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Monday, 28 February 2011
Page: 1544

Mr ZAPPIA (12:05 PM) —In my brief speech in the second reading debate for the Water Efficiency Labelling and Standards Amendment Bill 2010 I want to touch on a couple of matters. Firstly, I commend the member for Wills for his comments that he has just made to the House. He gave some excellent examples of how communities are becoming far more water efficient—a matter that I will touch on briefly. One of the positive fallouts of the prolonged drought was that we saw communities around the country, whether individual householders, industries, irrigators or broader communities generally, not only become much more water wise but truly acknowledge the value of water.

Water became a tradeable commodity. We saw it become a marketable product and we also saw the consumption of water around the country fall quite markedly not only in households. I commend the work that households around the country have done to achieve that decline in consumption not only because water restrictions were imposed but because people quite genuinely understood the importance of conserving water and the value that it should have always had. Along with that change came the use of products that saved water.

This bill specifically deals with providing consumers with clear information about the water efficiency rating of a product. It also ensures that that same product with the water efficiency rating is linked to the WaterMark certification. This is important because, prior to this, we could have had a product that was rated for its water efficiency but in fact was not allowed to be installed within homes, businesses or wherever because it had not been WaterMark certified.

One of the areas where we have seen the most efficiencies in water use in recent years has been across the irrigation sector. That is, of course, where most of the water is consumed. But I have to say as a member of the House of Representatives Standing Committee on Regional Australia that as I toured the many communities throughout the Murray-Darling Basin I was indeed impressed with the level of investment, the local knowledge and the efforts being made by irrigators across the country to use less water, whether it was through their investments in efficient irrigation systems or through the different varieties of crops they used or simply the way they managed their farms. It was wonderful to see, and I commend them for that. In fact, I suggest that many of them probably survived the drought because of their innovation.

We know that a lot more needs to be done if we are going to ensure we get the best use of our water, certainly across our irrigation sectors. In that respect I applaud the government’s commitment of $5.8 billion for investment in water efficiency measures. Water efficiency investment can and should also be linked to strategic water buybacks. I want to comment briefly on this matter because it was raised in the course of this debate by the member for Murray, who is also a member of the regional Australia committee. She was somewhat critical of the government because it had not adopted some of the interim recommendations the committee had put to the Minister for Sustainability, Environment, Water, Population and Communities. I will touch on those three interim recommendations, which were brought to the attention of this House only this morning by the member for New England, the chairman of that committee, when he was reporting on the work of the committee.

The three matters we brought to the minister’s attention were: firstly, the water buyback itself; secondly, the management of overbank flows; and, thirdly, the tax treatment of government investment in efficiency schemes. The minister has acknowledged each of these as legitimate concerns and has in fact taken them on board. In a speech to the Murray Darling Association in Dubbo on 18 February this year he outlined what the government response to each of those matters was. I want to start with the question of water buybacks.

The regional Australia committee supports the strategic buyback of water. It is an important component of restoring the balance within the Murray-Darling Basin system. To date, the federal government has bought back 863 gigalitres of water. The issue that has been raised is one that has been referred to as the Swiss cheese effect of buying water indiscriminately. What this effectively means is that if you buy water in an ad hoc way throughout the basin you create an inefficiency within the distribution system for those growers who are left. There are a number of matters that need to be taken into account when you start talking about the Swiss cheese effect. Firstly, the government is not the only buyer in an open market where water has become a tradeable commodity. The market continues with or without government intervention, and the choice as to where water is bought from is not under the control of the market in that open system. In fact, I suspect that the Swiss cheese effect has been caused as much by private buyers as it has been by the government. Also, the water purchased by the government has been predominantly water that has been surplus to the licence requirements of the individual landholders—surplus because those landholders have probably invested in irrigation efficiencies themselves and as a result have surplus water to sell or because they have changed their farming practices and, again, have surplus water to sell. In fact, two-thirds of the water bought by the government has been from sellers who have sold what you would refer to as their surplus water.

The government recognises the importance of the buyback program and that it needs to be strategic, it needs to be targeted and it should not distort the market. In response to all of that, the government has announced with regard to funding in the future—and this is the matter that the member for Murray was critical of—that the government will buy water on the basis, firstly, of rolling tenders. That means that the tender process continues and you do not get hikes in the price of water because the government comes in at one time and then disappears from the market for a long period of time. As I said, it will be on the basis of a rolling tender. Secondly, the government will buy back water in smaller quantities at a time. It is interesting to note after the announcement made by the minister, who I see is in the House today, that for the next round the allocation is $40 million. Contrast that with the $200 million used in the previous round, before the new policy came in. It is a clear distinction in the process under which the government will buy back water. It will mean that there will be a much more level market and that a lesser amount of money will be put into the market by the government at any one time. It will also mean that anyone who, for one reason or another, has missed out on being able to sell their water to the government because they missed out in a particular tender will have a continuing opportunity to put their water on the market. The rolling tender process will ensure there is much more evenness and fairness in the market for everybody concerned.

The buyback process will be led by the irrigation authorities. It is important that that is the case because the irrigation authorities best understand how to manage the water in their area. They best understand where the inefficiencies are and what needs to be done to correct those inefficiencies, so the process must be led by them. It will also ensure that there will not be exploitation of the government and inefficiencies will not be created as a result of the government coming in wanting to buy water and in effect being put in a situation where it needs to pay much more than it should for that water. The local authorities clearly understand the best schemes that need to be supported. I would expect that, on the basis of their recommendations, the minister and the department will take advice as to where the water buybacks take place.

That, in my view, shows that the minister and the government are taking on board the views of the regional Australia committee and, I suspect, others that have been having discussions directly with the minister on this matter. So clearly it is the case that the water buyback program must be a program that is targeted, and that is exactly what the government is doing.

I will just say very briefly in respect of the other two matters that were put to the minister by the committee—the taxation treatment and the overbank flows—that I was pleased that the minister also announced that the anomaly in respect of taxation deductions will be fixed up by this government. My understanding is that any legislation that will need to go through the parliament will be backdated to April 2010 to ensure that those farmers who were supported by way of government grants or similar investments made by the Commonwealth will not be disadvantaged in their tax treatment. In the past—or up to date—what was happening was that, if they got any form of grant and there were a tax liability associated with that, that would have to be paid for in the first year of the grant, whereas their tax deductions would not apply until after the first year. That meant that they were effectively disadvantaged. That anomaly, I understand, is to be rectified, and again I commend the minister for that.

The last matter that I will very briefly touch on is the question of overbank flows, which was also raised with the committee on several occasions by different authorities and by members of the communities as we took evidence around the country. The minister has announced that in April of this year there will be a forum of the basin states’ ministers to discuss this very matter. We understand that there are some engineering solutions which could be adopted to ensure that we much more efficiently manage our environmental waters. Again, it is up to each individual state, each individual locality and the particular catchment management authorities to come up with the solutions that need to be adopted in order to do that, and it is good to see that that will happen in April this year.

As I said from the outset, this bill is all about water efficiencies. Water efficiencies can take many forms in many areas of community life, but certainly, in respect of the work being done across the Murray-Darling Basin, I believe that we are on the right track. What this bill does to individual householders is that it empowers them with the knowledge of which products they ought to buy if they want to save water. I commend the bill to the House.