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Environment and Communications Legislation Committee
25/05/2015
Estimates
ENVIRONMENT PORTFOLIO
Murray-Darling Basin Authority

Murray-Darling Basin Authority

[17:30]

CHAIR: I welcome officers from the Murray Darling Basin Authority. Dr Dickson, would you like to make an opening statement?

Dr Dickson : No, thanks very much.

CHAIR: I will go straight to questions. Where are we at the moment with the environmental watering plan?

Dr Dickson : I can talk about the whole Basin Plan, or did you just want to talk specifically about the environmental watering plan?

CHAIR: The context in which I ask it is that I am just wondering, with some of the watering activities that have happened to date, whether we have some measurable or definable outcomes that are being sought and what we are doing about possible unintended consequences of some of these actions? I will be more specific in a minute. I am just interested more broadly. Do we have an environmental watering plan and how is it being monitored and measured—or when are we going to have it?

Dr Dickson : I will dig out the document that might help on this. We do have an environmental watering plan as part of the Basin Plan. That sets out all the objectives, the responsibilities and the processes. As well as that, we have had now three years of experience in setting basin-wide environmental watering priorities and in getting reporting on how those priorities are being met. Last year we produced the basin-wide long-term environmental watering strategy, which set out clear measurable outcomes that we would be reporting on over the long term.

I think you will be talking later on to the Commonwealth Environmental Water Holder, who reports on the outcomes of his specific watering events, as do all the other water holders and as do we, the authority, on behalf of the basin states for the Living Murray. Every water holder reports on their individual events and we report as a whole. This year we produced basically the first report on the Basin Plan. It is an annual report on the environmental watering activities across-the-board. I think they showed some really significant benefits, measurable benefits, in terms of the amount of fish spawning, bird breeding and those specific things, and improvements in vegetation condition.

Of course, you really need to monitor this over the long term. The process that we have in place for that will enable us to look at vegetation condition, fish responses, bird breeding and changes to the flows over the long-term. You need to test it through a number of seasonal occasions to be able to really get a view in the long term.

CHAIR: In terms of the measurability of outcome within a particular environmental location where you are trying to achieve an outcome, you would have a set of criteria that state that you want to achieve increased fish activity, birdlife or canopies of trees or reduced salinity levels or whatever it happens to be as your measurable outcome. What happens if the consequences are not felt within the area of activity—inundation or whatever it is that you happen to do—but are actually seen outside of the area? Are there any tools to measure the consequences to other areas?

Dr Dickson : I am not quite sure I am following you.

CHAIR: On the weekend I had the opportunity to look at one of your sites and the activities that occur there. It was inundated between September and December last year and the area that was inundated and the immediate surrounds look absolutely fantastic. However, it appears that a massive salt slug has been pushed out onto the neighbouring property and there is total devastation of the trees on the edge of it. This has only occurred in the last six months. How do you deal with something like that?

Dr Dickson : I am not sure, without the specific example, if I can help you. Do you know whose watering this was?

CHAIR: Chowilla wetland.

Dr Dickson : It was Chowilla watering. Was it the commissioned watering that was undertaken?

CHAIR: It was the testing with the regulator.

Dr Dickson : The testing of the regulator?

CHAIR: Yes. This is only a test of the regulator as opposed to putting it into full capacity. I am sure in many instances, when you start doing these things, there are going to be things that nobody realised, but I wondered what your process was to deal with that.

Dr Dickson : That is a really good question, because it is very important to manage the risks of environmental watering properly. The reason why those commissioned events were done for the works and why the water holders continue to test and evaluate their water events is to help manage those risks. Managing salinity risks, black water risk and all of those things is a really key thing with environmental watering. One of the things that you have to remember is that many areas of the basin now being watered through environmental water have not had any watering for a very long time, and that has helped to build up some of the risks. We will have to approach this very carefully.

The people who manage that are the TLM or icon site managers in the states. We have looked at the reporting of that as part of the joint funded governments and how they have been managing that. This year, as they are going to be doing more watering, they will take what they learned from that into account and look at how they can manage things differently.

One personal example I have had is at Koondrook-Perricoota, where they did some watering last year. It was very successful and they did have some areas of black water to manage. They did manage it, but they learnt some important lessons for how to manage it in the future, like having more flow through watering events to help manage some of those conditions.

CHAIR: Whose responsibility is it—as in the state jurisdiction, federal or joint—to ensure that any of these things are mitigated in some way, shape or form? Does it reside with the people in South Australia, in this instance, to try to come up with something to deal with what is quite an obvious consequence or is it something that we would oversee as a Commonwealth agency?

Dr Dickson : The Environmental Watering Plan sets out all the requirements that environmental water holders and managers need to take account of when they are doing environmental watering. From that point of view it is our responsibility to see that those activities are undertaken. The actual responsibility is for the environmental water holder in planning and managing the event, and in the case of the works, like Chowilla or Koondrook, it is the responsibility of the site manager, which is South Australia in that case. It was New South Wales in relation to Koondrook and Victoria in relation to Gunbower when they do that watering.

