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

DOOLAN, Dr Jane, Deputy Secretary, Water Group, Victorian Government

HEAPHY, Mr Phillip, Director, Intergovernmental Policy Group, Victorian Government

[10:12]

ACTING CHAIR: I welcome representatives from the Victorian government. 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 telecast on the internet. I invite you now to make an opening statement and then we will go to questions.

Dr Doolan : Thank you very much for the opportunity. The Victorian government in its submission to the authority has made a strong case that the environmental outcomes to be delivered through the plan through what is currently a reduction of 2,750 from the consumptive pool can be achieved more effectively and more efficiently with less water and a combination of works and changes to river operations. Effectively, we believe the focus should be the environmental outcomes that are desired and then the best and most efficient and effective way to achieve that through, as we said, a combination of water in the SDLs but with works measures and river operations that enable optimisation of water delivery for all users so that you are actually starting to seriously have smart river management as a result. In doing that, effectively you are not requiring as much water to be taken from the consumptive pool and clearly the impact on regional communities would be lessened. So our focus is more on the environmental outcomes to be delivered.

We do know that the River Murray is a highly regulated system, as I heard David Harriss say before me. There are structures all up and down it, including at its lower end. It is a highly changed system as well, with much of the land use alongside the flood plain not in natural condition. There are towns and people associated with it, and it needs to be viewed that way. It has a number of significant constraints upon it. Some of those are natural constraints; some of them are physical constraints. Some of the physical constraints are imposed by the need not to flood communities. That has to be recognised. That limits the capacity to deliver environmental outcomes, which I think we can see clearly through what the plan does. If you acknowledge that those constraints exist then you can start to look at whether you can achieve those environmental outcomes more efficiently and effectively. We believe you can.

We have been a strong advocate for the use of environmental works and measures. They enable us to ensure that areas of the flood plain can be watered at regulated flow, not needing overbank flow. It can then be watered at optimal frequency and duration. You can protect communities from flooding that way and, importantly, you do not preclude natural overbank flooding. So you can manage these systems during drought and long dry spells.

Overall, we think that there is much to be gained environmentally from this approach as well as lessening the impact on regional communities. One of the things that we have done to assist is that in our submission to the authority, which we have provided you a copy of, we put forward a proposal where the 2,750 outcomes could be achieved with a lesser volume. In a concept of environmental water equivalence that we have put forward, you would use methodology to look at the impacts of environmental works and measures river ops to quantify it and enable the SDL to be reduced. We have done work since then on modelling a run of 2,100 for information and on developing a method for environmental works and measures that we are consulting with the authority on now.

ACTING CHAIR: Do those figures take into account what has already been arrived at and what has already been saved—I think it something like 1,200—or are you going back to the start?

Dr Doolan : No. Effectively, instead of the 2,750, we modelled what 2,100 would achieve for the environmental outcomes.

ACTING CHAIR: Understanding that we are already halfway there?

Dr Doolan : Understanding that we are already halfway there. Effectively the environmental outcomes of that run—and we can provide you with that modelling report, if you do not already have it—at the Lower Lakes and at various icon sites show there is no material difference between that and the 2,750 run in terms of the achievement of environmental objectives that are set out in the plan.

We have been looking at environmental water equivalence. Again, it is preliminary work by Victoria that we are consulting with the authority on. It certainly shows that, from our perspective, you could get more environmental outcomes than the 2,750 run. I have some documents that I can leave with you, if you would like.

ACTING CHAIR: Yes, sure.

Dr STONE: Thank you very much for those comments. Being the member for the big irrigation areas in northern Victoria, I am concerned about the socioeconomic impacts—the economic impacts, in particular—of a further targeting of water to be sold back by so-called willing sellers in the tender process. Do you want to talk about that tender process? What has the Victorian government said to the federal government about bringing forward the $40 million to the end of this financial year to spend on tenders and the open market?

