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Standing Committee on Regional Australia
Certain matters relating to the proposed Murray-Darling Basin Plan

BANKS, Mr Simon, Assistant Secretary, Environmental Water Delivery, Commonwealth Environmental Water Office, Department of Sustainability, Environment, Water, Population and Communities

CAMERON, Mr James David, Chief Executive Officer, National Water Commission

COSTELLO, Mr Steve, Assistant Secretary, Policy and Portfolio Management, Commonwealth Environmental Water Office, Department of Sustainability, Environment, Water, Population and Communities

DICKSON, Dr Rhondda, Chief Executive, Murray-Darling Basin Authority

HARWOOD, Ms Mary, First Assistant Secretary, Water Efficiency Division, Water Group, Department of Sustainability, Environment, Water, Population and Communities

McLEOD, Mr Tony, General Manager, Water Resources Planning, Murray-Darling Basin Authority

PARKER, Mr David, Deputy Secretary for Water, Department of Sustainability, Environment, Water, Population and Communities; and the Commonwealth Environmental Water Holder

SLATYER, Mr Tony, First Assistant Secretary, Water Reform Division, Department of Sustainability, Environment, Water, Population and Communities

SWIREPIK, Ms Jody, Executive Director, Environmental Management, Murray-Darling Basin Authority

Committee met at 0 9 :40

CHAIR ( Mr Windsor ): We thank everybody for their attendance here today. Obviously, you are well aware of the Murray-Darling Basin Plan process. This committee had a fairly exhausting look at the issue when the guide was formally put out. The committee members essentially came up with a consensus on a range of views. We have received a reference from the minister to have a short, sharp inquiry into where things up to the moment, and more importantly some of the issues in the terms of reference that relate to environmental works and measures. We do not intend to revisit the whole issue. I remind committee members this is not about the last report, it is about the future and the positive things that we can actually draw out the witnesses that we will be seeing today, on Friday and next Wednesday. We will then be making a very short, sharp report back to the minister.

It is our view that we may well be able to assist the process if in fact there is any new information out there, particularly in relation to the works and measures, but also the groundwater issue that is a new issue since this committee did its work on the guide. We welcome all of you—you are all familiar faces. We are pleased to have you with us.

Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. These proceedings are being broadcast and televised on the internet. Would somebody like to make introductory comments?

Mr Parker : As I am sure we are all aware, the preparation of the Murray-Darling Basin Plan is reaching its concluding stages under the mechanisms that are set out in the Water Act 2007. Once these are complete, Minister Burke has indicated that he intends to present the Basin Plan to parliament this year. Along the way, there has been a comprehensive consultation process and the MDBA has recently released a revised proposed Basin Plan taking into account the information it has received from that consultation process. Basin water minsters are currently discussing the revised draft plan with a view to preparing a collective response back to the authority by 9 July. Once ministers have provided their comment, the authority will prepare a final plan for Minister Burke's consideration.

There are two particular matters on which the authority has sought the views of ministers. One relates to the manner in which water is recovered to meet the shared or downstream component of environmental water. The second issue is relevant to the second issue in the terms of reference for this committee, namely the potential role for new environmental works and measures projects to partly offset SDL reductions. In particular, the authority has asked if ministers would prefer the plan to include a mechanism which adjusts the SDL to account for such projects and other initiatives that affect the amount of water that is to be redirected to the environment.

The alternative, as originally envisaged, was to remake the plan, following a review of such matters in 2015. That question is presently being discussed amongst basin jurisdictions, including how such an adjustment mechanism would operate to evaluate possible SDL effects, and the consequences of any such adjustments for the water buyback project, as such initiatives are evaluated. Our submission to your committee includes updated information as it relates to the terms of reference, namely progress in water recovery under the buyback and infrastructure programs, and also an update on progress with identified environmental works and measures projects. I am pleased to note the substantial progress which has occurred in the rollout of the infrastructure program. The submission also notes some developments in the groundwater area. With that statement, we are at your disposal to answer questions.

CHAIR: If nobody else wants to add some comments, we will go straight to questions. Can you just flesh out the adjustment mechanism that you are talking about, just so the committee is totally in touch with that particular issue in relation to the SDLs?

Mr Parker : Yes. The possibility of this mechanism was flagged in the letter of transmittal from Craig Knowles to the water ministers. The question is essentially posed as follows. We know that there is some water out there in the form of environmental works and measures, review of rules and so forth and more efficient operation of the river. Given that we know that water is out there, we do not know how much is out there, but we know that it is out there, and given that means that less water would need to be recovered, including under the buyback program, essentially the question is: do ministers want a mechanism in the Basin Plan that would operate to adjust that SDL along the way, as those measures are evaluated—that is, in the sense that that plan resets automatically according to an agreed methodology between jurisdictions? Alternatively, do we make the plan at this point which sets an SDL reduction, and the proposed reduction is 2,750, that is recovered progressively along the way, but part way along the process—and the suggestion was in 2015—the authority would go back and reconsider the SDL setting to take account of increased knowledge, environmental works and measures as they have been built and proposed to be built? Essentially, it is the question: do we set this up as an automatic arrangement or do we remake the plan and take it back to parliament after 2015?

CHAIR: Just by way of example for people who may be listening, is it as simple as this: if a certain environmental work and measure can be put in place that has the net effect of providing 100 gigalitres of water to an environmental icon site, for instance, that can provide the same environmental benefit that would have, had the water been accessed from another area, required 200 gigalitres of water, that number—and you can call it 2,750 for the sake of the argument—self-adjusts to 2,650 because of the more efficient use of environmental water?

Mr Parker : Conceptually that is elegant in its simplicity. The challenge is going to be working out a mechanism which does that. These projects would need to be funded. Measuring that difference between the 200 and the 100 is not a trivial exercise, because one of the key objectives of the basin planning process is to run the river and environmental assets not just singly but as a whole—an interconnected system, including the downstream arrangements. Some of these environmental works and measures can be seen as saving water in a particular place, but it nevertheless means that there is less downstream water flowing down. So it is a non-trivial exercise. Substantial work is being done on the methodology to work that out right now, and the authority, if you like, could give you a further description of that process.