CHAIR: So in this instance there may well be engineering works that can alleviate the problem, whether it is putting drains in or the like or bores. Whose responsibility is it to fund something like that if that is determined to be the only thing that can deal with this issue?

Dr Dickson : In that particular case, because it is managing the works, that would be the responsibility of the site manager. The issue of the ongoing management of the Living Murray works and that responsibility is a live discussion with the joint governments at the moment, but it does rest with those governments that have the responsibility for managing those works.

CHAIR: My advice back to the landowner who has been adversely affected is to speak to the state government. We take no responsibility and have no jurisdiction over this?

Dr Dickson : We do not have any jurisdiction over it. It is the responsibility of South Australia to manage their works and their events.

CHAIR: Just finally—and I am talking about the same situation—I think for the last three years I have been here I have asked the same question, and it may be something that is more appropriate for the department to answer. There is still an ongoing dispute of the tenure of the land and yet the land has been inundated. There have been significant consequences for the inundation. So we have allocated a massive amount of money to this particular project, in excess of $100 million from what I can gather, and yet the tenure of the land is still in dispute and still in the courts. Do we have any view, oversight, control and capacity to do anything about ensuring that a huge amount of Commonwealth funding has not been spent in an area that if the court case is lost and it is found out the tenure over the land does not end up falling in the favour of the assumption of the South Australian government, that we have a $100,000 regulator sitting on a piece of land that we have no capacity to use?

Dr Dickson : The court case is a matter for South Australia, as you identify. The assets, like the Chowilla asset, are owned by the joint venture governments—Victoria, New South Wales and South Australia. The ongoing responsibility for those is with those states. It is an important thing for the Commonwealth to be aware of, what the long-term arrangements are for the Chowilla works, not the least because they are a proposal under the SDL adjustment process and so there is significant offset benefit from the Chowilla works for the jurisdictions.

CHAIR: Thank you very much.

Senator MADIGAN: Could you tell me how much the Murray-Darling Basin Plan has cost so far and how much has been budgeted for the further implementation of the plan over the next 12 to 24 months?

Dr Dickson : If you are talking about the overall budget for the Murray-Darling Basin Plan and the whole of the water reforms, I have not got the exact figures but it is in the order of about $13 billion. That has been committed in the budget. The amount that has been spent over the last several years is in the reports that have been provided by each of the responsible departments on that. It is not something I can give you as a summary, but we can certainly give you a detailed account.

Senator MADIGAN: You can take it on notice.

Dr Dickson : Just to be clear, you are interested in the entire budget of the plan?

Senator MADIGAN: The further implementation of the plan over the next 12 to 24 months.

Dr Dickson : So are you including the infrastructure investments, the whole works?

Senator MADIGAN: Yes, for the plan. What is budgeted for the Murray-Darling Basin Plan?

Senator Birmingham: In the next financial year or so we might be able to provide that based on information in the PPS. I am looking to officials to my right, who I am sure have that information. Obviously the quantum over the entire life since Prime Minister Howard initiated the reform in 2007 is a much bigger task to bring together. It is, as Dr Dickson said, in the order of $13 billion, but that includes some urban water projects, some Tasmanian infrastructure and a lot of other things that are not specific to the Murray-Darling.

Senator MADIGAN: I have asked over the next 12 to 24 months.

Senator Birmingham: I am sure Mr Slatyer can assist with water recovery and associated activities in the next financial year or two.

Mr Slatyer : Those programs are the responsibility of the department. The major program which is implementing the plan is our Sustainable Rural Water Use and Infrastructure program. In the next 12 months that has $1.101 billion allocated from that program for all the purposes of that program. Most of those are Murray-Darling Basin implementation works, infrastructure works primarily. There is, within the SRWUIP program, some relatively minor allocations for work outside the basin, but if you are looking for a broad number, that is the broad number that is allocated next financial year.

Senator MADIGAN: Is the $1.1 billion for the total expenditure for the Murray-Darling Basin?

Mr Slatyer : That includes the works that we expend on recovering water through infrastructure and includes resources for water purchase activity. It includes resources for supply measures under the SDL adjustment mechanism, which is a different type of infrastructure work. There are a couple of other programs we run. There are many lines on this budget table. I gave you the correct information. The situation is slightly complicated in that we have a separate program which is earmarked for some South Australian infrastructure work, but the basic position is as I have outlined it to you.

Senator MADIGAN: Could you take on notice how much money the Murray-Darling Basin Authority is spending over the next 12 months?

Mr Slatyer : We can take on notice for the Murray-Darling Basin or the authority might be able to answer that question right now.

Dr Dickson : Our expenditure is in the Portfolio Budget Statements. That is just the authority. The department invests the money. Over the next 12 months our Basin Plan expenditure for 2015-16—starting this next financial year—is about $46 million.

Senator MADIGAN: Can you repeat that?

Dr Dickson : It is $46,736,000.