Dr Doolan : From our perspective, the Victorian government, from Commonwealth figures, has got 706 gigalitres already contracted. There is potentially more committed. The position of the Victorian government is that that actually meets more than our in-valley requirements. No other jurisdiction is in that position in terms of water recovery or contracted water recovery. In our view, any further addition of purchase would be required to be strategic, ideally associated with our irrigation modernisation project or should come from on-farm. Our position is that we do not support open tender processes and that we would be consulting with the federal government to ensure that further water recovery in Victoria was through on-farm, strategic purchase and infrastructure—not in that order. Infrastructure, on-farm and strategic purchase is probably our priority order.

Dr STONE: Do you mean on-farm strategic water savings?

Dr Doolan : On-farm savings.

Dr STONE: Which might water for the—

Dr Doolan : Infrastructure on-farm savings, strategic purchase associated with the rollout of NVIRP.

Dr STONE: Does that 706 gigalitres already contracted include the 200 gigalitres that were associated with the $1 billion for the extra modernisation?

Dr Doolan : Yes.

Dr STONE: When are you required to deliver that total 706 by?

Dr Doolan : We have milestones out to 2017.

Dr STONE: You might have heard the questions to the New South Wales representatives in relation to the problem we have whereby, at the moment, the SDL is arrived at by aggregating water taken from entitlements. Are you part of the senior working group trying to address that and get a different approach so that when water is saved through works and measures there can then be a reduction of the SDLs on the basis that there have been water savings through environmental works and measures rather than just savings through entitlement clawback?

Dr Doolan : Absolutely. We are part of that senior officials group and the preliminary work that I referred to is feeding into that process. Victoria have developed a methodology that we are consulting with the authority on in the process of hoping to land a methodology where environmental works and measures and river management operations could be accounted for, their impact on environmental outcomes quantified and then offset.

Dr STONE: Do you have any commentary about the Lower Murray works and measures that Victoria might have helped identify as giving them better water quality in the lakes, or indeed better environmental outcomes in the Coorong, and what is your view about using the open mouth of the Murray as an indicator of river health?

Dr Doolan : We believe that there is a range of works and measures. We have identified a number of priority works and measures in Victoria that would assist in achieving environmental outcomes more efficiently. We believe that there is scope for that in the Lower Murray—that is not our jurisdiction. But certainly one of the TLM works, the Chowilla environmental regulator that is currently under construction, is one of those. We feel that there is potentially capacity. Our discussion with some of the South Australian communities suggests that some better management of the barrages could assist in managing salinity in the lakes. If that was possible then you might well be able to manage with a lower volume than proposed. But that is just informal conversations with communities that have identified that that is a possibility.

In terms of the Coorong, certainly the southern lagoon, the majority of its catchment is a local catchment and it is less dependent on Murray flows. Our view is that you should look to recover water from the local catchment as far as possible before you source an upstream source. In our view, all of those things are things that need to be seriously considered with a view of achieving environmental outcomes but with a discipline of trying to do it in a way that minimises the impact on regional communities.

Dr STONE: Did you do the economic impact work associated with the 200 gigs withdrawal from consumption that you have identified as savings out of food bowl modernisation?

Dr Doolan : It is all to be generated through savings, through channel lining, through connections programs and through a combination of on-farm.

Dr STONE: Converting irrigation to dryland stock and domestic?

Dr Doolan : That is part of it.

Dr STONE: That is right. So I am wondering whether you have done the associated economic impact work to identify the economic impact in converting irrigation country to stock and domestic only?

Dr Doolan : I think some of the work has been undertaken as part of the business case for that by government, but I am not at liberty to release that.

Dr STONE: That is a worry, though, isn't it, for the local community? There is fear about it.

Dr Doolan : There was a lot of consultation with local communities in the development of the envo process.

Dr STONE: No, there was not—as per the ombudsman report, which I am sure you have read, too.

Dr Doolan : I certainly have read the ombudsman's report.

