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Murray-Darling Basin Plan
06/11/2015
Social, economic and environmental impacts of the Murray-Darling Basin Plan on regional communities

COURT, Mr Terry, Goulburn Valley Environment Group

HARRISS-BUCHAN, Dr Arlene, Healthy Rivers Campaigner, Australian Conservation Foundation

LE FEUVRE, Ms Juliet, Healthy Rivers Campaign Manager, Environment Victoria

PETTIGREW, Mr John Maurice, Water Spokesman, Environmental Farmers Network

[09:59]

CHAIR: I now welcome representatives from environmental organisations. Thank you for appearing today. I invite you to make a brief opening statement if you wish to do so.

Dr Harriss-Buchan : Good morning. Thank you very much for the opportunity to come to Shepparton. We have what we hope is a short opening statement. The Commonwealth Water Act, the Basin Plan and the $2½ million of taxpayers' money which is supporting the implementation of the Basin Plan were developed to deal with a really, really big problem. Unsustainable overextraction of water from our rivers was a big enough problem in the 1980s for COAG to cap increases in water extraction in 1994, but there was very little progress made towards quantifying that degree of overextraction or devising pathways to try to return extraction for irrigation to sustainable levels. That was the situation that the Murray-Darling Basin was in when the Millennium Drought really started to bite.

By the time John Howard revealed his $10 billion National Plan for Water Security in 2007, he did this to address 'once and for all water overallocation in the Murray-Darling Basin'. By that time, very large swathes of the basin were hurtling towards ecological collapse. Ninety per cent of the wetlands were gone. Ninety per cent of the native fish were gone, with fish biologists concerned that, if things did not change, that would be 95 per cent gone. Colonially nesting waterbird numbers had plummeted. There had been no flow from the Murray mouth since 2002. The water in the Lower Lakes was below sea level; it was saltier than the sea; and the drying lake beds were turning acidic. Water quality problems including blue-green algal outbreaks were prevalent right throughout the basin. Water inflow to storages in 2006 was 40 per cent of the previous historical low. With no end to the drought in sight, water-sharing plans were being switched off, existing environmental water rights were being qualified and all of our basin users were desperate for a solution.

That solution is manifested in the Basin Plan. Nobody thinks that the Basin Plan is perfect, but, after years of negotiation, consultation and compromise, the Basin Plan secured bipartisan support across all of its jurisdictions and the support—at least the qualified support—of all the major environmental, peak and industry bodies. Just three years into the implementation of the Basin Plan, at the start of another drought, when the benefits of providing a fair share of water back to the environment are just beginning to show, this is no time to hit the panic button, to turn the clock back and to sell out almost $13 billion of taxpayers' money. The problem of overextraction still exists, and the Basin Plan is there to fix it. It is there to try to provide a healthy river system for everyone who relies on it.

CHAIR: Thank you. Are there more opening statements?

Mr Court : Yes, please—just brief.

CHAIR: Can you keep them quite quick, please.

Mr Pettigrew : We will try.

CHAIR: We want to allocate more time to questions and less to statements.

Mr Pettigrew : We welcome that, Chair.

Ms Le Feuvre : I just want to comment about environmental water, which allows environmental managers to directly address environmental problems and to avoid future issues, which is really important. Recent watering here in the Goulburn has been timed to encourage Murray cod and yellow-belly to spawn and breed, and fishing is better than it has been in years. But the benefits are much broader than that. Environmental water flowing out of the Goulburn travels downstream and can be used to water red gums at Gunbower—you just heard about Gunbower from Dr Stone—fill the lakes at Hattah and keep salinity levels in check in the Coorong.

The Basin Plan is intended to manage water resources in the national interest and provide good water quality for all. Environmental watering does more than just trigger fish breeding. Environmental flows flush salt from systems, keep algal blooms in check and limit the possibility of blackwater events. You cannot irrigate or water stock with salty or toxic water. Our rivers need to function as an ecosystem, not a series of disconnected irrigation sites, so we cannot afford to stop now. The Basin Plan and its billions of dollars of investment are the best chance we have to put our rivers and our irrigation communities on a sustainable footing for the long term, once and for all, as John Howard so memorably said.

CHAIR: Very good.

Mr Pettigrew : I would like to touch on the position we find ourselves in now. The Basin Plan has been a very soft target for most of what people perceive as ills and problems. The Basin Plan is but a small contributor to the position we are in today. The cost of temporary water and things like that date back to water reforms and the impacts and the benefits that water reforms have had. I would love to have questions on the water prices and what is driving those water prices at the moment.