Senator MADIGAN: Are you satisfied the environmental benefits of the plan are effectively measured and publicly reported on?

Dr Dickson : Yes, I am quite satisfied. In fact, as I mentioned to Senator Ruston, the annual report we did this year, the first annual report of the Basin Plan—because you must remember it is only a couple of years in—showed that there has been significant and effective environmental watering that has produced some very good results. The summary report that we produced a couple of months ago was supported by very detailed reports by each of the states and the Commonwealth Environmental Water Holder detailing the achievements of their environmental watering.

Senator MADIGAN: Are you satisfied the economic and social benefits of the plan and the economic and social costs of the plan are effectively measured and reported on?

Dr Dickson : I think it is still very early days in reporting on this, because these things take a long time to really identify what is due to the Basin Plan and what is due to all the other factors that affect the social circumstances and the economics of the basin. I think it is encouraging to see quite a lot of signs of confidence across the basin in the investments that have been occurring. Many of these communities have been experiencing long-term decline over the last couple of decades. I think it is encouraging to see things like about $54 million that SunRice has invested in the Murray area. We have just recently seen the investment in the cotton gin near Hay. There has also been the investment in Whitton a couple of years ago. I think all these are signs of confidence. There are the investments in the walnut processing that has occurred through Websters, and things that are not necessarily related to agriculture but are signs of confidence in the region, such as the opening of the abattoir in Deniliquin that has been closed since 2006. Just recently I think I saw in the Griffith Business Report that they were in the top 50 localities in the 100 localities across the basin as the region most likely or the ones that are going to be experiencing significant growth into the future or had good prospects. I think we have seen quite a few signs of confidence.

We are doing very detailed studies, working very closely with the industries and with communities, to get a really good understanding of what is happening on the ground. We have a very detailed one in the north, which we hope will be finished by the end of the year. That is working at the local level across the northern region. We are also doing some detailed work on the dairy industry and in the mid-Murrumbidgee in understanding how the Basin Plan might have changed behaviours. It is very hard to define these things sometimes for quite a number of years. I feel fairly confident that we are going to be well placed when we do the five-year report on the effects of the Basin Plan. That is when a lot of the detailed work that we are doing now will come to a head.

Senator MADIGAN: So in effect you are saying there will be a review of the effectiveness of the plan at the five-year point?

Dr Dickson : No. In five years time our requirement under the Water Act and in the Basin Plan is to do a detailed evaluation of the social and economic impacts of the Basin Plan and provide that to governments. We have, as part of the Basin Plan, an annual report on how effective the plan has been. Our first one was the one I mentioned. That looks across-the-board at the social, economic and environmental outcomes that have been seen so far. Every five years we do a detailed evaluation of those. So in five years time, in 2017, we are currently working to have a very detailed evaluation done at that time.

Senator MADIGAN: Thank you.

Senator SINGH: I would like to start on page 244 of the PBS. In that table, table 2.1, it outlines that the total expenses for MDBA are increasing by around $27 million from this year to next. This is on page 244. You have 299 down the bottom and it goes to 316. The explanatory material, which is over the page, on page 247, in the program expenses talks about the authority's administered item and various river and environmental management projects. Can you run through some of those and why they are changing the expenses profile of the authority?

Dr Dickson : Do you want me to start on the table program expenses, 1.1, and talk about the administered item?

Senator SINGH: If you would like to.

Dr Dickson : There is actually only one item there and that is the South Australian floodplain project. That is the profile for that project in that first line. There is only one item. That is one that we are overseeing. It was money provided to the South Australian government through the authority and we are responsible for overseeing that project. That is that administered item. Your other questions were about departmental expenses on that table?

Senator SINGH: It is about the increase in the funding of around $27 million from this year to the next. I am trying to understand what that is for. So we have the administered item, which you have just referred to, the South Australian Riverland Floodplain Integrated Infrastructure project. Are there any other projects or any other reasons—

Dr Dickson : All the joint funded revenue as well from governments—it includes all the capital and all the contributions from joint governments. We have two roles. One is in the implementation of the Basin Plan, which is the $46,700,000 that I mentioned to Senator Madigan. We also have a responsibility working as an agent for the joint governments in running or managing their jointly funded programs. This budget includes all the capital for those programs as well as the contributions from jurisdictions. We can give you some detail, if you would like it now.

Ms Schumann : Basically the key to this element of our increase is a combination of our revenue increasing by 16.7 per cent, comprising an increase in cash contributions from jurisdictions that Dr Dickson mentioned of $13.6 million. Also, there was an accounting treatment adopted for projected underspending, which has also impacted on the comparative revenues. These increases in revenues were partly offset by a reduction in the appropriation from the Commonwealth government for Basin Plan related activities of $1.8 million. This reduction will be repeated once more in 2016. There has also been a reduction in royalties, hydropower generation and other revenues of $3 million. Our expenditure was budgeted to increase by $9 million, comprising an increase in supplier related expenses primarily of $9.1 million.

Senator SINGH: For revenues from other independent sources there is a note there on the table.