ACTING CHAIR: Just one question from me about the groundwater reserves in the Victorian part of the basin. I understand that the north of Bendigo, for example, is pretty saline. But I understand there are vast resources of groundwater around Kyneton, Malmsbury and other areas which is not only potable but in many cases good quality spa water. Do you have any evidence of the volumes? The reason I say it is anecdotal evidence is that I did some work on this some years ago when we were experiencing the drought. A lot of old-timers, if you like—water diviners—all came out and said: 'There's plenty of water there, but you've got to be careful because a lot of it's good quality spa water. You can't just go pumping that into the cities and towns.' Is there any way of measuring that? Has there been any work done to measure the volumes of that groundwater and that level of potability?

Dr Doolan : We are going through a process in Victoria now of looking at our groundwater resources, redefining our boundaries and establishing PCVs. I do not have it at my fingertips, but I am certainly happy to provide to you what we have on that. In terms of the SDL set under the basin plan, in general we do not have a problem with them except in a couple of key areas, and not that one in particular. We have a bit of an issue in the Katunga area and in the Lower Ovens and in the very deep leads where we feel the authority has been overly precautionary in its approach and potentially inconsistent in its methodology. So that is some of what we are working on at the moment. But in the particular area that I think you are referring to I am happy to go back and provide more information. But it is not one where we have an issue with what the authority has said.

Mr Heaphy : We are also, I think, in the latter stages of redoing the local groundwater management plan for that area, too, so I would anticipate you would get a solid lot of updated information coming out of that process.

ACTING CHAIR: I did see some charts and maps put out by the old State Rivers and Water Supply Commission. Just looking at the charts, it looked like there were considerable volumes of water there.

Mr McCORMACK: Jane, you were extensively involved in the Living Murray project, and you have been the one responsible for environmental works and measures along the Murray. You mentioned before the 2,100 gigalitres. Can you give us your views on that 2,100 gigalitres and whether it will provide the sorts of environmental outcomes that, from a Victorian perspective, given the opposition to the proposed basin plan, are felt to be needed?

Dr Doolan : We do. Effectively, we were keen to have more modelling runs done by the authority so that you could start to really look at, if you like, where you were getting diminishing environmental returns for increasing water out of the consumptive pool. The authority was not able to do more than the 2,400 and the 3,200 run that they published, but they did allow us access to their modelling tools. So we had a 2,100 model run done where we tested the assumptions with authority staff and they were all quite comfortable with it. That model run shows that for all the icon sites along the Murray there is virtually no difference between the outcomes that are delivered under the 2,800 run and the 2,100 run. When you get to the lower lakes, the lower lakes under a 2,100 run will not drop below zero. So they will never move into that area of acidification again. They drop to zero a couple of times but they recover quickly under that modelling run. In general, regarding the key indicator of the Murray mouth under the 2,750 run, it currently delivers in 88.6 per cent of years. In the 2,100 run, the flow that is required—greater than 2,000 gigalitres—is achieved in 84 per cent of years.

I can leave the report with you if you wish, but if you look at all of the environmental objectives that are outlined in the reports of the authority and you compare the runs, there is minimal change for the key icon sites, including at the Lower Lakes and the Murray mouth.

I have a little graph of our environmental equivalent methodology. Again, they are preliminary results from Victoria, so you have to understand it that way. You can see that here is our 2,100 run on those environmental equivalents: 24, 28, 32. They are the model runs of the authority. If we factor in a range of our works along the Murray with the 2,100 run, you start to get above the outcomes, which is what we think we should be aiming for here—more than. That methodology is preliminary, but we are in discussions with the authority over it. From our perspective, an investment of 2,100 out of the consumptive pool, or something around that, would allow you to meet all the environmental outcomes, and if you couple it with environmental works and measures and with a smarter set of river operating rules you could absolutely meet those requirements and not take as much out of the consumptive pool.

Mr McCORMACK: Are you worried about the language used last week that the federal minister may well go this alone, irrespective of what the states come up with in the period between the revised plan and the actual plan being put to federal parliament?

