bill in December 2006. That was a Bill which assumed existing structures would remain intact and proposed minor changes.

The idea that the Prime Minister’s announcement was a well planned and detailed proposition is a triumph of rhetoric over evidence.

That is why Labor is pleased the Prime Minister has accepted the sensible propositions of various Premiers, and that a workable proposal has emerged as a result of that constructive dialogue.

In short, we are pleased that common sense and a common purpose have prevailed.

In particular, the role of the independent commission will be vital if politics is not going to interfere with needed outcomes. In addition the review after 7 years, the maintenance of planning powers with the States and other measures are sensible improvements to the Plan.

There remains an obligation for scrutiny to ensure the objectives are attained by the implementation of the final package.

It is of ongoing concern that, under pressure from the National Party, John Howard’s plan to deal with water over-allocation in the Murray Darling Basin and buying back water entitlements appears to be - if you can excuse the pun - being diluted.

After stating on Sunday 28 January that “There might be an area where you buy out the farm, close down a channel because it’s inefficient”, the new Minister for Environment and Water, Malcolm Turnbull is now meekly saying that buying water entitlements would only be a “last resort”.

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Labor firmly believes that the over-allocation of water licences is a primary source of the water crisis, and the Government should maximise its purchase of over-allocated water entitlements.

The future direction of water policy in Australia

So what of the future direction of water policy in Australia.

Labor strongly supports the principles of the National Water Initiative.

After a long gestation period of 10 years, the National Water Initiative was created in 2004 through the COAG process.

It emphasises the need for cooperative effort, in the national interest.

It highlights the importance of community education about the delicate water balance of this nation.

The National Water Initiative recognises the importance of investment in water infrastructure to deliver efficiencies and water savings.

The principles behind the National Water Initiative are therefore very sound.

The National Water Initiative puts public and environmental needs into an economic system - it attempts to establish structures to manage growing demand for water and a diminishing supply, in a way that uses water efficiently and productively.

The fact is we need to get the price right for all our natural resources.

There is a direct connection between our water and climate change, and there is a synergy between developing trading systems for water and carbon.

If we promote market based solutions with pricing that reflects the finite nature of our natural resources then significant productivity and environmental gains can be achieved.

Water is a precious asset and a valuable commodity, and it needs to be treated as such.

We need to appreciate that an effective nationwide trading system in relation to water is an imperative to meeting our challenge.

Australia needs new ways of working with water and a policy framework that guarantees river health and greater certainty and security for investors, farmers and communities.

Historically, land use and access to water was viewed in the absence of environmental standards or regulations, and in the absence of a clear understanding of environmental responsibilities.

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As elsewhere in the world, Australia’s irrigation systems suffer from problems associated with losses in storage and conveyance, on-farm losses and variable water use efficiency. It is hoped that the significant financial input from the National Water Plan will assist in addressing this issue.

The real wastage however, comes from not being as productive as possible with the water that is consumed.

Growing more food with less water alleviates scarcity - and it contributes to food security and puts less strain on nature. The most effective way to increase water productivity is to shift water use by trading from low value to high value crops.

To facilitate this, water entitlements and water trading regimes have to be developed. They must provide security for water users and the environment.

We need economic tools to ensure proper allocation of water resources to appropriate end users.

Pricing water to reflect its finite nature is essential.

Pricing water in that way will encourage greater efficiency, and investment and development in new technology and innovative water solutions.

And Governments have a critical role in intervening to ensure equity in the outcomes that these structures produce.

Once pricing reflects externalities and the full cost of the water cycle, much more rational decisions result with substantial environmental benefits.

While current policies includes broad principles around allocating water for the environment, restoring flows to stressed rivers and water quality objectives, they remain general and unspecific.

The time has come for some clearer national goals, targets and benchmarks in river health, water recycling and water quality.

That requires leadership from the national government.

And leadership means taking people with you, not delivering an ultimatum.

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Meeting the Urban Water Challenge

John Howard has made it quite clear he does not see a leadership role for the Commonwealth in urban water.

While seeing a strong role for the Commonwealth in the Murray Darling and other irrigation areas, on 25 January John Howard stated it was

"less obvious that the Commonwealth should be directly involved in the provision of urban water."