Ms Schumann : Yes.

Senator SINGH: That is around $12 million; is that right?

Ms Schumann : That is right.

Senator SINGH: That includes funding from basin states for certain functions the MDBA undertakes?

Ms Schumann : Correct.

Senator SINGH: It includes revenue drawn from the Murray-Darling Basin Special Account?

Ms Schumann : It does.

Senator SINGH: Can you provide us with a breakdown of that revenue, whether it is for the measures that you have just spoken about?

Ms Schumann : I can. It would probably be best if I gave that to you in writing.

Senator SINGH: I just wanted to know how much came from basin states, for which projects and programs, and how much was drawn from the special account and for what purpose.

Ms Schumann : Essentially the increase in the cash contributions for jurisdictions was $13.6 million. That was a negotiated outcome and the cash. An increase in the comparative revenues is a result—$10 million—primarily of some accounting treatment as a result of the introduction of the PGPA, the Public Governance, Performance and Accountability Act.

Senator SINGH: Let us move to staffing levels. I understand that the average staffing level at MDBA is increasing from 299 in 2014-15 to 316 in 2015-16?

Ms Schumann : That is correct.

Senator SINGH: Is this increase in order to undertake work on projects?

Ms Schumann : Primarily it is a reflection of our renewed focus as a result of a span of controlled initiatives whereby we have been able to increase the number of staff for a relatively similar amount of money by reducing the number of EL1 and EL2 officers and replacing them with graduates. The remaining number is 5-6 positions. We have been able to increase the total overall staffing as a result of that initiative.

Senator SINGH: So there are no extra projects or specific projects that extra staffing are doing, the graduates are doing or anyone else?

Ms Schumann : The graduate is an increase in numbers for us over the previous year and so that will ultimately facilitate with our workload. There is no specific project that we have allocated the extra resources to at this time.

Senator SINGH: Perhaps you could tell the committee about the general staffing profile as in the basic number of staff in different roles and where they are based.

Ms Schumann : They are all based in Canberra, aside from one staff member in Toowoomba.

Senator SINGH: And the rest of the profiles and different roles?

Ms Schumann : Yes. We could break that down into quite broad levels, but again we do not have that detail with us now.

Senator SINGH: If you could take that on notice.

Ms Schumann : We can provide that on notice, but we would have to do it in fairly broad categories.

Senator SINGH: Have there been any changes of note to staff duties since the last estimates? Has there been any change to the work that the staff are doing?

Dr Dickson : The role of the staff varies, for a start, as the Basin Plan is rolled out, so some tasks are completed and new tasks come on. For example, in environmental watering, one of the key tasks of our environmental watering staff on the Basin Plan side was to develop the basin watering strategy over the last couple of years, which is a very detailed piece of work. In these next coming years they will be focusing very much on the water resource planning supporting the development of environmental watering planning under those water resource plans with the states, so things change as the Basin Plan is being rolled out.

In the joint programs the decisions on the activities that the governments want are the decisions of those governments, so as those tasks change our staff need to adapt and do different roles. There has not been a huge amount of change in that, but there has been some change.

Senator SINGH: Are you able to take on notice more specifics in relation to those kinds of changes? I know you are going to provide me, on notice, with the profiles and some of the roles, so perhaps it could be formulated in response to that since last estimates.

Ms Schumann : Yes.

Senator SINGH: I have some questions about funding.

Dr Dickson : Just before you continue, I do not think that there has been a lot of change since last estimates, which was back in February, so there would not have been anything to report on there. We could certainly do the—

Senator SINGH: No, since the last budget estimates. Obviously this is about the budget in the last 12 months.

Dr Dickson : Since the last budget estimates?

Senator SINGH: Yes. I have some questions on funding beyond 2016-17. This is on page 247 of the PBS. The departmental appropriation remains at a relatively constant level through to 2016-17 after which it drops off quite significantly. I think it ends up being around $45 million to around $7.5 million. That is quite a dramatic decrease. Then, again, in the 2018-19 year it goes to $5.5 million. Could you please explain that dramatic decrease?

Dr Dickson : Yes. It is a question I might share with the department and probably with Senator Birmingham. It is basically that the water reform funding was provided over a 10-year period which concludes in 2016-17, so the next stage beyond that will be the basis of a new proposal for the outyears that we and the department and other agencies will need to work together to see what the nature of the tasks will be into the future.

Senator Birmingham: Dr Dickson has pretty well covered that. Funding profiles often have terminating components to them, or time limited components to them, and the funding profile here and in a couple of other areas of the water reform package that was instigated by the Howard government initially had a 10-year profile, as Dr Dickson has indicated. The government, of course, has equally certain legal obligations under the Water Act to ensure that the MDBA is able to fulfil all of its functions in relation to the Basin Plan and the operation of the river system to ensure that the Commonwealth environmental water holder is able to fulfil all of his obligations in terms of the successful management of environmental water and so on. So, one would envisage, in the next budget cycle, that decisions will be made in relation to the forward funding profile for those currently terminating programs.