On the question of economic growth, the economic growth that we have seen in the Goulburn Valley over the previous five and six years has been unprecedented. We heard from Dr Stone of the value of those investments and, yes, there have been some investments put on hold. My advice was that the investments in the milk industry were put on hold predominantly for the price in overseas markets. The Basin Plan is not the prime cause of any delaying in those investments. In fact, just this week we have seen the announcement of a joint venture between Blackmores and Bega Cheese at Tatura. This has happened this week, almost as the committee is sitting. These people are savvy investors. They are not going to invest money like that in something that they see as having an uncertain future.

The area I think I should comment on is certainly the constraints management consultation. I have been part of that, as many people in the room have been. That was carried out mostly by the Murray-Darling Basin Authority. It has been handed over to the Victorian government, with the catchment management authority doing it now. The extent of that consultation has been very impressive. There have been numerous one-on-one consultations up and down the Goulburn River. We know the Goulburn River perhaps better than any other river in the basin. I would commend the constraints consultation that has taken place up to this point.

CHAIR: Thank you.

Mr Court : Can I just add from Goulburn Valley Environment Group's point of view?

CHAIR: Are you going to add anything new?

Mr Court : Yes, I can.

CHAIR: The most important value from an inquiry is questioning witnesses about their submissions. Are you going to add anything that is not in your submission? That is the important point here.

Mr Court : Yes, I am.

CHAIR: Go ahead.

Mr Court : Thank you. The implementation of the Basin Plan as agreed is essential for the prosperity of the basin, its people and our economy. Environmental watering and its associated watering regimes will rejuvenate the environmental ecosystems that are essential for the long-term productivity of agricultural production. Ecosystem services are completely and utterly underrated, and they do not necessarily just include breeding; it is pollination, nutrient recycling, carbon sequestration and so on. It is even more important in a selective market that we have a reputation for green, clean and environmentally safe products.

On the issue of Goulburn-Murray Water and its 6,500 kilometres of channel and 17,000 customers, no-one should underestimate the complexity of that task. Any delay in that now will just create more angst. The plan has allowed the people to exit farming if they want to and to improve their productivity. It is obviously evident that the environmental improvement is already underway and that with a proper constraints program that we can improve that. One thing that is obvious here is that the environment movement and irrigators' values are closely aligned. We have got a petition going at Eildon at the moment to keep water in Eildon for water scares. That is not what the environment wants and it is not what irrigators want. So we have to watch that. We must not panic and jeopardise the full implementation of the plan. We have a chance to create a truly sustainable basin of international significance. We need to tread lightly on this landscape if we suspect it to support us indefinitely. We need a working basin that everyone can be proud of. Let us leave the plan as it is.

CHAIR: Thank you. I just do note that your submission has very large amounts that are carbon copies of the Environmental Farmers Network submission. That is why I did not think that you wanted to make a separate statement.

Senator McALLISTER: Some of the evidence this committee has heard already suggests that environmental water is being applied indiscriminately without regard for actual environmental outcomes. I wonder if any of you could comment, either locally or basin wide, on any of the environmental outcomes that you see and their significance?

Dr Harriss-Buchan : I might start in a broader sense. The Environmental Water Holder does not have enough water to be indiscriminately applying any of it. It is an absolute expectation that environmental water is used as efficiently and effectively as possible to get the biggest bang for the buck in terms of environmental outcomes. There is a list longer than anyone's arm in this room of examples where actual improvements have been seen—around here recently, silver perch spawning for the first time since floods in 2010, and great contributions in the Mallee towards Murray hardyhead recovery. There are plenty of examples of the very strategic use of environmental water to top up natural floods, or extend flow recession peaks, so that colonially nesting waterbirds can complete their breeding events, whereas otherwise they might abandon their nests because water levels drop too rapidly. Everyone else here might have better local examples. But there is not enough to waste it. We expect, as everyone else expects, that environmental managers use their water efficiently and effectively and to maximise environmental outcomes.