CHAIR: The information we seem to be getting through submissions—and I take on board that it is not a simple process, although it sounds simple— is that the community would like to see that sort of process if in fact it can be put in place. Rhondda, would you like to make a comment?

Dr Dickson : Yes. One of the issues—and the reason why we put this forward for governments to consider—that came up through the consultation period was that, while everyone wanted the opportunity to explore a whole range of more efficient ways of managing the river and supported a review to do that, a lot of people in the community were concerned that this was going to reopen the whole thing. They were concerned about that level of uncertainty hanging over the fact that it may come back. That was why we put a lot more effort into thinking through how we could in fact put such an adjustment mechanism forward. It is not the first time we had thought about it—earlier on it was our intent to look at something that would adjust through adaptive management processes—but the requirement in the act to do an amendment is very clear that there are only very minor matters of fact that you could change without going back and seeking parliament's approval to a changed plan.

So the process that we proposed, and that governments are looking at, is where you use the method and the determinations that the authority made in getting to the position it has put forward—so all the trade-offs we have already made between, environment and economic and social, weighing up that balance. That sort of determination needs to stay the same. Any change to that is effectively an act of discretion or re-looking at the trade-offs. So to make this work we need to maintain that as the balance that has been sought. That is why the process we are looking at is to maintain the same environmental outcomes, or better, and maintain the same level of socioeconomic impact, or less, through the process. They are the principles that are essential to make it work. David said it is not trivial; that is absolutely right. It actually is quite a complex modelling task to look at individual proposals or groups of projects and assess those against the outcomes that were determined as being the outcomes we were seeking under the Basin Plan. It can take many months to go through just testing one individual project, and we are probably going to be looking at pulling a lot of projects together to see what a combined effect would be, rather than one by one. All of these things are the sorts of issues that we are looking at.

CHAIR: To finish on that point—Mr Gibbons would like to ask a question—and trying to simplify the issue, it is possible that if you did go to that methodology where you could more efficiently water an environmental icon site, then there would be no reduction of the SDL because of the run of the river, even though on paper it shows that you can do it more effectively and efficiently—

Dr Dickson : That is right.

CHAIR: over the total system.

Dr Dickson : We have been trying to optimise the achievement of objectives by using water several times over as it goes down the river, so trying to achieve as many objectives as you can with a given quantity of environmental water. Every time you look at one project you need to look at the relevant series of reaches that are involved.

CHAIR: The reverse is the case in some circumstances if you have much more effective river management and environmental flows that you can create a bigger impact than the paper figure.

Dr Dickson : There is a lot you could do to improve the environmental outcomes within a given volume of water, simply by the way that it is used and released, or how you might optimise different contributions from different tributaries. There is a whole range of things that could be done. Some of those may not make a difference to whether you need more or less water but certainly achieve better outcomes within a given volume. It is quite a complex conceptual thing to compare that with, say, what do you achieve with a lesser amount of water and the same changes to rules?

Mr GIBBONS: We have received some submissions from people who question why The Living Murray savings appeared to be not included in the SDLs. Is this the case and, if so, why is that so?

Dr Dickson : The Living Murray water is included. The operation of The Living Murray works was in the model but there was not a trade-off done at the time we did the modelling. I will ask Jody to come up. Jody Swirepik was in charge of the modelling. The work that was done was to include the operation as part of the function of the model but the specific trade-offs of whether you would use The Living Murray work instead of doing overbank flows for a broader reach was not undertaken at the time we did the modelling. But it is the sort of work that we have been undertaking now to assess whether those trade-offs would have made a significant difference. Jody can update where we are on that analysis.

Ms Swirepik : As Rhondda said, the works are there operating in the baseline for the Basin Plan modelling—the TLM works. Effectively, that assumes those are all operating and we are getting the benefits from those. That is reported in our hydrological modelling report. At the time we set up the modelling, there was a fairly rapid assessment of the areas inundated by the works versus the broader flood plain that we thought we could manage and get environmental benefits for. Because the works were only a portion of that flood plain, it was decided that we still needed to get flows for other parts of the flood plain, so there was a brief assessment on the way through about the relevance of those works in creating an offset. There is further work to do to determine if there is still an offset. One of the things, for instance, is that there are several objectives in the Basin Plan about waterbird breeding in the River Murray. It might be the works can deliver the majority of that and you can get an offset against that particular environmental objective. So there is further work to do. What we are doing is working with states to identify things like areas inundated and the objectives that we can achieve through the works versus the objectives that could be achieved with the broader watering. That would then have to be assessed under the SDL adjustment mechanism that Rhondda has been outlining.

Mr GIBBONS: Could you guesstimate what impact that will have?

Ms Swirepik : I would not want to do that in terms of a GL offset at this point in time.

Mr GIBBONS: But you must have some idea whether it is substantial, significant?

Ms Swirepik : It depends on the value judgments made and the methodology that has been discussed among the jurisdictions at the moment, because it would depend on how many objectives you could achieve and offset against. You may still have to deliver water, as Rhondda indicated. For example, the Lindsay work that is often talked about is a couple of thousand hectares of flood plain. There are actually 100,000 hectares of flood plain downstream of the Darling junction. So being able to get a couple of thousand hectares is great, and if you can deliver water to that and get very good local environmental outcomes, are you prepared to trade that off against the areas that you then may not be able to water? Those are the sorts of things that governments are having to consider at the moment in identifying a possible SDL adjustment mechanism.

What we have in the modelling already is that you would not make that trade-off of 2,000 or 15,000 hectares that you might be able to get in that reach against potentially 80,000 or 100,000 hectares. But on individual objectives like waterbird breeding, as I said, we have a duration of flows which is quite an extended duration to allow waterbird breeding. If you can satisfy yourself that you can get the majority of waterbird breeding in the Murray in the area inundated by the works, which are the highest value areas, then you could reduce the duration of flows under the Basin Plan and that might create the offset. There are a lot of assessments and judgments to be made as you walk through this methodology, so I would not be prepared to put a figure on it.