Senator SINGH: I understand that. So, that is basically as outlined on program 4.1 on page 75. I would like to move on to the 1,500 gigalitre cap issue. I know that we have previously discussed the issue of the 1,500 gigalitre cap on voluntary water buybacks and that it sits with the department rather than the authority as such, but given the work of the authority on the ground in the basin can you tell the committee what kind of feedback your officers have had or received from irrigation communities?

Dr Dickson : I can because just over the last month or so we have had quite a few meetings with local communities, particularly in the southern areas. It has been very beneficial in creating a greater sense of confidence with those communities. I think they understand that the government has had the policy of the 1,500 cap; they are comfortable with that and certainly the increased confidence is important to them.

Senator SINGH: I might hand over to my colleague. It is the deputy chair's turn now.

ACTING CHAIR ( Senator Urquhart ): I have some questions on your work plan for 2015-16. Can you tell us about a revised suite of programs agreed by basin states on how they have changed based on the revised contributions and where the authority is up to?

Dr Dickson : Are you talking about the jointly funded program or the Basin Plan?

ACTING CHAIR: The Basin Plan.

Dr Dickson : The Basin Plan?

ACTING CHAIR: Yes. The work plan for 2015-16.

Dr Dickson : Our work plan for 2015-16 has two key components. On the Basin Plan our key focus over the next 12 months will be on supporting the SDL adjustment process.

ACTING CHAIR: Is that part of the revised suite of programs agreed to by the basin states?

Dr Dickson : As I was saying, there are two parts to our work program. There is the work we do for the basin states on the jointly funded programs which is—

ACTING CHAIR: I am interested in the revised suite of programs agreed by the basin states, how they have changed based on the revised contributions and where you are up to with that.

Dr Dickson : The programs for 2015-16 are very similar to the programs for this current year. Since 2011-12, when New South Wales unilaterally reduced funding, there have been significant changes across the programs, but in this current year the core programs which are managing the River Murray, the salinity program, the Living Murray program and the supporting science programs are pretty much as they were for this current year and they are very similar for next year, so there has been little change from last year to this in terms of the nature and the scope of the programs.

ACTING CHAIR: Are you able to provide us with a bit more detail of that because you said 'very similar'? Could you provide on notice some more detail around what that revised suite of programs that has been agreed to by the basin states looks like.

Dr Dickson : Certainly. The basin ministers are due to formally sign off on their corporate plan for next year, so once that is done it could be quite a straightforward job and we can point out what was done this year and what the program is for next year.

ACTING CHAIR: Also, could you take on notice a little bit more detail around your work program?

Dr Dickson : What sort of detail would you be after in relation to the joint funded programs?

ACTING CHAIR: Just any other detail that you have. I am mindful of time. I do not want to take all my colleagues' time and the chair has returned, so she is probably going to stop me now anyway. We will put it in further questions on notice to you in terms of the detail.

Dr Dickson : We could very simply do just a summary of what is involved in each program. We have that information up on our web, so we could probably do a simple assessment like that.

ACTING CHAIR: Yes, if you could send that to us. We will have a look and then if we need any further information we can put it on notice. Thank you.

CHAIR: Senator McKenzie.

Senator McKENZIE: Thank you so much for your indulgence. As part of the constraint management strategy what has been done to look at remediation and ongoing maintenance, particularly in the context of levy banks?

Dr Dickson : The constraint strategy at the moment is still in what you would call the research and investigation phase, so our focus at the moment is really to look at the types of flows that would achieve benefits, so what sort of managed watering would need to happen to improve the environmental outcomes. That is the purpose of the constraint strategy, so there is that side to it.

The other side to it is the identification of what we would need to do to avoid any impacts of third parties, because that is a fundamental principle of the strategy. That is looking at what would need to be done to put in bridges, for example, or if impacts cannot be avoided what would be the rights we would need to purchase to be able to water low-lying levels. If you can just give me a moment, I might ask Mr Williams to come to the table and he can give you more of the detail of where we are the moment.

Just in terms of where we are, this work is being led by the states and we are providing the support for them, this sort of research and investigation support, to enable them to make a decision on whether or not they want to proceed with these measures.

Senator McKENZIE: Just to assist you with the level of detail, obviously I am a Victorian senator. I spent last week up along the Murray at Echuca and in the Yarrawonga area and there is a lot of concerned producers up there about this particular issue, so if you could maybe focus your comments around their specific concerns.

Mr Williams : In the Goulburn-Yarrawonga area we have been working for the last two years with three groups in the upper, middle and lower Goulburn. These groups comprise members of the community, riparian landholders, councils, Goulburn Murray Water and the CMA. We have been investigating relatively low flows and how they might affect flood plain producers, other industries and landholders in that area.

The issue of levies which you raised initially is still being investigated this year, as Dr Dickson mentioned. In framing up the business case the Goulburn CMA is leading that work for the Victorian government this year, building on the work that we have done in the last two years, and they have a work program which they are rolling out with some assistance from ourselves.

