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Standing Committee on Regional Australia
27/06/2012
Certain matters relating to the proposed Murray-Darling Basin Plan

HARRISS, Mr David, Commissioner for Water, Office of Water, NSW Department of Primary Industries

Committee met at 09:40

ACTING CHAIR ( Mr Gibbons ): We welcome David Harriss from the NSW Office of Water. 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. Thank you for your interest and your submission. Would you like to make some opening remarks and then we will go to questions?

Mr Harriss : Thank you. I will be very brief with my opening remarks and give you more time to ask questions. New South Wales made a submission to the proposed plan that was released in November last year. Our submission had a number of key elements to it. One was that we were concerned about the water recovery and we believe that it should be largely focused on recovery through infrastructure works, particularly environmental works and measures. We believe there is a lot of potential to recover water and get better outcomes for the environment through changes of potential rules that currently exist and through changes to river operations where we can deliver water in a manner which is more suitable for achieving environmental outcomes without diminishing the volume of water available for production throughout the Murray-Darling Basin.

We also believe that there is capacity for other institutional changes which might mean that the way water is delivered and accounted for might deliver environmental outcomes without recovering water from production. We believe we have a good record already in the recovery of water in New South Wales and we are proceeding very well, and we believe that we should continue to recover water for the environment but not at the expense of production. The New South Wales government was very strong in its submission that it would be interested in strategic buybacks of water, not wholesale purchases of water, taking water out of production where that could be coupled with infrastructure works or with other mechanisms which provide benefits for the environment but have minimal if any impacts on regional communities or the socioeconomic considerations in the basin.

We were very concerned that under the proposed plan there are in-valley requirements and there are downstream-shared requirements. Those downstream-shared requirements had not been articulated. We did not know what they were for. Also there was no indication within the Basin Plan where that water would be recovered from. So the New South Wales submission was very strong on saying that there should be equity in the recovery of water between jurisdictions and between catchments. We in the respective jurisdictions still believe that is a very important issue to be addressed. We believe prima facie that the distribution of that apportionment should be, effectively, based on your proportion of baseline diversion limits. So it recognises equity and, in turn, could also recognise where you are going to recover the water to deliver the best environmental outcomes. In terms of the purchase of entitlements we believe that all infrastructure options should be exhausted before you go into wholesale water purchase. We are not adverse to strategic purchases where it is agreed by communities and agreed by the state. Our submission suggested that, if it came down to having exhausted all the infrastructure projects and you still needed to acquire water through purchase, then there should be limits on that. We based it on three per cent per water source over a 10-year period. We believe that that kind of limitation would enable communities and industries to adjust. It was not just a subjective decision; it was based on the risk proportionate framework included in the National Water Initiative which said that after any 10-year period in the New South Wales water sharing plans you could recover up to three per cent without compensation from water users. We believed and it was agreed that that would give time for technology improvements and communities to adjust. In effect, if you could not get a three per cent efficiency dividend over a 10-year period you are probably wasting your time. But we believed that was an appropriate figure. In fact that was legislated in New South Wales. Subsequently, governments have said that they will meet the costs of water recovery so it would not be without compensation, but we believe that that three per cent over a 10-year period was justification. That is still subject to discussion.

They were the tenors of our submission. We also had issues with structural adjustment and the cost of implementation and making sure that there were no additional costs borne by the jurisdictions for this because, under the terms of the National Water Initiative, we would have to pass those costs. In a nutshell, that was the basis of our submission. We were very concerned also that the sustainable diversion limits for groundwater, particularly in our deep and saline aquifers, were not substantiated and had not taken into consideration as best they should some of the extensive work that had been done in New South Wales, particularly in projects that had been done in collaboration with the CSIRO.

ACTING CHAIR: Thank you for that. I take your point about the infrastructure needs. We found, for example, that there is substantial infrastructure programs planned, say, for the Menindee Lakes, but nothing can happen while it is still under water. I understand there are other infrastructure programs that are on hold because of the range of circumstances which has nothing to do with funding or governments.

Mr Harriss : I appreciate that. We have had a whole series of projects throughout New South Wales including pipeline stock and domestic water supplies which were otherwise in channels or in flood runners, which, because of the last two years, we have not been able to get any heavy machinery into to undertake the works. For Menindee Lakes, we still have a fair bit of preliminary work to do. But you are quite correct, the lakes are surcharged at the present stage and have been for a couple of years after having got down to about three per cent of capacity. I think it demonstrates the variability we get in Australia. That notwithstanding as Water Commissioner I am quite pleased to have a lot more water around. Maybe the infrastructure projects can wait.