Mr GIBBONS: There have been other concerns raised that the authority has not adequately utilised the scientific information available from state authorities. I know during the first round that my local water authority put significant work into preparing a submission and a paper on it, Bendigo being the largest single regional population centre in the basin. I might add that most people in Bendigo would not know they are actually in the Murray-Darling Basin because they are 100 kilometres from the Murray River. But nevertheless we are in the Basin and we are the largest regional population centre. They put considerable work and effort into it and it never got acknowledged, utilised or even looked at. There is considerable expertise within the state bureaucracies and people suggest that it has not been utilised by the Murray-Darling Basin Authority.

Dr Dickson : I presume you are talking about the submissions that were made to the guide. Are those the submissions you are talking about?


Dr Dickson : Since I have been in the authority—and perhaps Jody could add a bit more—we have extensively used all the information that has come from state bureaucracies. There has been a long, detailed, technical consultation with all the states over the last year, both in the form of the plan itself, the technical information that supports the environmental watering objectives that were sought and the modelling approach. So that has been incorporated both technically and also on the policy of the plan itself. I think you are talking about the Bendigo shire council, were you?

Mr GIBBONS: No, it was Coliban Water.

Dr Dickson : Right. I do not know specifically about—

Mr GIBBONS: It is the water authority that provides water for that region. They put significant work and effort into it and it was never utilised. The other problem is that again it has been alleged that the authority still does not take into account the local knowledge of the local users, if you like, whether they be the environmental people, who favour the environmental side of the equation, or the irrigators. There does not seem to be any evidence that the authority has heeded that local advice. We found that when we did the tour people provided us with considerable information. They said they tried to provide that to the authority but they were not interested in it.

Dr Dickson : We are very interested in the local information. The key question is how it can be used and the process for it to be used. We have the challenge of having a broad basin-wide perspective and coming up with broad-scale change. With an interconnected system that is what you need to do. What we have done is really set up an arrangement where you do have an adaptive management process. At the local level, when water is managed for environmental watering at the local level that there are the opportunities created for local engagement at that point. That is where you get the real outcomes from local knowledge. Our approach to it has been both to have the period of time to enable a proper adaptive managements process to run and to create opportunities in every part of the provisions of the plan that we can for local involvement.

Mr GIBBONS: Chair, I might invite people from the Commonwealth Environmental Water Office to respond on the local knowledge issues.

Mr Costello : Yes, that is a very important input into planning for environmental water and working out how to deliver to particular sites and locations there, and that is happening now. There are existing arrangements within states. They vary a little bit across the basin and they are stronger in some areas than others. For example, in a number of the New South Wales catchments, there are environmental water advisory groups that are made up of local people and the local authorities and agencies involved in water management. My colleague Mr Banks is out there this time of year with proposed use options for the next coming water year and talking to the local groups about those and getting feedback. So that is an important part of our planning and work that we do now. The minster has written to his state colleagues saying, 'We need to review this and possibly strengthen it in some areas,' as we go forward into the basin planning process where it is a mandatory requirement in the environmental water plan that there would be local input into the planning process.

CHAIR: Could we bring the department in here to provide a snapshot of where we are up to in relation to terms of reference 1, progress to date in water recovery towards to the 2019 objective in the guide and the draft. Thank you for your submission too. I think it is a very good one. Particularly for those who might be listening, can we get a snapshot of just where we are up to at the moment in terms of any objective.

Ms Harwood : Of the 2,750 in the proposed plan, there is 1,401 gigalitres essentially under contract, and that is through water purchase and also through infrastructure works contracts where the water delivery from the project has been agreed. Of the 1,401, 217 gigalitres is from infrastructure recoveries. The projected recoveries for the whole of the sustainable rural water use and infrastructure program is 600. That figure I gave you was for end of May, just so we could give you a consolidated picture. But since then the agreements for the four New South Wales priority projects have been made. So that has brought into contract around another 79 to 80 gigalitres. We are about halfway through bringing all the infrastructural water under contract and overall, including the New South Wales projects, over 60 per cent of the 2,750 is either already secured in the holdings or in contract and come into the holdings.

CHAIR: Given that there is still some legal room in terms of those contracts, what is the number? If people are indicating that the 2, 750 is a target, where are we at now?

Ms Harwood : If you add in the New South Wales projects, we are around 1,480 gigalitres under contract—meaning that we have a legal contract for the acquisition of that water either through water purchase or through a infrastructure project where the money only flows to the project as the water share to the Commonwealth comes off.

CHAIR: My mathematics says that if 2,750 is the number we have got 1,270 to go.

Ms Harwood : Yes, that is about right.

CHAIR: Have you got any other comments you would like to make? One of our important terms of reference is: just where are we up to as of today?

Ms Harwood : We really are in a different situation compared to even 12 months ago with the number of infrastructure projects rolling out. For instance, with the On-Farm Irrigation Efficiency Program, contracts are coming in for round 2. We have only one contract still to go on that. Those are with the delivery partners, to roll out literally hundreds of individual on-farm subprojects. The Private Irrigation Infrastructure Operators Program is now fully committed and those second round projects are now coming in under contract. The sheer amount of works under infrastructure contracts in each of the basis states has changed markedly in the last 12 months. Over the next few years the relative investment in infrastructure to water purchase is very much in favour of infrastructure.

Mr McCORMACK: I would like to talk about funding—from both sides of politics. The New South Wales government recently announced that its funding to the MDBA will be halved. How will that impact on your forward work program? In the recent federal budget there was $941 million taken from the table for works and measures. David, you mentioned the savings that could be made to sustainable diversion limits through works and measures. Now there has been nearly a billion dollars taken off the table—actually delayed until 2015—in the 8 May federal budget. As well, the 2012-13 budget reduced funding to the Commonwealth Environmental Water Office by $13.2 million over seven years. How will that impact upon the work that that organisation does?

Mr Parker : There are three elements to that. I will get the authority to pick up the issue of New South Wales funding.

Dr Dickson : For New South Wales, there is a 60 per cent reduction in their contribution to the joint programs for next financial year and then there is a 73 per cent reduction for the following years. Reductions of that magnitude will have a significant effect on the joint programs, which are the management of river operations, maintenance of dams and the river system, the delivery of irrigation shares, all the natural resource management programs, the management of The Living Murray water and the management of the fish strategy. We hope it will not have much effect on the finalisation of the environmental works and measures, but all of these are the programs that are affected by the New South Wales cut. It is a very significant cut.