The issue of where the levies are touched by the flows that we are looking at is still being worked through and the degree to which they would be affected by those low flows is still being modelled, investigated and consulted on with landholders.

Senator McKENZIE: So, we are not releasing any water because that work has not been done?

Mr Williams : No change to river operations will be made until governments have made decisions and all the work has been completed. We are looking at between seven and 10 years before there is any change in river operations, which is a message that we have been repeating and reaffirming to people as we go through this process.

Senator McKENZIE: There was some concern that there had not been enough money budgeted to fund the repair of existing levy banks. Do you have feedback on that?

Mr Williams : The management of existing levy banks for the purpose that they were built is the responsibility of the state government. The degree to which the proposed changes might affect existing levy banks or require changes to those banks' operating arrangements has been worked through in this business case process and there is the research that we are assisting the Victorian state government with.

Senator McKENZIE: Are you confident of what time frame that will bring a conclusion to those discussions?

Mr Williams : This next stage will conclude at the end of this year when a business case may or may not be decided upon by the Victorian minister in relation to the Goulburn Valley as a part of the whole SDL adjustment process.

Senator McKENZIE: So, it is the state government that seems to be dragging their heels on this?

Mr Williams : I would not say that they are dragging their heels. They are working on this process with us. There has been a handover period since we completed our work last year and since they started their work this year.

Senator McKENZIE: So, you are comfortable with how they are tracking to get to the intended outcome, which is a plan by the end of the year?

Mr Williams : They are confident they will get there, yes.

Senator McKENZIE: Are you confident?

Mr Williams : We are providing every assistance we can. We will have a business—

Senator McKENZIE: The community is not confident.

Mr Williams : The degree of the detail that committee might like to expect could be debated. This business case process for this year is putting forward a proposition and there is likely to be a work program in ongoing years to confirm the further detail.

Senator McKENZIE: Would you like to outline the risks to downstream communities if environmental flows are released and the levy banks have not undergone appropriate repair and maintenance? What could happen if we do not get that right?

Dr Dickson : It is probably important to get into perspective the scale of the flows that are being envisaged here. There has been a lot of concern when people think about flooding and they think about the 2010 floods, the rather major floods. The level of flows that we are talking about are nothing like that. They are controlled, managed flows. They are managed in the same way that irrigation releases and so on are managed. The levy banks are usually built to protect against big floods. What we are doing is at a much lower level. It is getting flows up a little bit over the banks into all the little creeks and rivulets in that part of the region where it is highly dissected by little streams and flood runners. It is not at the scale—

Senator McKENZIE: I appreciate what you are saying. You mentioned low flows earlier. Are you confident that there is an understanding on the ground, then? These are very experienced producers. They have not just arrived in the north-east. They have been part of the irrigation landscape and conversation at a local level for decades. They understand the system very well and how what they do on their land interacts with that. They are not confident. Is there some sort of breakdown of communication that they are so concerned about this? I am at a loss really, because I appreciate what you are saying.

Dr Dickson : I think we just need to continue what we have been doing, which is very detailed consultation with landholders and reporting their issues. I think it is very important that, as you know, the CMA is now leading this detailed work. We are working with them, of course, but I think that will help to make sure that the messages are not misunderstood and that we can listen to every concern that everyone raises and deal with it.

Senator McKENZIE: Another concern that was raised last week—and this is my last line of questioning—is that they were concerned about superannuation funds buying up water licences and what that actually may mean for the water market in the case of a drought. I wanted to understand, in more detail, what mechanisms we have in place to guard against collusion, if you like, in the water market more broadly. Do we have anything in place to give us confidence?

Dr Dickson : Superannuation funds buying water does not necessarily mean that there is collusion.

Senator McKENZIE: That is one concern.

Senator Birmingham: Ignoring the fact that there are trading rules which I recall came into effect last year. I do not quite recall who is the expert at the table in relation to those trading rules.

Senator McKENZIE: Can someone help with the trading rules?

Dr Dickson : The trading rules are about removing restrictions to trading, reporting and making sure that there is transparent reporting on trades. Everyone has to report on a trade and the price so there is transparency in the market. The trading rules also remove restrictions, except for those exceptions where there are physical reasons or where there are other reasons where it makes sense to have restrictions, such as the Barmah Choke restriction that is currently in place. That is what the trading rules cover. I think what you are talking about might come into the category of more general oversight of corporate governance, which is probably outside where we are and maybe into ASIC or something like that.

Senator Birmingham: I would think they are trading rules that require transparency and give transparency to transactions and prices and, of course, help to uncover any instances of collusion or malpractice. The water market, like all markets, is subject to the operation of the Competition and Consumer Act and the terms there, so actual market collusion in that sense would fairly rapidly become a matter of interest for the ACCC.

Mr Parker : I can make two comments. If a superannuation fund or any investor who is not engaged in an agricultural activity owns a water entitlement which they would have purchased from the market, the yield to that for them is the water allocation that they get each year and, as we know, that goes up and down with the availability of water.