Ms Le Feuvre : If I could add to that. There was an example last year of watering in the Barmah Forest where moira grasses reproduced in a way that has not been seen in years. That was as a result of all the different water holders getting together and pooling their resources to create a single event. If I might just comment on the fact that the CEWH is selling water in the Goulburn this year. It is not because they have more water than they can use; it is because the conditions for watering were not right so they decided that, rather than waste the water and send it down the river for no reason, they would sell it and then they would have the cash in their hands to buy water in the northern basin where it is has been really dry. That is the reason they made the decision to sell in the first place. So it was due to good planning not due to excess, useless water.

Dr Harriss-Buchan : And we very much support the CEWH's ability trade in water for greater net environmental outcomes.

Senator McALLISTER: As a follow-on to that, there are proposals that have been put forward that would change the constraints that currently exist on the CEWH's ability to sell water. What is your view about that?

Dr Harriss-Buchan : We are worried that it is the thin edge of the wedge. The recommendation to change section 106 of the act, as it stands, looks like a very sensible, measured recommendation. If there is an example where the CEWH says, 'You know what, in this particular year and under these particular conditions, the best thing I can do for the environment is sell some water and use the proceeds to put in a fish ladder.' That seems like a very, very sensible thing to do. But where does that end? Today it is a fish ladder; next week it is an expectation that the CEWH should be selling water that he could use for environmental benefits in other places to pay for delivery charges and fees. The CEWH is already under a lot of pressure to sell water and has to resist that pressure and make sure that he acts according to his obligations and makes sure that he can sell water where he can get a bigger net environmental benefit than elsewhere. So the recommendation itself is a sensible one, but I worry that it is the thin edge of the wedge.

Senator McALLISTER: Just to be clear, you support the CEWH being able to use funds derived from the sale of water for works and measures to support environmental outcomes?

Dr Harriss-Buchan : No. It would seem like a very sensible thing, but those works and measures, fish ladders, all those things, are obliged to be paid for elsewhere. They are meant to come out of other buckets of money. We are worried in terms of that thin edge of the wedge—a one-off example, 'Well, you know, the local CMA does not have any cash, we'll just do it in this case and we'll put in the fish ladder.' That would be fine, but it happens once and it ends up setting a precedent and the next thing you know state governments and others withdraw all their funding from existing programs that are intended to fund those works and measures and it falls on the CEWH.' So it is that thin edge of the wedge issue that we are concerned about. As a result of that, we do not support that recommendation.

Senator McALLISTER: I am interested in your views, Mr Pettigrew, about the economic impacts and the drivers of economic change here and in the basin, broadly, but I suspect they will be the theme of questioning from other senators. If other senators do not get to that, perhaps we can come back to it at the end.

CHAIR: By all means.

Senator McKENZIE: I would like to go to a variety of your submissions. I will run through a couple of issues that I want to understand. Several of you make claim that you want the Murray-Darling Basin Plan to be delivered as intended and on time. We have heard over and over and over again—as sometimes is the case with these big unwieldy things; dreams of governments, multiple governments—that the implementation is sticky, there are unintended consequences and there is lack of consultation at both the federal and the state level, even local CMA or local council level. Am I to take it that, irrespective of those concerns raised by numerous people across different states, you still think we should push ahead with delivering something that is clearly needing some more massaging on time?

Ms Le Feuvre : We would agree that the implementation is not perfect. The trouble is that the whole thing was driven, as Arlene just said, by the environmental imperative. That was the problem we were trying to address.

Senator McKENZIE: I think it was more a political imperative, but we will argue about that later.

Ms Le Feuvre : We could argue about that. The best available science is saying that we do have to make a change to the way we manage water.

Senator McKENZIE: I really do not want my line of questioning to assume that I do not value the environment at all. That is always the common attack line: because I have questions about how we are implementing this program, somehow I am not for a sustainable environment. I am for the Ramsar Convention, which equally values wetlands' economic, social, recreational outcomes. I just want to put that on the record. Irrespective of the clear lack of consultation of key stakeholders in this across states, you still want it delivered on time?

Mr Court : As said before, this is a complex issue. It has been known from the start that it was going to take eight or nine years to implement—the remodelling and the GMID. It is enormously complex and it is enormously complex when individuals are involved. Without doubt—

Senator McKENZIE: So you would support spending some more time getting it right?

Mr Court : No. If you do that, you will create more problems. We are now in the driest year since 2006. Allocations in the Goulburn system are 75 per cent, so we are under enormous stress at the moment. If you delay this now, you will create more stress into the future. We do not want this to be a 15-year program. We want to try to deliver it in the eight or nine years that it was intended to be delivered in, and that is what we should do.

