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Monday, 7 November 2016
Page: 2947

Mr BROAD (Mallee) (16:05): I rise to talk about the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. This was an amendment put forward by the Greens and it is one of the few occasions in here where I have actually commended Adam Bandt for putting forward an amendment because I think this one does have value. Transparency creates good policy. We have lots of discussion around who owns our agricultural land, which is a discussion that we should have as Australians, as we have discussions around who owns our water entitlements. I think transparency does lead to good policy and ultimately this is a very good amendment and I am happy to speak on behalf of it. Water is wealth—it is earning potential. I grew up on an irrigation farm and I now represent a community that has the Murray River alongside it. Lots of water is extracted out of the Murray River and is turned into wonderful wealth, so you can see just how important water is. I am often in aircraft, and you can see what the countryside looks like where there is irrigation and what the country looks like where there is no water.

I want to reflect a little bit on the journey that has brought us to this point in water policy. When water was first extracted from the Murray-Darling Basin system close to 100 years ago there was a great vision of turning an area that was running very light stocking rates into a prosperous area. Of course, when they assigned that land they assigned a water allocation to the land. That served us pretty well for a very long time, but there was a view that if we decoupled—if we removed that water asset from that land—it would create some greater reform in the irrigation communities. Of course that was quite controversial. There are some who say that that should never have happened.

I want to reflect a little on the intention of that reform. The intention was to allow greater diversification of crops. It was to allow water to flow to the highest value productive use. We have seen across my patch some significant diversification of products that would never have been available had we not decoupled water from land. We grow 25 per cent of Australia's carrots in the electorate of Mallee. We now grow nearly $1 billion worth of almonds in my patch. These things probably would never have taken place had we not decoupled water from land.

The intention of the reform was never to take water out of production; it was to simply allow the water to move between production systems. I fear that there have been some negative consequences of that reform. I have talked about the positive consequences but negative consequences took place as the Labor Party began to implement the buybacks of the Murray-Darling Basin Plan. I was instrumental in those discussions when I was President of the Victorian Farmers Federation. Both sides of the parliament have been quite pleased to work on a cap—a maximum of 1,500 gigalitres—that will be purchased out of consumptive use.

The market has matured. It has taken a little while for people to get their head around managing water—managing a water portfolio as an asset external to the land that they also own as an asset. This has led at times to lessons. People who were purchasing water thought they had it and then lost it through carryover when the Hume Dam spilled. It has led to a little bit of uncertainty. I think that is now starting to find a bit more equilibrium as people work through what is New South Wales entitlement, what is Victorian entitlement, what is high security and what is low security. It is not simple; it is quite complex. I have grown up around water management and irrigation management all my life and I have represented farmers, but even I do not profess to know all there is to know about water management.

That led to the development of water brokers. In my opinion water brokers have a very key role to play as people develop their water portfolio, as they assist those who go through the marketplace. I might add that reform does need to take place with water brokers. I believe trust funds need to be set up like in real estate. When you are transferring water—even a temporary sale from one user to another—there are quite substantial amounts of money. There is no legislative framework that requires a water broker to hold those funds in trust. That potentially puts at risk the money in that transaction process if a water broker folds. That is a reform I think still needs to continue to move forward.

There has been the challenge between the sale of permanent entitlements and temporary sales. Of course there is the risk of speculators entering the market and playing a role in undermining the intention of the original water reform. The intention of decoupling water was so that you could take water from one consumptive use to another. The intention was never that you would develop a network of middle people who own water without having a productive use for that water and who would say: 'This is a package of water that is simply going to be speculated. I'm going to sell it in temporary sales to the highest bidder each year.'

It is my great ambition that we move towards a process where we eliminate speculators from the marketplace. Essentially water is not just a financial package; water is a physical product and, under the stewardship of the Australian people, you can take an entitlement and you can grow something with it. The principle makes sense that, if water is not used to grow grass for dairy cows this year because it is drier, it will move upstream to go to horticulture. People generally endorse the principle that you can make more money growing cotton than growing lambs this year so you move the water from one to the other. But I think we should be very uneasy with the concept of a person sitting in an office in Collins Street having a portfolio of water when they do not actually own a farm or have a use for it and are just speculating on the market. That was also not the intention of the reforms of decoupling. This legislation goes to the heart of that. It is saying that an investor who is offshore should be declared within the marketplace. If they are going to be a substantial water holder, they should have some transparency around that. That was never the great intention of decoupling of water. It was originally linked to land, but in this day and age this is the way the marketplace has moved.