Mr McCORMACK: In dollar terms, what was the cut for the financial year coming up?

Dr Dickson : For 2012-13, according to the figures here, the draft plan corporate that was being discussed by jurisdictions, and they had been agreed to subject to the New South Wales budget, was that New South Wales had $32.2 million. The effect of the cut for 2012-13 reduces that to $12.4 million. In the out years, their reduction from $32 million would be down to $8.9 million, so it is very significant. As you know, all jurisdictions contribute to a formula to those joint programs. We are yet to have the discussion with the jurisdictions on how this is going to affect their contributions. It is probably an issue for the ministerial council at the end of next week.

Ms Harwood : I think the $941 million is a misreading of the budget papers, in that there was some much smaller movement of funds, keeping the total project funding the same but moving some funds in the early years of the forward estimates, to reflect the fact that wet weather has delayed a lot of projects. The funding that we have available under the Sustainable Rural Water Use and Infrastructure Program, SRWUIP, is sufficient to do the projects we have that are coming in under contract and so on. I think what happened is that this year's budget was the first year that the forward year 2015-16 came into view in the budget papers. There is over $900 million there, but essentially that has always been there. So it is not that it was deferred; it is just that the funding for that year under the infrastructure program has now come into view in the budget papers. That is the only way I can work out how to explain the comment that somehow $941 million has been delayed. I cannot think of another explanation. People think, 'Oh, that has suddenly appeared,' but it is actually just the profile that was there for appropriation in that year.

Mr McCORMACK: What about the $13.2 million for the Commonwealth Environmental Water Office?

Ms Harwood : That is a reflection of the fact that there is a slightly slower build in the portfolio, with the pace of water purchase having slowed down—for instance, with the undertaking not to do general tenders until 2013. That source of funding for the Commonwealth Environmental Water Holder is about the cost of running the entitlement base, paying the licence fees et cetera, so it is just a revised projected cost for managing the holdings—for the costs that come from that account against the holdings. That is where the saving comes from.

Mr GIBBONS: Can you identify some of the projects that have had to be put on hold because the whole region is under water.

Ms Harwood : In terms of delays, there are a lot of examples of contract milestones having moved. There are some in the Murrumbidgee, there are some in the Macquarie, and I think the Trangie project has had some contractual delays. There have been small delays in quite a large number of projects, but if that moves the milestone into another financial year then the funding moves. So we basically do a complete tally against the literally hundreds of infrastructure contracts in train and see where the delays are. Sometimes it is approval delays, with the need to get all the environmental and statutory approvals before they can proceed.

Mr GIBBONS: The fact that a lot of the areas concerned are under water has also been a big problem. I understand that has been a problem in the Menindee system; is that right?

Ms Harwood : In Menindee, we are still at the stage of exploring joint options with New South Wales, but physical works at Menindee would have to wait quite some time because the system is completely under water.

Mr TEHAN: Is there any room for doing other preparatory work, or any other work, in cases when you cannot do it because of the amount of water in the basin? Is there a forward schedule that you could move towards to do future planning, rather than having to shuffle the money from the next financial year to following financial years to help with budget surpluses?

Ms Harwood : The actual expenditure on projects has to be against contracted milestones on the delivery of performance. So, in the near years, we are managing that process. We are negotiating a large number of contracts at present, but we have the forward profile to handle where those milestones will fall. For instance, there are some New South Wales projects that have just come under contract in the schedule, and we have been negotiating those for some time and the money is there in the profile to pay for those projects. It is the same for the Private Irrigation Infrastructure Operators Program projects. We have just opened round 3 of the On-Farm Irrigation Efficiency Program, and again we do a projection, for our purposes—that is, when those delivery partner contracts are done, when we have been through all the assessment processes, we ask where that expenditure is likely to land. So we have the oxygen, essentially, there in the budget to cover the known projects as they are coming in, and there are negotiations on many contracts.

Mr TEHAN: Has pushing the spending into the later years of the forward estimates had an impact?

Ms Harwood : Not on the contractual delivery, no.

CHAIR: I have a query to the department. The Lower Lakes Integrated Pipeline Project, and early works for the Lower Lakes and Coorong Recovery Project: does anybody know what that is?

Ms Harwood : Yes. They are two different projects. The Lower Lakes Integrated Pipeline Project was one of the first state priority projects to get underway. Essentially, it was done very speedily to relieve pressures on the communities around the Lower Lakes in South Australia about the quality of their water supply. It is a substantial irrigation and water pipeline supply to the—

CHAIR: Is that the Meningie—

Ms Harwood : No. It is right at the end of the system and it is for the vineyards and agriculture around Lake Alexandrina. Most of the money went on a pipeline supply to bring water from higher up the Murray to those communities because the lake was too salty for agricultural use. The other part was to provide a potable water supply to the communities around Lake Albert who were similarly challenged. Those pipelines are completed and flowing. Mr Slatyer can tell you about the early works for the environmental projects.

Mr Slatyer : There is a major project in train at the Lower Lakes to improve the environmental condition of the lake system and to improve its resilience so that when we face future serious drought conditions the lakes are more able to cope with that. The project is one part of the South Australian priority project initiatives. It has had two major parts. The first part is characterised as early works, which were implemented during the drought and were designed to protect the lake system from the emerging ecological catastrophe that was unfolding at that time. It included the construction of structures to separate the system in various ways to protect parts of it from desertification and hypersalinity risks. It also included revegetation or vegetation of the lake bed so that as the lake bed was being exposed—it is hard to remember it all now but it was only a few years ago that there were vast areas of this lake system, which is a Ramsar-listed system, which were exposed as the lake levels receded, creating a whole lot of issues with acidified dust in the air and an ecological collapse of that part of the system.

The project funded, through its early works, aerial seeding of various things to try to stabilise the soil and the lake and to increase the carbon content of the lake bed. This work included the application of a lot of lime and other methods to try to neutralise what was, at the time, a very serious ecological problem. It was also a problem for the surrounding communities. The other parts of the project which continue and are in train now include longer term measures, not emergency response measures, such as replanting the whole literal margin of the lake so that the lake shoreline is more able to cope with rising water levels. Many community based activities down there are funded from this program, replanting that whole area. There is funding to improve the Ngarrindjeri Indigenous community involvement in the management of the lake system. There is funding to remove some of the structures that were put in to deal with the emergency a few years ago.