Senator McKENZIE: Thank you, Mr Court. You have answered my question and I do have a few more in the limited amount of time. You counter the claim that the Basin Plan is pushing up the price of water to unaffordable prices, and you have a rationale around that. You say that more irrigators are participating in the market. Does this panel support multinationals participating in this water market?

Mr Pettigrew : The water market is an open market.

Senator McKENZIE: So you support superannuation funds buying the water?

Mr Pettigrew : I will not be verbalised.

Senator McKENZIE: I am asking you a simple question: it is a yes or no, Mr Pettigrew?

Mr Pettigrew : I am not sure what international players are in that market now.

Senator McKENZIE: You want an open market. Would you support multinationals—not based in this country, not based in this community—holding water from this community?

Mr Pettigrew : My preference would be that they would not.

Senator McKENZIE: Is that a yes or a no, Mr Pettigrew?

Mr Pettigrew : My preference would be that they were not. It is important. For the water market to operate, it has always been known that, when water reform was being put together, to maximise the market for the benefit of the irrigators and the community and to get full value to the nation for the value of the resource, we had to have the maximum amount of players in the market. That included people who did not own farms as well. It was seen as a mechanism for irrigators—

Senator McKENZIE: So you are supportive?

Mr Pettigrew : to finance operations, to modify farming management plans and to set themselves up in the type of economic situation for the 21st century.

Senator McKENZIE: So what do you say to speculators, who 'play' the water market, if you like?

Mr Court : Could I give John a breather. Self-managed funds own some of the water, individuals with self-managed funds. The subject of superannuation is going to be quite—

Senator McKENZIE: How open do you want this market to be? By the sounds of it, you want it to be a fully open market.

Mr Pettigrew : Yes.

Senator McKENZIE: Thank you.

Mr Pettigrew : I have made comments on the market in that I believe there can be improvements to it. I have always been an advocate of a national exchange and not your individual water markets. So I do agree with Dr Stone in some regard, that there can be some improvements but you cannot have too much transparency. I have always been an advocate for the national market.

Senator McKENZIE: There has been some commentary on carryover. I would be interested in your perspectives on reducing or getting rid of carryover.

Ms Le Feuvre : The point about carryover is that it was irrigator demand which led to carryover being instituted in the first place. The environment is obviously able to benefit from carryover but to no greater or lesser extent than any other irrigator in the basin. It is not the environment that was asking for that; it was the irrigators.

Senator McKENZIE: I am not asking whether the environment was asking for carryover. I find it quite incongruous that an environment can ask for something like carryover. I am asking your perspective of carryover and any reduction of carryover or of getting rid of the notion of carryover. Do you have a view?

Mr Pettigrew : Carryover is a very important part of irrigators' management of their water allocations. I think the irrigation industry would be up in arms at the thought of carryover—

Senator McKENZIE: I am asking your view.

Mr Pettigrew : My view—absolutely.

Senator McKENZIE: As it is? No reduction?

Mr Court : Yes, as it is.

Senator McKENZIE: The lack of data: I am all for a science based approach and always have been. If you look at any commentary I have had on this over the last four years I have been a senator, it is all about a science based approach. When you look at the lack of data that we have about certain tributaries of the river, the effect of flows et cetera, do we have enough data throughout the system to able to manage it? We are only getting the Murray-Darling Basin to agree the Barma Choke might be an issue of recent times. I know we have been talking about that for four years. So do we have enough data to base our decisions on science?

Dr Harriss-Buchan : Yes, we do, but it is important that we learn as we do and that there is ongoing investment in science, metering, monitoring, adaptive management—we are all for that.

Senator MADIGAN: Dr Buchan, thank you for your appearance today. Have there been any negative environmental impacts from implementation of the Murray-Darling Basin Plan?

Dr Harriss-Buchan : Are you talking about black water events?

Senator MADIGAN: I am asking about any negative impacts from the Murray-Darling Basin Plan which your organisation is aware of?

Dr Harriss-Buchan : There are some black water events which have been attributed to environmental watering, which has happened after long periods of dry and when there is not enough water applied to flush it out the other end. That would be my first example of an unintended consequence and an example that environmental water managers have to learn as they go. The question there was about enough information, enough science to start doing stuff. They are learning as they go. Other people on the panel might have better local examples.

