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National water reforms: Western Australian Rural Water Users' Summit.



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NATIONAL WATER REFORMS

NFF President, Mr Peter Corish

Western Australian Rural Water Users’ Summit, Nannup, WA

Wednesday, 10 December 2003

ABN 77 097 140 166

NFF House

14 -16 Brisbane Avenue BARTON ACT 2600

PO Box E10

KINGSTON ACT 2604 Australia

Telephone 61 2 6273 3855 Facsimile 61 2 6273 2331 Email nff@nff.org.au Web www.nff.org.au

• Ladies and gentleman, it is great to have the opportunity to talk to you this evening from the National Farmers’ Federation perspective on recent significant developments in relation to water reforms.

• Too often in the national debate, issues in relation to the Murray Darling Basin dominate the media coverage and overshadow discussion about the need for national water reform.

• This Summit in Nannup serves as a timely reminder to key stakeholders, bureaucrats and politicians alike, that water security is an Australia-wide issue which has to be addressed by a strong National Water Initiative.

Resource Security (Property Rights)

• Since before the last Federal election, NFF’s number one policy issue has concerned environmental management and resource security both in regard to water and land.

• The two aspects are inextricably linked.

• If farmers are to manage their natural resources - particularly land and water - in an environmentally sustainable way, they must have certainty about their long-term control of those resources.

• As an irrigator farmer myself I know that I have invested a considerable sum of money and time in undertaking actions that will not only make my farm more economically viable but which will also be beneficial to the environment. I know that many of us would like more recognition of this type of activity. Yet it is vital that we get the certainty we require to give us confidence to invest in the latest efficient and environmentally sustainable management practices and to give banks and financiers certainty to support these investments.

• The risks associated with a lack of resource security for farmers were spelt our recently by Mike Carroll, the General Manager of National Bank’s Agribusiness Division. He acknowledged that advances in water efficiency would only be made if farmers had clear security and tenure over access to water.

• Mike Carroll said uncertainty and limited tenure for water entitlements could fundamentally change the financing of irrigation farms. He indicated that if farmers and their finance providers had no certainty of tenure, for example beyond 10 years, then loans being serviced by the product of a water entitlement would need to be paid out over that period. And he warned that the cash flow impact of this change in farm financing would be a 30 per cent reduction in cash surplus on a typical irrigated farm. The scope of flexibility in droughts or during falls in commodity prices would also drop significantly. This is a sobering message indeed.

COAG Water Reforms

• Over the past 2 years NFF has been calling on Federal and State Governments to put aside politics and provide resource security in relation to water allocations and access.

• In July this year, NFF and the Australian Conservation Foundation released an historic joint statement which called on the Prime Minister, Premiers and Chief Ministers to adopt a long term vision for the management of Australia’s rivers and water resources.

• NFF viewed the August meeting of the Council of Australian Governments (COAG) meeting as the most important policy forum on natural resource management since Federation and called on Governments for unity and leadership on water and rivers.

• NFF played its role in the process by clearly articulating to Governments, in the week before COAG, exactly what Australian farmers needed:

1. Healthy River Systems to be based on science

2. Decision making to give equal weighting to social and economic impacts

3. Fair and equitable structural adjustment for farmers and affected communities

4. Certainty for farmers and the environment

• The framework agreed to by COAG lays out a sensible foundation on which a new water system can be developed that will apply across every river system in Australia and set the principles to underpin water use across the nation.

• However, there is still significant work to be done to flesh out the detail before the next COAG meeting in mid-2004.

• And let’s be honest: the devil really is in the detail.

• While NFF has been very supportive of the COAG agreement we have concerns with the direction that some of the policies may be heading. For example, the Communique stated that:

“Water access entitlement holders should generally bear the risks associated with … bona fide improvements in the knowledge of water systems’ capacity to sustain particular extraction levels”;

NFF remains concerned that the risks associated with changes in knowledge of the capacity of water systems to sustain particular extraction levels should be borne by the entire community, not just the farmer or entitlement holder.

If this risk is borne by farmers two of the key principles of the initiative, namely investment certainty and further adoption of sustainable management practices, will be compromised.

The Communique also said that:

“Best practice water pricing will involve the principles of user pays and full cost recovery, and include where appropriate, the cost of delivery, planning, and environmental impact”.