ACTING CHAIR: My knowledge of groundwater is limited but I understand that volumes of groundwater are dependent on above-ground water catchments. In other words the aquifers are charged by excessive water on the surface from rivers, lakes and things like that. With the amount of water around now is there any evidence that the groundwater aquifers have been recharged or are being recharged? If so, what sort of volumes could we expect?

Mr Harriss : I could not tell you off the top of my head. It is an absolute technical assessment by hydrogeologists. I would say that aquifers are three dimensional, they are deep and they are shallow. Some of the aquifers in extensive areas across New South Wales were originally created when sea levels were far higher, which is why they are exceptionally saline. There is minimal recharge if those deeper aquifers, the ones below 200 metres for example, or 100 metres in different areas and separated from the shallow aquifers by what we call aquitards, which are thick layers of deposited clay. You have surface water aquifers which are immediately recharged by floodwaters, in particular, but some of the deep aquifers have very little connectivity with the floodplain and with rivers.

If I can talk about the deep aquifers first. We know there is very little recharge. We know there are extensive areas. We have, based on our collaborative projects with CSIRO and others, determined what we believe to be an estimate of recharge and then we assess what we believe to be our long-term average annual diversion limits based on a very conservative estimate of that recharge. So we are not actually impacting on the aquifer storage itself, just on a very minor potential of recharge. In the more surface water aquifers, particularly the shallow aquifers, yes, they will be recharged by the recent flood events. We have come through an extensive flood, prior to which we had significant issues with surface water salinity and waterlogging, which Dr Stone would be very much aware of. We are undertaking a lot of measures to try and address that through surface water drainage programs and so on. There is a definite need to make a distinction between those aquifers and the major alluvial aquifers for which we do have limits. We agree with the SDLs in the Basin Plan. In fact we are still winding up a $135 million adjustment process for those major alluvial aquifers in New South Wales to bring them back to sustainable entitlement levels. We are reducing the entitlements by 942 gigalitres.

Our concern in the deeper aquifers is the sustainable diversion limits currently not based on the best available information. They are exceptionally conservative and there is potential to enable developments to occur which do not impact on the river, on the health of the river or on third parties. I will give you two examples if I can. The deeper aquifers are exceptionally saline and they have a lot of pressure. In fact the connectivity where it does connect with the land or the water is that that saltwater is entering the streams and increasing the salinity.

So, collectively, the Murray-Darling Basin Authority has spent hundreds of millions of dollars on salt interception schemes to intercept that water that would otherwise get into the river, so that the water is coming into the river and not going from the river down. If we are to abide by the proposed sustainable diversion limit in one area, we will not be able to pump to full capacity a recently completed salt interception scheme which is designed to take that saltwater out. That seems to me to be a bit ironic. What we are suggesting is that we use the best available information, which is to determine the long-term extraction limits, which is very conservative. We are prepared to overlay some sort of conservation factor, but not so as it would limit any potential development.

Another example could be minerals sands, say, 100 kilometres west of the Darling River in New South Wales. The connectivity of the river system is just non-existent or it would take centuries for there to be a connection. Why would we limit production of mineral sands like they are doing at Pooncarie, which provides an economic stimulus and does not have any environmental impacts, because of an arbitrarily determined sustainable diversion limit? The issue in those areas is: how do you dispose of the water, because it is impacting on the surface water.

ACTING CHAIR: The salinity levels are uniform right across the basin in New South Wales or do they vary?

Mr Harriss : No, it varies in three dimensions. We have different rules for the different water sources within those aquifers. Within the Lachlan Fold Belt, which goes across much of New South Wales, whilst it is considered one broad aquifer, we operate within 10 discrete areas because of the differences in those areas.

Mr McCORMACK: It was an excellent submission to the Murray-Darling Basin Authority. The fact that money was deferred in the last budget for water savings infrastructure, yet buyback water still remains in the budget, does that put your plans on ice, so to speak?

Mr Harriss : No, that is really an issue for the Commonwealth who are responsible for the apportionment of dollars. Our submission has been to the Commonwealth to say that wherever possible you should be investing in infrastructure works or investigations into looking at rules changes or river operations changes which can deliver your environmental outcomes without the wholesale purchase of water.

Mr McCORMACK: Does that make it that much tougher, the fact that the money has been put back into 2015-16?