CHAIR: Does that include the Narrung Bund?

Mr Slatyer : Yes.

CHAIR: And the (inaudible)still has not been done?

Mr Slatyer : No, that has been done. I cannot tell you precisely how complete it is, but my understanding is that part of the bund that was put in has now been physically removed. There might still be a little bit of light work around that.

CHAIR: Are you aware of what that physical removal has done to the salinity levels at Meningie?

Mr Slatyer : Salinity in Lake Albert is very slowly declining. It will always lag the decline in Lake Alexandrina's salinity, because Lake Albert only gets flushed through water passing back and forth through the Narrung Narrows. So it will always take longer for salinity to stabilise and fall in Lake Albert than in the rest of the lakes system. I cannot tell you what the salinity is as of today, but the authority may be able to provide the committee with that data if you are interested. So that is, in summary, what the Lower Lakes environmental project is trying to accomplish.

CHAIR: One of the solutions that has been proposed—in fact, Patrick Secker proposed it—and that we have had witnesses give evidence about is that some engineering works take place, is that Lake Albert that could relieve some of the saline issues of Lake Albert. Some people take that seriously; some do not. But they are the sorts of things that we are getting as to how you alleviate an issue.

Mr Slatyer : There are many possible approaches to this concern about high salinity levels in Lake Albert. They include physically connecting Lake Albert to the Coorong system, which has potential consequence for both water bodies and for the land that would need to be interfered with, basically, to create a channel or a pipeline between those two bodies. There are options around further improving the functionality of the Narrung Narrows as a passage of water, including the fact that there still exists there a causeway that carries a roadway and provides all sorts of important access for the local community. But that causeway itself is obstructing natural flow between Lake Alexandrina and Lake Albert. There are also measures that are being put in place, such as the artificial wetland project at Meningie, to try to improve local amenity, even though the lake itself has still got high salinity. So there are several possible approaches to managing the high salinity in Lake Albert.

The way nature deals with it is through the passage of water, mainly through wind-blown effects and the natural rise and fall of Lake Alexandrina causing water to flush back and forth between Lake Albert and Lake Alexandrina. And the combination of the bund that has now been removed, the causeway that is still there, the fact that Lake Alexandrina is now being held at a much more constant level than it naturally would have been, are all conspiring, if you like, to cause the salinity problem at Lake Albert to be worse than it would naturally be.

CHAIR: And yet given those options that you have talked about, has there been any modelling done on what that would mean in terms of the total number?

Mr Slatyer : You mean the number for the Basin Plan?

CHAIR: Yes, if we are talking 2,750.

Mr Slatyer : We would have to ask the authority to answer that, but you are talking here about a lake which is not part of the normal Murray channel water system; it is off to one side. But the authority could answer your question.

Dr Dickson : In terms of Lake Albert, we have not a salinity target for Lake Albert, so we have not modelled to that objective. It would not make any difference really in terms of the overall number whether you change it, but in terms of what you need to do for Lake Albert, there are the range of engineering solutions that Tony was talking about.

CHAIR: Being simplistic again, I guess, part of the demand for water for Lake Alexandrina is to have an impact on the salinity levels in Albert, then you have these unnatural constraints that are impacting on the people within that system. If you remove some of the constraints or pipeline through to the Coorong or the ocean, does it do anything to the total figure that is required to get into Alexandrina?

Dr Dickson : That will not affect the modelling that we have done because we have not had a target for Lake Albert. We have not modelled water supply to Lake Albert to achieve a particular salinity target, so it would not make any difference. We did have salinity targets for the Coorong, so there are opportunities potentially from some of the engineering solutions. For example, the south-east drainage would bring fresh water into the southern end of the Coorong. That may affect how much water you need because we did have a target in the Coorong, but that is not something we have been able to do just yet. Again, it is one of those complex modellings where, because we have optimised the water all the way down, there are not very many years where you actually have to call additional water for the Coorong. That is one of the things you could potentially look at.

Mr McCORMACK: There is a community rally in Griffith next Wednesday, 27 June at 11.30 in Memorial Park in Banna Avenue. Griffith is the food bowl capital of Australia. I want to extend an invitation to each and every one of you to attend if you can. If you cannot, I want to know what might be a message that you might tell those people who are worried about their futures, and understandably so. Is there a message that you would give them if you were to attend that rally?

Mr Parker : I would pass that invitation to the minister.

CHAIR: I think that is a good answer; after all, that is his job. Any other questions?

Mr McCORMACK: No, that is it.

Dr STONE: Not official till after question time, but I am allowed to ask a question now in terms of the committee membership.

CHAIR: We actually moved a motion that you are part of the arrangement.

Dr STONE: Okay, good. We have appendix D, which was the Environmental Works Feasibility Program—you have just been talking about it. There are lots of dates of outcomes hopefully on target, on schedule, despite the floods and so on. In terms of looking at the number of megalitres or gigalitres that might be saved as a consequence of each of these activities—some of them are very famous, like Lindsay Island and so on—my concern, and it is a concern right across the basin, is that we invest a lot of public moneys in doing first of all the feasibility study, then the actual works. Is that then going to make a net difference to the environmental waterholder's need, or the sum that is sitting there that the public sees—the 2,750 gigalitres at the minute? There is a lot of controversy about, 'We can't in fact deduct the new savings from that sum because the legislation does not let us'—I have heard that one. Can you explain that for us? Is this going to end up with the investment leading to the savings, which in turn says, 'Fantastic, we've now got less water that needs to be found, say, from irrigation buybacks'?

Mr Parker : We had a discussion of this matter at the beginning of the hearing. I would be happy to rehearse that with you.

CHAIR: We have been there a bit, but David could give us a bit of a summary and you might come from a different angle.