It depends on the entitlement. There is potential in many entitlements to carry over that water allocation from one year to the next in part but there are constraints on the ability to issue and carry it over. It is not as if an investor can bank the water forever in a dam. You quite quickly get to a point where you use it or lose it. The way that the superannuation fund or other investor will get a yield on it is to actually sell the water allocation back into the market and the people who will buy that and use it are the farmers. The idea that water is permanently lost to productive uses, there is a sort of fundamental—

Senator McKENZIE: I do not think anyone is arguing it is permanently lost but just held until the return is a lot better.

Mr Parker : There are limits to that because of the carryover limitations. It is very complicated and it depends on the particular entitlement in question but there are quite—

Senator McKENZIE: Are there any examples where you can carry over 80 per cent or 90 per cent?

Mr Parker : There is a range that you can carry over and you can swap between different licences and do many things, but there are constraints on the ability—

Senator McKENZIE: So the potential does exist?

Mr Parker : The potential exists but it is like a capped potential. Eventually you will get to a point where you us it or lose it; you will forfeit the water allocation. It depends on the type of allocation. If it is a high security there is less opportunity to carry over. If there is low security—I am talking about Victorian water here—there are more opportunities.

I will just make a quick comment on the constraints management issue as well because there is one element of this in the discourse which is sometimes missed and that is that it is not simply an environmental issue alone. There is also the potential for the irrigator community to benefit from constraint relaxation. I can give you a little example where it may have benefited. In the summer of 2014 it got very hot very quickly and unexpectedly. The river managers were not able to deliver down through the river within all the constraints all the water that was ordered and as a result of that water levels dropped precipitously. Had there been fewer constraints it is possible that that water may have been able to be delivered and there would have been fewer consequences which came from that.

Senator CANAVAN: Can I just ask a couple of questions?

CHAIR: Yes.

Senator CANAVAN: What is your best estimate of the costs of meeting the constraints or adjusting for the constraints, in terms of roads, bridges, purchase of easements and so on?

Dr Dickson : I will get Mr Williams to talk in more detail. Within the annual report that we provided to ministers last year we provided the range—the very rough estimates at that time—and this year is about trying to get a much better understanding of what the costs would be. Mr Williams, would you like to say more?

Mr Williams : I am not sure there is much I can add to that, except that the estimates last year were based on a number of different flows.

Senator CANAVAN: So, what were the numbers? I do not want to hold people up because I am only asking a couple of questions. What were the numbers?

Mr Williams : I cannot recall off the top of my head.

Senator CANAVAN: From the report here it is about 400 million that is the highest. Is that about right?

Mr Williams : That is the highest.

Senator CANAVAN: How much money has been put aside for it?

Mr Williams : Two hundred million dollars.

Senator CANAVAN: I see in this table that Yarrawonga to Wakool is the only one that gets to 77 gigs a day. The costs of meeting that relaxation of the constraint, the 77 gigs, is going to be potentially—and it is not a very big range—from $174 million to $280 million alone.

Dr Dickson : What flow are you talking about?

Senator CANAVAN: So, Yarrawonga to Wakool at 77 gigalitres per day. To achieve a flow rate of that amount would require an investment, according to this report and this is your cost estimates report, Constraints management strategy prefeasibility, of between $174 million to $218 million alone for just that one. Is that right?

Dr Dickson : It is first best to clear up the fact that that was one of the early flows that was estimated and 77 megs a day is no longer under consideration.

Senator CANAVAN: Gigs.

Dr Dickson : I think the flows for—

Mr Williams : The New South Wales government decided to investigate two flows this year, 50,000 and 65,000 megs a day downstream of Yarrawonga.

Senator CANAVAN: So, it is 75 and not 77. What is the cost estimate of that?

Mr Williams : We do not have that.

Senator CANAVAN: You do not have any at this stage?

Mr Williams : No. That is the work for this year.

Senator CANAVAN: So, that is still going to achieve the 80,000 megs a day at the border, the 65?

Mr Williams : It will depend on a combination of other constraint relaxation measures that you can provide through the other tributaries to what degree you can achieve that.

Senator CANAVAN: Is that 80,000 megs a day at the SA border a fixed constraint that you must meet or can you relax that based on these costs and so on?

Dr Dickson : The 80,000 was one of the probable outcomes, but there is no target in that rate.

Senator CANAVAN: So, 80,000 is not a target?

Dr Dickson : No. There are no targets on the constraints. Effectively they are to look at ways of whatever the amount of environmental water that you have of getting better outcomes from that environmental water. It is possible, based on the modelling that the authority did a couple of years ago for basin ministers, that you can, in fact, achieve those flows.

Senator CANAVAN: I just want to be very clear. If it is shown that the costs of meeting a particular flow target are ridiculously large, will you take those costs themselves on their own into account in deciding how much water to send to South Australia?

Dr Dickson : The key issue for the state governments and the Commonwealth, who are the decision makers on these projects, is on the assessment of the costs of all the projects and for each of the major regions their costs, what they are going to be able to deliver in terms of improving the effectiveness of environmental watering. That is what they are going to be basing their decision on. It is their decision to make and that decision is still some time away.