Mr Harriss : Not really. Because the conditions are so wet it is going to be difficult. The real cost of any infrastructure is probably at the eleventh hour when you actually do the works. A lot of the investigations, the assessments and the environmental assessments are done upfront. It should not be a great concern. We are working pretty furiously at developing some of these alternative projects. We would like them to be funded as soon as possible. But I am a realist. We have a very large project proposed for the Lowbidgee area of the Murrumbidgee. That has been underwater for the last 2½ years, so we have to be realistic. If we are going to do reconfiguration works there, it is going to take some time.

Mr McCORMACK: Are you confident that we will end up with a plan which will not necessarily hurt those regional communities which rely so much on the water to grow food?

Mr Harriss : No. New South Wales is very concerned that the plan, as it is written now, will have a substantial impact on those regional communities. To be very blunt, our submission has been to focus on those communities. We have spent 20 years developing effectively a property right for irrigators that they can use, they can carry over as a conservation measure or they can trade either permanently or temporarily on the annual market. We do not want to compromise that, but we recognise that, if there is this huge transfer of those entitlements out of productivity and back to the environment, there could be a substantial socioeconomic impact on regional communities, particularly those communities that are largely dependent on water related industries.

Dr STONE: I wonder if you have focused much on the fact that at the moment the SDLs are an expression of water taken out of entitlements, not water that has been saved through environmental works and measures. We put this question to the authority and they said, 'Yes, we are looking at that issue.' Has New South Wales addressed that specifically and are you concerned that there are any impediments in the Commonwealth Water Act to taking what I would call a more common-sense approach where, if you find savings through works and measures or indeed even through on-farm water use efficiencies, they come off the SDL rather than staying there as an isolated envelope?

Mr Harriss : Yes, we are concerned about that and we are very supportive of any process which will enable us to determine SDL offsets, which might not necessarily be held entitlements but which could deliver the same outcomes without the requirement to hold those entitlements. We recognise, or we have had legal advice, that there may be some issues with the Water Act that might limit the potential for that, so we, along with other jurisdictions, have asked the Commonwealth to provide advice and investigate that for us. We would rather see investment in those mechanisms which can deliver improved water management and deliver the environmental outcomes without necessarily taking water out of production.

Dr STONE: Would you say that in the case of New South Wales that has been something of a handbrake on your decisions about investment in works and measures, given that at the moment the savings are not able to be used as an offset for SDLs?

Mr Harriss : No, I do not think New South Wales has been in a position to fund those projects unilaterally. We have made every endeavour to progress those potential projects as far as possible so that they can ultimately be funded through partnerships with the Commonwealth.

Dr STONE: Some people have said that no matter how many brilliant environmental works and measures are undertaken and make savings—and Lindsay Island is commonly mentioned as a very evident, obvious case—it does not make any difference to the SDL, so what is the point? This is the argument that many are making.

Mr Harriss : That has been a very significant point of conjecture with New South Wales. We are concerned that a huge amount of investment in infrastructure works which provide regional outcomes is being discounted in terms of their commitment to the environment, because the proposal in the Basin Plan is that it is all very well to look at regional projects here, but we have to provide higher flows down to meet all the environmental requirements in between those. I think that is potentially a significantly limiting factor on the value of those works. New South Wales has been very strong in saying that we should be focusing on works and there should be mechanisms which enable the benefits of those works to be realised and not discounted simply because they do not affect wetlands A, B and C in between the icon sites, or whatever you choose to call them.

Dr STONE: You mentioned you had asked other jurisdictions or agencies for legal advice on those SDL offsets. Have you been told when you are going to get that advice?

Mr Harriss : We are working on that with the Commonwealth through a group called the senior basin officials group, which is meeting at least weekly at the moment. We are seeking legal advice and the other advice we require so that we can provide advice to ministers when they make a response to the federal minister regarding the Basin Plan.

Dr STONE: Finally, can I ask you about forestry, agroforestry, small farm dams and mining. You mentioned the mineral sands before, but I am talking about coal seam gas and so on. There is a lot of water extraction involved in that mining process. Do you have any comments on the fact that the plan fails to enumerate the impacts of growing agroforestry, mining and small farm dams—I am talking about those rather than the big ring tanks. Do you have any comments about that? I suppose you could throw in ACT water use as well.

Mr Harriss : We will throw that in—we do throw that in the mix. There are some issues with interception, but a lot of that is negligible and we do not believe it is worth the huge investment of dollars it would take to measure every bit. We believe there should be mechanisms which enable us to estimate the potential use of that. But, if there are big interception activities, we believe that they should be considered in the mix of things.