Dr Doolan : I think the preference is that the states and the federal government could agree, but under the Water Act the federal minister certainly has that power to put the plan to the federal parliament, and then it is in the federal parliament. We are doing our best to work with both the federal government and the authority at this important period where ministers have been asked to provide comment back to the authority to be quite clear about some of the issues that we have with the plan and to be as proactive as we can in helping solve issues such as these, but with the ultimate aim of achieving the environmental objectives that are currently outlined in the plan—just achieving them more effectively and efficiently. As I said, with some of the works and measures, we will get more. As you said, I have considerable experience, and the Living Murray is part of the Victorian delegation, and we have been able to water, in the depths of the drought, areas in the Hatter Lakes that you could not have watered any other way. Even with all the floods that we had last year, they were not watered by overbank flooding. Just because of the constraints of the system it is not possible. Lake Krymon in the Hatter Lakes takes a flow of 150,000 megalitres a day in overbank flooding. You cannot achieve that. It was not achieved last year at the height of the February floods in Victoria, and yet you can do it with a pump.

Mr McCORMACK: On that, and finally, regarding the icon site that you mentioned that you managed to water during the height of the drought, and I can imagine it probably deteriorated to some degree, did it bounce back when it was watered? Did it bounce back when we had better seasons? I will ask you for your opinion on this: the Wentworth Group of Concerned Scientists gave evidence last week that they felt that the majority of wetland water icon sites in the Murray-Darling system had been lost irretrievably because they had not received enough water. Do you agree with that or disagree with that?

Dr Doolan : I have not quite heard their full contention, but certainly, regarding the areas that we watered during the drought, their condition improved rapidly. We have pictures of river red gums in the Mallee that you honestly would have thought were dead but responded to water. You have got to have a reasonable watering regime and not just give them one drink in 10 years, but by having the works in there you can do that—you can do it efficiently. A number of those trees recovered and a number of those wetlands are now in excellent condition.

I know that one of the criticisms the authority has of works is that they target a particular site. That is true, but some of these works can target quite significant areas of sites. Our proposed Lindsay River regulator would target more than 5,000 hectares in the Lindsay-Wallpolla icon site—that is, 40 per cent of the area that is flooded at, say, 71,000 megalitres per day. That is not the whole area, but it is quite a significant area. And if you cannot achieve a 71,000 megalitre per day flood easily due to the constraints in the system then it is virtually the only option that you have.

I know that the authority is also saying, 'but all areas are flood plain'. Some of these areas of flood plain have been cleared and they are farmed—they are not all conservation reserves. Again, I think we need to be targeting our effort to where we will have environmental benefits, and that is the areas of high conservation value in particular. That is where you will get the best bang for the buck, rather than putting water fairly irregularly on pieces of flood plain that are not particularly valuable.

Dr STONE: I want to go back to the 200 gigalitres of currently productive water use committed to the Murray-Darling Basin Authority. Can you supply us with the socioeconomic analysis of the impacts of that 200 gigalitres being converted from irrigation to dryland farming?

Dr Doolan : This is the 200 gigalitres that is coming out the NVIRP project. Quite a lot of that is in losses, so it is actually not in productive use currently; it is in losses through channel lining and through a range of on-farm. Much of it is coming from system changes, and some of it is coming from changes in irrigation, as you say, with farmers deciding to change from an irrigation enterprise to a dryland one.

Dr STONE: Could you break that down?

Dr Doolan : I have not got the figures on me in terms of the break up, no.

Dr STONE: Could you supply those?

Dr Doolan : Yes, I think we could supply those.

Dr STONE: That would be excellent, thank you. One of our objects is to make sure we understand, as well as we can, the socioeconomic impacts of the authority plan.

ACTING CHAIR: We are almost out of time so, if there are no further questions from committee members, Dr Doolan, are there any other matters you would like to raise that you think we would find beneficial?

Dr Doolan : I think we have covered the areas that are particularly pertinent to your terms of reference. If you would like, we can supply the modelling report for 2100.

ACTING CHAIR: Yes, if you could get that to our secretariat it would be much appreciated.