Senator CANAVAN: Thank you.

Senator URQUHART: I want to take you to page 240 of the PBS where it talks about working with basin states to facilitate the development, assessment and accreditation of water resource plans. There are other factors in there as well but I would like to talk about that. It talks about developing options also for sustainability of joint programs. Is this part of a necessity brought about by the new agreed contributions and priorities or is this an ongoing element of your work?

Dr Dickson : You are looking at the last paragraph on 240?

Senator URQUHART: Yes.

Dr Dickson : 'The authority will continue working'—

Senator URQUHART: It is to develop options for sustainable delivery of joint programs. I am sorry, I read out the wrong one.

Dr Dickson : Over the last few years we have been supporting the governments in doing a lot of reviews of the joint programs in looking for more efficient and more effective ways of delivering those programs. Over the last few years it has been year-by-year funding, which makes it very difficult to plan for the even, sustainable management of some of these assets, and governments are committed to move back to the multiyear funding arrangements.

We have been working with them and looking at options to deliver things like the Living Murray, where we did a review last year, to see whether there were ways we could deliver that program at a lower cost and just as effectively. Similarly, with some of the monitoring programs that we do for basin governments, some of the water quality monitoring that we manage for them, seeing if we can do that with fewer sites but still have information that is just as useful. They are the sorts of things that we have been working on to provide governments with more options.

Senator URQUHART: Is that because of new agreed contributions and priorities or is it just an ongoing element? It is surely not just linked to funding, is it? It is broader.

Dr Dickson : It is linked primarily to funding because all governments are finding the costs of the program very challenging, so we are doing what we can to assist governments in getting the outcomes they desire from the jointly funded programs but trying to do it at lower cost.

Senator URQUHART: Can you tell us about the environmental works and measures program. Am I correct in saying that these projects include projects that are not officially water flood plains, for example? Is that part of that process?

Dr Dickson : The Environmental Works and Measures program is the Living Murray program, so the key works there are Gunbower-Koondrook-Perricoota and—

Senator URQUHART: What was the second one?

Dr Dickson : Koondrook-Perricoota, Hattah Lakes and Chowilla. They are some of the key ones. There are some smaller measures associated as well. That program has been funded by the Commonwealth and the southern basin states since about 2004 or 2005. It has been built and its commissioning happened last year. The purpose of these programs is to be able to manage flows into these parts of the flood plains, some very important valuable areas, to be able to water them. They vary in the nature of the different types of programs.

For Gunbower the water pretty much flows through, so it is really diverting water and flowing through. These are flows they would have had before. I would not call them artificial. They are enabled by works to be able to flow over the flood plains. Some of them require keeping the water there for a while, which is different from natural, but it is being managed carefully to avoid any negative impacts.

Senator URQUHART: How are the environmental works being seen by stakeholders, including environmental groups? Do you get that kind of feedback from environmental groups?

Dr Dickson : In relation to the works projects?

Senator URQUHART: Yes.

Dr Dickson : No, we have not. We have had very good support for the outcomes from these environmental works from a range of people in the communities.

Senator URQUHART: But you do not get feedback from stakeholders?

Dr Dickson : On those particular works?

Senator URQUHART: Yes.

Dr Dickson : Not negative feedback. We have had people concerned with whether the salinity risks or black water risks are being managed and it is important, as I said earlier, that we need to do that, but we have not had any direct feedback from any environmental groups about them.

Senator URQUHART: When is the next 15-year program due to start on the Basin Salinity Management program, and how is work progressing on its development?

Dr Dickson : I will get someone to report on where we are up to at this stage.

Mr McLeod : The next 15-year program for salinity management is being styled as BSM2030, which reflects the period out to 2030. We are currently in a development phase of that program and over the course of the coming year we hope to kick that off and set up arrangements for the period through to 2030.

This is the third iteration of the salinity management. The first ones were the Salinity and Drainage Strategy 1998-2000 and the Basin Salinity Management Strategy 2001-2015. In moving into this new phase a general review of salinity arrangements was initiated about two years ago in relation to the changes that occurred associated with the basin plan coming about, which was not envisaged at the time that the BSMS was set up in 2001, and we are looking at moderating the efforts associated with implementing the salinity management to actually take account of those new things and also look at the new risk, which is both the benefits of the dilution effect of the environmental water and also any salt mobilisation that might occur as a result of those environmental watering events. All of that will be coordinated in an overall comprehensive framework.

Senator URQUHART: You mentioned that you were kicking it off. Did you say later this year?

Mr McLeod : Yes. I would have to take on notice the exact timing.

Senator URQUHART: Could you get back to me with the time frames.

Mr McLeod : Yes.

Senator URQUHART: That is all I have.

CHAIR: Thank you very much for your attendance here. That concludes the Murray-Darling Basin Authority.

Proceedings suspended from 18:37 to 19:40