With mining and coal seam gas in New South Wales it does not matter what the activity is—whether it is industrial irrigation or otherwise—you are required to have a licence for extraction. A lot of open-cut coalmines have water come in that is detrimental to their production, but we still insist that that be licensed because it impacts on third parties or the environment. The issue there is the disposal of it. We are looking at mechanisms which allow access to that, preferably by the market.

I will come back to access to saline aquifers. If the mineral sands project, for example, in Pooncarie, in the far west of the state, requires a licence of, say, two gigalitres and is not allowed access to that saline water—which is not impacting on anyone else—it will have to go on the market and take fresh water out of production to maintain its activities. We do not necessarily think that is a good idea in areas where there is a huge separation between surface water and groundwater. Where there is connectivity—for example, in some of the upstream areas or right next to the river, for example, on the Murray and the Hunter we might assume a one-to-one connection—if you are going to intercept water you have to buy that equivalent of water on the market. We recognise that is where there are substantial differences between alluvial aquifers and paleo-aquifers which are 100 metres or more below the surface and not connected.

ACTING CHAIR: Going back to the extraction of saline water and requirements on mining companies to be able to deal with that under your regulations, how cooperative are they? Do they baulk at that or are they generally pretty compliant and see it as a social responsibility?

Mr Harriss : Typically they are very compliant. They generate an enormous amount of wealth. They need to have the regional community on side, and they recognise that they need that support.

ACTING CHAIR: They understand that they need the social licence to operate.

Mr Harriss : Pretty much so, but they also realise we have a pretty rigorous compliance program and that they have to meet all of their obligations and the terms and conditions of their licence.

ACTING CHAIR: Finally, going back to the Menindee Lakes, can you give us some idea of the negotiations, if you like, regarding the SDLs and how they are progressing?

Mr Harriss : With the Menindee Lakes—and I can leave you some information papers, if you would like—we have progressed in looking, with the Commonwealth, at changing the operations of the Menindee Lakes. New South Wales had three points where we were not going to be compromised. They were that there should be no reduction in the availability of water for downstream users—not just in the lower Darling but in the Murray—there should be no reduction in the environmental values of the Menindee Lakes in their own right, and there should be an alternative water supply provided for Broken Hill. None of those points were achieved.

We recognised that—and, quite frankly, this is pretty straightforward—if you start a dry period with two lakes empty rather than full, all things being equal, you are going to run out of water more quickly. We found through our modelling that the number of times that the Menindee Lakes would be effectively dry—we define that as having less than 100 gigs capacity—under the current arrangements would be two times in 100 years and under the proposed arrangements would be 18 times in 100 years. It is very difficult for a water use industry to operate effectively when there is no access to water 18 per cent of the time. Clearly, in an extended dry period, there was a reduction in water availability to users and the alternative water supply for Broken Hill was prohibitively expensive. What we have done with the Commonwealth is said, 'Well, we haven't touched that but we still recognise there are significant options; they might deliver more modest water savings but let's investigate those options.' That might include rule changes, because, if some of those options mean the water is not spread out across four lakes when we go into a dry period—if it is in the top two lakes—then we might be able to reduce some of our drought security, which was based on having them spread out over a longer period of time. So there are a lot of options there.

We have recommenced negotiations with the Commonwealth. We believe there is a lot of potential there but we will still maintain our requirements to maintain security of supply for existing users. We do not want to diminish the environmental values of those lakes, because they are a huge tourist and economic drawcard in that part of the world in the first place. We want to make sure we look after Broken Hill's water supply—bearing in mind that the water supply to Broken Hill at the moment is equal to the high-security supply for users downstream. If you have permanent plantings or things like that downstream, you do not want to run out of water either.

CHAIR: Are there further questions?

Mr McCORMACK: Would the Nimmie-Caira project downstream in the Murrumbidgee provide some real benefits for water recovery? Can you tell me what the New South Wales position is on that?

Mr Harriss : The New South Wales position is that we are very supportive of that project. The business plan will be completed this week. We will be providing a covering letter to the Commonwealth department next week. We believe they have had access to supplementary flows—high flows, typically—where, in the biggest diversion year, they have diverted up to 381 gigalitres. That equates to a long-term average yield, at the site of their diversion, of about 173 gigalitres. Located in the lower parts of the Murrumbidgee, you could not want a better resource for environmental purposes, because if that is to be used for the environment, whoever owns that resource can determine if they divert that into the Lowbidgee, which is an environmental asset in its own right. It has been wet now for 2½ years. Or, for example, would we prefer the next flow to continue down to address the needs of Chowilla, the Murray mouth or Hatter Lakes in the Murray Valley? We are very supportive of that. We believe it can bridge the gap and deliver a significant volume. We are proposing to the Commonwealth that that would be the equivalent of a long-term average of 173 gigalitres of water annually. It is a significant project.