The Prime Minister's speech made his view clear that if the Commonwealth handles the Murray Darling, then the States should handle urban water on their own.

Labor takes a different view.

Labor believes that the Commonwealth has a responsibility to provide leadership and assist in securing water supply for the 17 million Australians who live in our capital cities and towns on the coast.

Water use and water supply in urban Australia is a national crisis. It requires a national response.

Labor doesn’t just see clean water as an expenditure of money, we see clean water as an investment in the future of Australia.

Urban infrastructure is important for the jobs and lifestyles of those who live in our major cities - but it’s much more than that.

Urban infrastructure investment is essential in the creation of sustainable cities to address climate change. And urban infrastructure is also critical to improve productivity and economic growth.

Just last Wednesday, 21 February, the Governor of the Reserve Bank, Glenn Stevens highlighted the need to invest in “the productive side of the economy”, to minimise inflationary pressures and boost productivity.

Treasury’s most recent Economic Roundup (Summer 2007), has revealed that Australia is ranked 20th out of 25 OECD countries for its public investment in infrastructure as a proportion of GDP.

Kevin Rudd’s announcement of a “Major Cities” Program envisages a renewed role for the Commonwealth in our cities - in the provision of transport, energy and communications, as well as water infrastructure.

We have a national plan in the National Water Initiative and we have funding through the Australian Water Fund, but unfortunately not enough is happening.

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It is extraordinary that since the $2 billion Australian Water Fund was set up in 2004, more than half of the funds remain unallocated.

Last year’s budget figures showed that the Government allocated $337 million to the Australian Water Fund but spent just $77 million - less than one quarter.

We have been frustrated that good projects have been unnecessarily delayed.

This includes nation building projects such as the Queensland Western Corridor Water Recycling Scheme, Western Australia’s Gnangara Mound aquifer recharge project and Harvey Water Piping Project and South Australia’s proposed desalination plant in the Upper Spencer Gulf.

Last week, Labor cut through the red tape and committed to supporting those projects.

As most of you would be aware, Labor has set a 30 per cent waste water recycling target by 2015.

A Rudd Labor Government will support practical, nation building projects to help deal with Australia’s water crisis in our major coastal cities where 17 million Australians live.

Federal Labor has committed to spend $408 million from the Australian Water Fund to support the Queensland Government's Western Corridor Recycled Water Scheme - the third largest water recycling project in the world and the largest in the southern hemisphere.

The Western Corridor Recycled Water Scheme is an important part of providing water security for the 2.7 million residents in south east Queensland, which will grow to 4 million residents by 2027.

Completion of the Scheme by December 2008 will deliver up to 210 mega-litres per day of recycled water.

That is 210 Olympic swimming pools a day.

Labor has also committed more than $30 million to boost Perth’s future water supply through the funding of the Gnangara Mound aquifer recharge project and the State water management plans.

Groundwater resources supply about 60 per cent of Perth’s drinking water and Gnangara Mound is the largest and most important shallow underground water resource in the Perth region.

Under the plan, 1.5 gigalitres a year of treated wastewater will undergo further treatment including desalination and then will be pumped through bores into the confined Leederville aquifer on the Gnangara Mound.

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That is 1.5 billion litres of water every year.

The Federal Government has been dragging its feet on this project.

Labor is Australia’s nation building Party.

As well as through direct funding of water projects through Commonwealth water programs, a Rudd Labor Government will establish a Commonwealth Statutory Authority called Infrastructure Australia to coordinate the planning, regulation and nation building infrastructure.

We will address the failure of the Commonwealth to engage in urban infrastructure programs through the creation of Labor’s “Major Cities” program, which will support practical initiatives in our major cities.

This will provide significant opportunities for good water infrastructure to be funded and built.

Conclusion

We have to open our eyes, accept the truth of our diminishing fresh water supplies - and we need to take action.

The Commonwealth has an important leadership role in ensuring each and every Australian - whether they are in rural or urban Australia - has a sustainable supply of water.

The time has come to value water as a finite resource.

The time has come to develop the economic mechanisms which deliver a sustainable water supply and ensure future generations can live and prosper.

The time has come to meet the challenges of the new Century - avoiding dangerous climate change and securing water supply for all Australians.

Labor is up to this challenge.