Mr Parker : One of the issues which has been considered in respect of the finalisation of the Basin Plan is the potential to include in the final Basin Plan an adjustment mechanism to pick up the effects of this. Such an adjustment mechanism would be an alternative to the originally proposed 2015 review which would then have led to a remaking of the plan, possibly with a changed SDL reduction. So the issue of environmental works and measures with changes to rules, constraints and so forth is being intensively worked on at the moment between the jurisdictions in the discussions about the next version of the Basin Plan feeding into the ministerial process, which will kick off in a couple of weeks. From an official's point of view, one of the challenges in this area is working out the precise modelling, methodology and details so that these projects turn into a number which can be quantified in a robust and certain way. That methodology is being worked on as we speak. Essentially, there have been a number of interjurisdictional meetings precisely on the question which you have just raised, so work is ongoing on that issue.

Dr STONE: That, as you say, is a critical part of the work you are doing which will inform your next version of the plan. Will the next version be the final version?

Mr Parker : It will be closer to the final version. Once the next version comes back and goes to the minister, there is the potential for the minister to request further work or to direct changes to the plan. It is not possible to say precisely whether the next version will be final.

Dr STONE: You will remember that our previous report did not in fact enumerate a bulk number because we felt there were better ways to describe the water needs of each part of the system, ecosystem or whatever. But, as we know, we do have a number out there and the public tends to focus very much on that number as evidence of environmental versus agricultural production winners and losers, which is very unfortunate. In terms of that environmental flow calculation, are you also taking on board the need to calculate when water in fact is reused? For example, over a period of time 500 gigs or so goes into the Barmah forest and then a proportion of that goes back into the river and then it goes on to Gunbower—it goes in and goes out. That is the natural consequence of down-river environmental flow. Are you putting that into your calculations? Is someone doing that work?

Mr Parker : Yes, the return flow issue is taken account of in the plan, so I will let Ms Dickson talk about it.

Dr Dickson : The approach of doing this adjustment mechanism is to take the modelling that was done to determine the ESLT and the trade-offs that the authority made in providing the proposed SDL. That is effectively like a benchmark model and the environmental benefits that you get from that model are really the basis of the method that we are looking at. That model did have the optimisation function you were talking about where you just reuse the water to get as much as you can out of the one parcel of water all the way through. That is why it is quite a complex of approach when you need to model particular proposals for environmental works.

Mr Parker : There have been a number of so-called multi-site watering events which have been done in a cooperative way between environmental water holders, including Commonwealth Environmental Water. There was not one last year, but there will be one this year, so decisions have been taken around the technical accounting treatment of this so that a multi-site watering event can take place. On the technical issue, I will not bore you with the detail, but water is essentially owned down the river and the accounting of it for multi-site events significantly affects who owns the water as it gets to the end of the system. The so-called Basin Officials Committee took the decision earlier this year to have another multi-site watering event later this year.

Dr STONE: Do you know when that event will be?

Mr Parker : No. I might pass over to the experts on that.

Mr Banks : We have been discussing with TLM, VEWH—the Victorian Environmental Water Holder—and a range of other holders the potential for multi-site use of water through the system. That is considering the needs depending on the conditions at the particular time and the flows at that time in Barmah-Millewa. We would also be looking at connecting other sites like Gunbower as well as the lower part of the system. We would generate a pulse in the lower Murray River and then pass the water down to the Lower Lakes and the Coorong.

Dr STONE: When we were doing the earlier inquiry we went to Perricoota and saw works that predated the Murray-Darling Basin Authority work. It was a big effort with a lot of environmental flow consequences. How are you integrating that work into the accounting for environmental flows and the needs for taking water out of the river? I know that it is in a different silo—it is a New South Wales government initiative and so on. Are we able to be assured that, even if the state—such as Victoria—initiates something that is just coming into play now, it will be very much part of your thinking in terms of environmental flow works and measures and water needs.

Ms Swirepik : There are a couple of different levels to your question. At an operational level, for the coming year we are well aware of the Koondrook works and we have looked at the timing of completion of those works. Part of the multi-site event is a proposition to commission those works and start a small managed flooding of that forest. In the year coming, we have catered for that. Building on what Simon has said about the plans for the coming year, there are different scenarios, if you like, that depend on how dry or wet it gets.

Some of the key decisions that will have to be made as the year progresses will be about things like Barmah watering or how much watering you do of Koondrook forest. For example, if it stays fairly dry, we will actively try and keep water out of Barmah forest, because it has been wet for the last three years and it could do with some drying out. If it comes to the point where natural flows are in excess of what we can keep out of the forest then we will try to make a short sharp peak to inundate the forest and then draw the water back into the river. We do not necessarily want prolonged flooding that will start a bird breeding event. All those sorts of active management decisions will be discussed by all the different water holders together, including the Commonwealth and the MDBA.

With regard to the Koondrook works, that is a Murray-Darling Basin Authority project. The entire suite of Living Murray works, of which Koondrook is one, is managed through the authority on behalf of the joint governments. New South Wales is the implementation state for that particular work. They are overseeing the infrastructure there. But all the centralised modelling of that works actually occurs in the Murray-Darling Basin Authority, as does all the centralised budget management and contracting.

In the longer term, we have taken account of that, too. The modelling of that work is already in the benchmark modelling for the basin plan. Those works are all operating there in the background of the basin plan modelled scenarios. We had a discussion before you came about the fact that further work still needs to be done to see if with a suite of works you can achieve some of the objectives of the basin plan and therefore still maybe get an SDL offset from them. In short, in both the short term and the long term the operation of those types of works are completely integrated with our thinking.

Dr STONE: Good. I was concerned. We were told at the time that this was pretty much a silo and that there had not been consultation occurring. People were quite concerned that it was not being integrated.

Ms Swirepik : We have worked through that more with the states and they are aware that is being considered as part of the SDL adjustment mechanism in terms of how those works might be catered for more over time.

Dr STONE: Now it is part of the story. That is good. Have you already talked about Menindee? Given New South Wales lost some enthusiasm, it would seem, for the works that were very much on the cards a few years back, can you update us on where you are at in terms of the fairly extensive environmental works and measures there? Where are we up to? Are works going to be undertaken and money spent in Menindee Lakes or is it back in the basket of New South Wales?