The issue is also that it is not the only project on the Lowbidgee. There are two other areas—not where there is bigger entitlement. But they are projects where you can deliver a fantastic environmental outcome and reconfigure the area as well—infrastructure to provide an alternative water supply to dryland farmers who might stay there and some sort of offset for the councils which are going to be affected and so on. It can be rolled up into a big project that provides a huge dividend for the Commonwealth as well as providing a dividend for regional New South Wales at the same time.

Dr STONE: But at the moment wouldn't it be taken off the SDL requirement?

Mr Harriss : We believe it will be taken off the SDL rig-up. We will provide an entitlement to the Commonwealth, but the entitlement will be at that point of delivery. It will not be an entitlement which is held in the dams. Quite frankly, if you are an environmental scientist or environmental manager, when you get that water as periods of high flow—which is currently being diverted for consumptive use—those are the periods where you provide the investment in environmental dividends. If everyone is happy—the regional councils are happy, the users are happy, the Commonwealth is happy and the states are happy—we believe it is a no-brainer.

Dr STONE: I would agree.

Mr McCORMACK: Do you understand that the regional councils are happy?

Mr Harriss : We have spoken with the regional councils as part of the business plan. We have looked at offsets to meet their requirements. That is included in the business plan. We have always said to the Commonwealth, in developing the feasibility projects, that it is not just water savings. We have to look at the socioeconomic impacts. We have worked with Wakool council and Balranald council—which does not even get council rates but, quite frankly, Nimmie-Caira being so close to that area it is where they do most of their economic activity—and also Hay council. We have discussed and negotiated offsets with those councils.

Dr STONE: The Wakool irrigators originally put a lot of water up for sale during the drought; they were wanting infrastructure to replace their current rice-growing activities. Since then, it has rained and the Commonwealth knocked back their offer to buy that water. Are they part of that package you have just described?

Mr Harriss : No, they are not part of the Nimmie-Caira package. If the Wakool users were as keen as the Nimmie-Caira users and as a collective were prepared to look at infrastructure options and different options then we would be prepared to consider whatever they proposed. At the moment in Nimmie-Caira we have 11 landowners and, I think, 19 separate properties. They have established themselves as a legal entity and they are all supportive of the project, which is a rare and wonderful event, quite frankly, so we do not want to look a gift horse in the mouth.

Dr STONE: So Wakool would need to start again, in a sense.

Mr Harriss : Wakool would need to start again or to—

Dr STONE: Pick it up where they left off.

Mr Harriss : effectively get themselves together as a collective and come with a proposal that we could investigate, when we would do exactly the same thing—we would look at the respective councils and the social impacts and look at how we would put that up as a joint package. It is not just about water purchase. One of the benefits of Nimmie-Caira is to reconfigure that area to get better environmental outcomes out there but also to enable additional water to flow pass the chokes at Balranald, and that provides downstream benefits.

Dr STONE: You mentioned the mouth of the Murray and that a certain work or measure would assist with getting water down there. Have you any comment in relation to a surrogate for the health of the whole basin being in the plan: the mouth of the Murray being open nine years out of 10?

Mr Harriss : We do not necessarily agree; we believe that has got to be substantiated. Equally in the plan is looking at salinity targets. There is concern for salinity in Lake Albert at the moment. Fifteen thousand gigalitres went across the border in 2010-11 and 9,000 gigalitres will probably go across the border in 2011-12. If you still have a salinity issue in the Lower Lakes when you have had those kinds of volumes of water going across the border then I think you have got to look at—

Dr STONE: There are other problems?

Mr Harriss : I think there are probably issues you can look at on site as well as just expecting additional water to come down, because that is not going to solve your issues. One of the issues with the Basin Plan is that this is not just about water, it is about river regulation. Effectively below Mildura you have a series of lakes, except at high flows. A lot of the impacts are caused by invasive species like cold water pollution, by inappropriate clearing at the edge of the river. Just more water is not going to solve all the problems of the basin and I think we have to be more thoughtful of that.

ACTING CHAIR: Thank you very much, David. We appreciate your taking the time to be here with us today. There will be a Hansard transcript available for your perusal. If there are any changes you need to make or if there is anything else you think we need to know about that may come to light over the next short while, please do not hesitate to drop our secretariat a line.

Mr Harriss : Thank you very much for the opportunity.