Dr Doolan : Absolutely. And if you are interested in some of the work we have done on things like the Lindsay River environmental regulator and the benefits of that—

ACTING CHAIR: Yes, definitely.

Dr Doolan : and all those types of works.

Dr STONE: Does that include the Barmah-Millewa Forest and the Coorong Lakes? Have you got work and modelling that you have done on those?

Dr Doolan : We have got modelling on the Barmah-Millewa. There are fewer work solutions but more smart river operations solutions for the Barmah-Milawa. If I may, I will give you an example of the sort of thing that we see as being useful there. Currently the authority will transfer water from Lake Hume to Lake Victoria—through the Barmah, obviously. If the Commonwealth water holder was to water the Barmah with just his water, he would have to raise the river level to 16 to 20,000 megalitres a day to create overbank flooding. Effectively, if there was a change in river operations and those transfers went down slightly earlier in the season, at slightly higher, and the Commonwealth Environmental Water Holder was prepared to pay the losses and then compensate for any increased spills in Lake Victoria which might result from an earlier transfer, you would get a very efficient watering of Barmah Forest for a lot less environmental water. Those are the sorts of things that we are talking about in terms of smart river operations.

Dr STONE: There are already a lot of regulators in Barmah, particularly—

Dr Doolan : Yes—

Dr STONE: so you are talking about addition regulation.

Dr Doolan : This gets the water to a height that then flows. Then you use the regulators to hold and move it around the site itself.

Dr STONE: When you refer to losses, it is a term that worries me a little, because losses are also known as the water that goes in one end and out the other and serves another ecosystem need. They are not losses; they are water that moves through the Barmah down to Gunbower and Perricoota and so on.

Dr Doolan : Some of them are on-site losses that do not move through. Some of them then are—

Dr STONE: They are not losses; they are groundwater accession and a whole range of environmental service outcomes.

Dr Doolan : Yes, that is right. Therefore, if there were known losses—if we are using consumptive water to achieve environmental outcomes—there needs to a principle of no impact on those consumptive users. But you can get very efficient outcomes and a very efficient use of environmental water by underwriting those, if you like.

An example we had in Victoria using our own Victorian environmental water in the drought was that inter-valley transfer from water from the Eildon Weir Dam to the Sunraysia area would normally have occurred going down the Goulburn and the Murray. We were able to have that transfer go down the Goulburn, the Waranga and the Campaspe, where at the height of the drought there were no environmental flows, for simply, again, paying the losses of that extra route. So, there was no impact on the consumptive users of doing that. It was the only way that the lower Campaspe could have been watered during that period, and it was a very efficient, effective and sensible thing to do.

Dr STONE: How will the Victorian Environment Water Holder interact with the Commonwealth Environment Water Holder? Let us presume this plan has been completed and there are those two entities. Will you liaise and cooperate? Will you have your two set plans that you bring together annually? How are you planning to do that?

Dr Doolan : We have processes in place already where our water holder will participate in the allocation of Living Murray water, which is a shared water resource, and will have consultations with the Commonwealth Environment Water Holder as we speak. We are trying to have a reasonably streamlined planning process where the environmental water plans for sites are done by catchment management authorities in consultation with their communities. That is almost the building block for any environmental water holder. It is what the site needs.

Then, our catchment management authorities will go to the Victorian Environment Water Holder with their priorities and preferences for a particular year, and the water holder, our water holder, will then have discussions with the Commonwealth to work out, as far as possible, coordinated watering. So, we are certainly not seeking any duplication, and we are trying to streamline it as much as possible and be as efficient as possible. Both the Victorian Environmental Water Holder and the Commonwealth Environmental Water Holder are quite committed to that. They obviously have to coordinate and be seen to be using their water effectively, and the processes are in place to do that.

ACTING CHAIR: Thank you for your submission and your evidence. If there is anything else—including the documents you referred to—could you send them to our secretariat it would be appreciated. A copy of the Hansard transcript will be made available, which you may check to ensure that everything has been recorded accurately.