I also think there needs to be some more reform around those who do hold water and do not have a consumptive use for it. One reform is that if you are going to carry water—to carryover water is to keep water in a dam and not use it in that given year—and you are not a consumptive user of it then you should take a 15 per cent surcharge on that, because you are essentially removing the opportunity for someone else to store water in that catchment and use that water for consumptive use. That 15 per cent surcharge—essentially a loss of 15 per cent—if you choose to carry that over incentivises you to make sure that the water you hold goes into the productive market. Water is not to be held for you to play the market with; water is to be made available for us as a country to grow our products so we can then export and create jobs for Australians.

Another thing needs to happen. An extraction point needs to be listed. That is a way of eliminating speculators from the market. If you hold a water entitlement, you have to nominate where the extraction point is going to be. That limits your ability to be a speculator, and it favours those who are going to use water in producing products.

I think there do need to be some changes in our carryover laws. This is more a state legislation, because each state has different regulations around carryover. At the moment, for example, Dartmouth is about 75 per cent full and Hume is full and spilling, and it does burden me that we are seeing people who quite frugally use their water and hold some water back in carryover losing that carryover because the trigger for the carryover is the Hume spilling, as opposed to Dartmouth spilling. I think there would be merit—in particular, for those who have carryover as a result of frugal water management on their own farm—in having that carryover linked to Dartmouth as opposed to Hume.

It is a little bit different if you are someone who has just purchased carryover water as a risk management strategy. I think, if you are someone who, on your own farm, has said, 'Well, I've got 100 megalitres of water. I'm going to be very frugal with my water management. I'm going to use 60 megalitres of water. I have been able to do that by putting better technology on and by managing my practices. Therefore, I have kept 40 megalitres back in the catchment,'—to then be penalised in a year like this, where Hume has spilled and they have actually lost it. It sends the wrong signal. What we want to send as the signal is that, if you manage your water very well and you can still produce the crops that you can produce, then you should be able to be rewarded for that.

I also believe that there is justifiable concern about environmental groups who want to go and buy consumptive water and hold that for an environmental flow. We, as a government, in conjunction with the opposition, have found a middle ground of a 1,500 gigalitres cap of water that can flow for the environment. That is important. Some of the people who are the most passionate about river health are the irrigators who live on the river. They live and breathe it. They want to have a long-term, safe and healthy environment for their children to be brought up in those communities.

In doing that, we have agreed on a 1,500 gigalitre cap. It concerns me that there are environmental groups who are out there buying water that is traditionally used for growing food. They are choosing to hold that back and have their own environmental flows. I think that then becomes very hard for the Murray-Darling Basin Authority to manage, because they have got other groups, such as the Nature Conservancy and other groups, who want to try their own space in water management. I think that does not lead to good management. Ultimately, good management leads to better fish stocks, better river health, better trees and better wetlands. The water of anyone who is a private water holder and who intends to use their water for the environment should be included in the 1,500 gigalitre cap. It certainly should not be water above that.

I commend the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. Transparency creates good policy. I believe that common sense is what people are looking for. People believe in healthy rivers, they believe in healthy environments and they want to use the water for its main intended use, which was to look after the health of the river and to look after the economic opportunities for their families that are growing food and for the country as a whole. They think transparency would be a very good thing, and I think this legislation goes a long way to delivering that.

It is very easy to work out the value of water. If you can have clear legislation that shows how many megalitres are held by foreign owners, you can very quickly, on the back of an envelope or with a calculator, work out what that translates to dollars, which has been one of the criticisms about foreign ownership of agricultural land, because land is not so clearly defined. Always being mindful of the intention of the decoupling of water years ago, which was about moving water to its highest value use, which was about ensuring that we keep water for production so that Australians can feed themselves, so that Australians can export the food and so Australians can have jobs. I think, with some good, sound and reasoned discussion, we can deliver confidence in water management in this country.