Mr Parker : I will make some introductory remarks and then Mary can fill in the detail. It is fair to say that the Commonwealth and New South Wales are again working closely on Menindee options. David Harris, who is the head of the Office of Water in New South Wales, and I visited Menindee a little while back. We are now working very closely to see what might be possible a Menindee. There is a fair degree of concordance between New South Wales and the Commonwealth on the infrastructure works which could be used to make Menindee a more efficient water storage. There are still a range of issues to be sorted out around the actual running of the water storage. But that is being actively worked through. All of that said, and we flagged this very quickly in passing in an earlier part of the discussion, the fact that the Menindee system is very full and the fact that there are large amounts of water flowing down the Darling mean that it will not be possible to get out there and efficiently do infrastructure works for some considerable time.

Dr STONE: But you are expecting Menindee to be able to deliver some environmental flow advantages within the scope of this plan?

Mr Parker : That is our fervent hope.

CHAIR: I am probably outside the bounds of my job as chair, but I think that it is the fervent hope of a lot of people that some commonsense can apply here. The committee visited Menindee and we have a reasonable understanding of the various issues and options. It seems a bit of a no-brainer to a lot of people in the community. Buy backs are being addressed and engineering could achieve some of the outcomes. That is one of the pressures that we are all getting: that we should be looking more intently at some of those things before the easy option of non-strategic buy backs. That is probably an editorial comment.

Dr STONE: Agreed. That is a point well made.

CHAIR: There were suggestions in the original committee report—and I know that this has been talked about in various theatres—that the Commonwealth as the environmental water holder should have the capacity to trade back into the productive market at certain times. Has any work been done there? Has there been any progress in working out what the trigger points could be and what impact that two-way traffic could have on the number, if any?

Mr Parker : Again, I will make some introductory comments and then pass it over to my colleagues. A substantial amount of work has been done on what a framework for trading for the Commonwealth environmental water holder might look like. A discussion paper about that was released last year in November. That was held open for comment for some quite considerable time. Submissions have come back in response to that trading framework paper. I will let my colleagues pick up the details of that. Broadly, there was considerable support for the Commonwealth environmental water holder to trade. If we go back to first principles, the objectives of watering the environment are somewhat different in terms of timing to those of irrigators. Irrigators need in general to water regularly and in small amounts, whereas—and this is a caricature—watering the environment tends to happen in large amounts less regularly. Given those different objectives, there is potential for gains from trade between the two and the irrigation community more broadly. That is what underlined the paper which went out. The response which came back from the community was very broadly supportive of trade, but I will let the experts—

Dr STONE: That was for temporary and permanent trade?

Mr Parker : There are some considerable limits in the Water Act itself about temporary and permanent trade. There are essentially two arms in the act which can allow trade. One is more restrictive than the other. I am happy to go into the details, but I am sure you are broadly familiar with them, so rather than take up the time of the committee—we have the framework which is in the act as it is and we are trying to work within that. I will let colleagues talk further about the response to the trading paper.

Mr Costello : Essentially, we put out the discussion paper, which gave some scenarios of when we thought we might trade and then under what kinds of mechanisms, how we might go about that and so on. We got responses back from a wide range of stakeholders—irrigation industry groups, state governments, and many others—so we are quite heartened by that. It was a good discussion, a good debate. Most people either support or accept that we can trade and should trade. There are concerns, because we are an unknown quantity at this stage and a potentially large player, about what impact that might have on the market if we went about it in a rash sort of manner. There are some demands that we provide some transparency so that there is information out there about what we might do and how we might go about it, and that was part of our proposal anyway. We are currently taking all of those responses and we will turn that into a position paper that says, 'We've heard your concerns and here's how we propose to address them.' There is some potential for those to be made into rules if that is considered necessary by the minister, but—

CHAIR: When would that take place?

Mr Costello : The response to the discussion paper we think will be out later on this year in August, September or something like that. That would be, I suppose, our proposed framework of how we will address the concerns that have been raised. The minister does not need to make rules to allow us to trade but has the option to do so at any time, so we could perhaps trial some approaches. Given that we have not done any trade yet, we could, I guess, trial an approach over a year or two and see if that was addressing the concerns people had and then revisit the question of whether they needed to be formalised into rules. That would be one way of going about it, but there are no decisions made on that.

Part of your question was: what is the impact of trade on the number? We have not modelled that specifically. Our job as environmental water holders is to make water available at the times and in the places where it can be of most benefit. There are times when there is a bit of a mismatch between what the environmental demand might be and what the supply might be, so that is where we do provide opportunities for trading. For example, to meet some bigger and higher flow targets, that is generally when there are wet conditions and good flows in the river, and water tends to be cheap at those times, so that might be an opportunity for us to buy some entitlements. Because we have this variability in demand in environmental assets, if they have been watered for a couple of years and some of the flow targets and so on have been met, it is okay to let them dry out. We might still have some water in the accounts as the climate starts to dry and there becomes high agricultural demand. We may be able to put some of that water back for productive use. In that way, we think, and our hope is, that there is a win-win outcome for both sides, the environmental and irrigation sectors, in trading between the two.

Mr GIBBONS: I imagine—just to pick up your question, Mr Windsor—that certainly trading has the potential to reduce the socioeconomic costs of the diversion of water to environmental purposes, at least.

Mr Parker : To the extent that these are voluntary transactions in the interests of both parties, that is what you would normally expect. The kinds of scenarios that Steve Costello has just outlined are examples of that, but it is very early days.

CHAIR: The other issue we have not covered is the groundwater issue. Could someone just give a snapshot for the record of the gross changes between the guide and the draft and, in layman's terms, the differences in the nature of the water and where that is currently at? There was a number; I know it has been reduced. Can we get a bit of an overview?

Dr Dickson : I cannot give you between the guide and the draft that went out in November, but between the draft that went out for consultation in November and the revised draft that we put forward at the end of May the gross differences were from a total SDL of 4,340 gigalitres a year in the draft plan in November to the total now of 3,184 gigalitres in the revised plan that we provided to ministerial council on 28 May. Those are the gross numbers.

Mr GIBBONS: What do you attribute the reduction to?

Dr Dickson : The bulk of the reduction has been a reconsideration of some of the large unassigned water aquifers. These are very deep aquifers. In response to a lot of the concerns that we heard during the consultation period, we called together a group of groundwater experts towards the end of the period to run through the modelling we had done, the assessments we had done. Many of those had been involved in the peer review of those models earlier but it was to get a view on those.