NFF believes that water pricing should be accountable and transparent and that an independent process, removed from government, should be established to determine water pricing. This process should include significant public consultation.

We support the principles of user pays and full cost recovery with the exception that water charges not include a rate of return for existing assets at the date of initiation of pricing reform in each jurisdiction.

NFF does not support the inclusion of environmental impact as part of best practice pricing. We believe that water pricing must not be used as a policy instrument for delivering environmental outcomes or modifying the behaviour of water users. Attempting to incorporate environmental impact into water pricing is highly subjective, it could artificially increase the price of water and transfer costs to users which could lead to the erosion of some entitlements.

We believe that the pricing of water should include the cost of service delivery (operational and capital expenditure, water storage and delivery staff, meter readers etc) and part of the cost of resource management.

• NFF is participating in the ongoing consultation process to flesh out the principles agreed to by Governments.

• In fact we have taken a proactive approach to this process, with input from the Pastoralists and Graziers Association of WA and other State organisations, and Commodity Councils. We have recently developed a number of policy positions on the key issues that need to be addressed in the Intergovernmental

Agreement including best practice pricing, environmental water and infrastructure, Murray Darling Basin issues, urban water reform, water entitlements and markets and water resource accounting.

• These policy positions will enable NFF to actively and positively participate in the development of the Intergovernmental Agreement that will provide farmers with the certainty over their resources that they require to continue to manage their farms in an environmentally sustainable way.

• These NFF policy position papers are available on NFF’s website at www.nff.org.au/policies.

• I would urge WA landowners to use these policy papers to engage in water reform at the local and State level.

• It is vital that we all contribute to securing a National Water Initiative for the long term security of Australian agriculture, and that we follow up that Initiative to ensure it is being properly implemented at the State and local level.

Living Murray

• The Living Murray has been the focus of much media attention in relation to national water reforms.

• Only a few weeks ago the Murray Darling Basin Ministerial Council took a first step decision to outline a course of action to achieve environmental outcomes for 6 icon sites along the River Murray.

• Farmers and rural communities in WA could be forgiven for thinking that progress on the Living Murray is irrelevant to them. However, the fundamental issues in relation to rivers and the allocation of water in WA are no different to the Murray Darling Basin.

• The same basic principles apply and that is why NFF is working hard to ensure that the Murray River proposals, which are an adjunct to the COAG process, are consistent with what we want to see in the Intergovernmental Agreement on a National Water Initiative which will apply across Australia.

• Given this, NFF has delivered a consistent message to Governments at both the Federal and State levels through face-to-face meetings with Ministers and their staff. Our message was to:

Allocate secure water access entitlements to all water users in perpetuity before Governments made a decision on any proposal;

Support a proposal that delivers good environmental outcomes for the 6 icon sites along the River Murray based on sound science without impacting negatively on water users and river communities;

Undertake social and economic assessments to identify the impacts of exposing river communities to the risks of stranded assets and social dislocation;

Ensure that clear time frames are provided for public consultation and that the decision making process is open and transparent, with active participation of Basin entitlement holders and communities.

• The fruits of this coordinated approach are evident in the outcomes of the Council meeting.

• The water for the environment is expected to come from a combination of actions including engineering works, better management of river flows, on-farm water efficiency savings and some purchase of water from willing sellers.

• Water will not be obtained through compulsory acquisition.

• The stated intention of the Council is to have no adverse social or economic impacts on river communities.

• The proposal will be taken to local communities for their input and a final decision will not be made until COAG has implemented the National Water Initiative, which will agree on a regime to provide secure water access entitlements for irrigators and institutional arrangements for water trading.

• You can see how these significant outcomes for the Murray River can set an important precedent for other river systems in Australia. Ministers have listened

to farmers and recognized the importance of their need for secure water access entitlements and their call for water to be obtained with no adverse social or economic impacts on river communities.

Conclusion

• In concluding I cannot overstate the importance of resource security to both delivering a viable farming sector and to ensure the long-term ecologically sustainable management of our Australian landscapes.

• It is vital that we all engage in this process at a local, State and national level.

• NFF will continue to work in a positive manner to ensure that Governments and the Community recognize that resource security is vital to farmers as they develop an Intergovernmental Agreement on a National Water Initiative.

• I congratulate the organisers of this Summit for recognising the significance of this issue to the future of WA and Australia, and I thank you for the opportunity to speak on this important issue.