Mr GIBBONS: You use a different method to calculate and that is what has caused the reductions?

Dr Dickson : No, we have not used a different method. On the basis of the discussion we had with those groundwater experts, we looked at a more conservative factor. This is in the broad: there were quite a few changes, but that was the main one, to deal with the uncertainty in some of those very deep groundwater systems.

Dr STONE: Is this the Great Artesian Basin? Which area are you talking about with very deep aquifers?

Dr Dickson : I might ask Tony McLeod to talk about the specific areas, but the Great Artesian Basin is not in our purview. It is specifically excluded under the act.

Dr STONE: Why? It is in the basin, or under the basin.

Dr Dickson : It is under the basin. We actually look at groundwater resources that are under the Great Artesian Basin, which is a very interesting thing.

Mr McLeod : In relation to Dr Stone's question about the areas associated with these changes, the unassigned water areas, these are areas where we believe there can be increases from the current levels of diversion in those systems. They were across much of the western basin in an area roughly extending from Horsham to Moree and to the west, and then also across what is known as the Lachlan Fold Belt, which is a geological formation which extends from more or less here where we are in Canberra out towards Bourke. There are also some of the highland areas that extend across the upper reaches of the basin from around Kilmore right through to Toowoomba. These are not contiguous in many cases, so there is quite a broad extent. These are areas where our assessment indicated that the level of diversion from those systems could be sustainably managed above those levels that are currently occurring. That became known as unassigned groundwater.

In relation to the question of the change in methodology, we had the same methodology in a sense up to a point where we looked at the level of take that could be sustainably taken from those systems. Generally speaking, that was a recharge risk assessment method where we estimated the recharge of those systems and, based on the quality of the data, the amount of data and the level of environmental risk associated with extractions from those systems, we came up with a level of take that we thought was sustainable. We then applied a factor based on the further consideration of either 50 per cent or 100 per cent of that water that could be available. As a result of the considerations taken in response to the consultation period, that factor was reduced to 25 per cent in all cases, for different reasons. The two main reasons were that in the western systems, as I mentioned earlier, it was not so much one of groundwater connectivity but the quality of the data there. The sheer amount of groundwater data is quite limited and a view emerged, which the authority ultimately adopted, that caution was a better way to go in those systems given the amount and quality of the data. In the other systems I mentioned extending from the upper parts, surface water connectivity, which we did include in our initial assessments, further consideration of those matters suggested that we should be more cautious in the amount of water that we allowed to be increased in those systems and thus a factor of 25 per cent. So it was different reasons but the same outcome. Those reductions were the major component. Rhondda mentioned the change in overall groundwater SDL. That is a useful overall measure but the groundwater problem in the basin is actually 70-odd different problems, sometimes connected and sometimes not. The overall change is one of 1,155 gigalitres from the groundwater. Concerning the total of groundwater SDLs at the time the draft Basin Plan was issued in November to the revised draft in May, most of that is a change in the unassigned water areas we have just talked.

CHAIR: There seems to be confusion out there in terms of the original numbers in the guide and the numbers being talked about now. In the Namoi system, for example, the new numbers you are talking about have no application at all, as I understand.

Mr McLeod : In the Namoi system there are two areas covered by the Achieving Sustainable Groundwater Entitlements program, a joint New South Wales and Commonwealth government funded program. At the time of the guide back in 2010—I do not have exact figures with me—there were further reductions in one or both of those aquifers being considered, as they were in other areas. One of the changes in the policy that the authority adopted by the time of the draft Basin Plan in November last year was to place no further reductions in those areas undergoing a current reduction program. In part that was due to the compounding uncertainties associated with placing a reduction on top of a reduction, given the extra information that will become available in a technical sense from the aquifer response due to lower diversions as a result of those programs. There was some consideration of those areas at the workshop we talked about and also by the authorities as to whether there should be any further changes in those areas, but the authority has maintained its position in both the May draft of the plan and last November's plan in relation to those areas. That is not to say we will not further consider that, as we will for all parts of the basin as part of the ongoing planning process of the Basin Plan.

CHAIR: I do not think anyone will be able to answer this question because I do not think the modelling has been done, although people may have a view on it. There is a range of views in terms of the number, the 2,750 we are talking about now and the other extreme, the 4,000 plus megalitres. Is there any work out there in terms of the additional environmental impact of an extra 1,250 gigalitres? In layman's terms what would we get for the extra water if in fact it were put in place and given some of the constraints on the system, the Barmah choke et cetera, what do we end up with if we actually go to a higher number?

Dr Dickson : To answer what is out there, there is not any modelling of 4,000 that is comparable to the work we did in the Basin Plan of that same level of detail. It was very detailed modelling and had all the components in the system and so was able to work through issues such as the Barmah choke and the other constraints. The 4,000 number in the guide was not a modelled number; it was just a numerical calculation, an end-of-system-flow model, an arithmetical piece of work. There was some work done on a very preliminary model for the Goyder institute towards the end of 2010 and Goyder reported on that in 2011. It was very preliminary modelling. It did not have constraints in the system. It was modelling done by the authority and it also did not have quite a lot of the functions of the current model has. So it is not comparable. They did produce some results of 4,000 but I do not think you can compare it to what we have now. It is the only other piece of information that is out there. Without doing it we could not really say, but I think it would be fair to say that the constraints we identified when we modelled 3,200, which really kept the water in channels, so we could not get the large flows into the lower reach of the Murray, would still apply to the outcomes you get from higher volumes of water, because it is effectively like a rate-limiting thing in the model. That is what we would expect, at least with those lower flood plains in the Murray.

CHAIR: Thank you for your evidence. It has been a good introduction for this short, sharp inquiry. Hopefully we will build on some of the things mentioned here today, particularly some of the framework issues. We can build on that with the witnesses we will hear from in future. A copy of the Hansard will be available to you. If there are any issues, please let us know.

Resolved (on motion by Mr Gibbons):

That this committee authorises publication of the transcript of the evidence given before it at public hearing this day.

Committee adjourned at 11 : 05