Senator MADIGAN: I addressed the question to you, thank you, Dr Buchan. Mr Pettigrew, your group's submission says that, 'The constraints management strategy appears to be progressing well with excellent community consultation identifying constraints and options to mitigate the identified risks, environmental water flows and river channel capacity.' This directly contradicts evidence in the submission of the former water minister Mr Peter Walsh. What evidence do you have that the strategy process is working well?

Mr Pettigrew : I have been part of it. I am on several committees, on it, representing Goulburn Valley Environment Group on that committee. We have met with all the other interests at committee meetings, up and down the river, the Murray-Darling Basin, in their segment of where they were responsible for that consultation—I find it hard to know how you could do more. They were out there offering one-on-one consultations. They met with anyone who had a query or complaint. They virtually met one on one.

I realise there are still people concerned but you have to realise what the plan is doing, what the consultation is doing. It is out there to find where the issues are so that they can be taken into account in getting the final plan presented. I do not know how else you would do it. I have been involved in a lot of consultation over the years. This has been over the top, but you have to go through it to that length. It is very sensitive.

Senator MADIGAN: How many members do you have in your organisation?

Mr Pettigrew : Around 50 to 60, ranging from almost the Murray Mouth well into Queensland, not entirely in the Murray-Darling Basin but also Gippsland.

Senator MADIGAN: How many of your members, would you estimate, are in the Murray-Darling Basin area?

Mr Pettigrew : My guess is probably half.

Senator MADIGAN: What number would you put there, roughly?

Mr Pettigrew : It would be something like 25 or 30.

CHAIR: I have a couple of factual details to ask you about, if I may. Your submission says the dairy industry is booming in the Goulburn Valley. We have had submissions from processors who say they have difficulty sourcing sufficient suppliers of milk, because of a lack of water. The dairy industry itself says they have not returned to production levels of 10 years ago. What do you base your statement on?

Dr Harriss-Buchan : There was an earlier comment about the Pactum factory, which has just spent $45 million on a new UHT facility, with another $18 million extension envisaged. Murray Goulburn has just floated on the stock exchange with, I think, a capital value of $500 million. Gerry Harvey has just bought a property here for $80 million. To me—and I live in Melbourne; I do not live in the basin—that looks like investor confidence. That looks like, as John described them, savvy investors who see a future for the industry.

Juliet and I were talking this morning about our conversations with the dairy industry who, I believe, will be on just after this and they will expand on this. They are worried that their production levels are still 500 gigalitres below their production levels before the millennium drought. That is a big problem for them. I understand why that is a big problem for them. In a resource constrained environment they need to be innovative, like all other areas of agriculture and the environment, in trying to find solutions and ways to move forward in a resource constrained environment. In terms of actual productivity, the financial profitability of industries there are across the basin—one of the other numbers we used—even in the drought years, water use reduced by 14 per cent but productivity increased by two per cent.

To return to your question of why I made that comment, it looks like investor confidence, to me, in an industry that is not on its knees. It is an industry that is challenged and under pressure, as you would expect whilst going through a drought. It is not an industry on its knees.

CHAIR: On page 2 of your submission you claim there are more irrigators than ever, but on page 5 you say the number of irrigation businesses has declined by over 500. Your argument is, I think, that their plan is having a minimal effect on the irrigation industry, which is directly contrary to what the large majority of submissions we have received would argue. Do you suggest that the plan, as it is currently being implemented, is having no social or economic impact on basin communities?

Dr Harriss-Buchan : No, I do not say that. What I am looking at in our submission is the number of irrigation businesses in the basin has declined 3.3 per cent over the five-year period from 2008 to 2013. But the trend is much less marked than for the overall farmer population, which reduced 11 per cent Australia-wide over the same period. We are not suggesting there are no social and economic impacts. There was a massive problem to solve and an enormous adjustment is required to solve the problem. I think it is very difficult to tease out all the different factors that impact upon irrigators, irrigation businesses and communities throughout the basin. There are commodity prices, input prices, exchange rates, weather and the demographic trends that are moving through Australia in the same way that they are moving through all other countries in the world. And some of those things are very difficult to control and identify. It is easy to point the finger at the Basin Plan and blame the Basin Plan for things that it is not responsible for.

I hope that you will talk to Jacki Schirmer, who is running the Community Wellbeing Index, from the University of Canberra because that is the organisation charged with doing lot of the studies to try and tease out those issues. To what extent can you identify the Basin Plan and its elements as being partly, wholly or not at all responsible for some of the trends and issues that we see in the basin.

We are not at all suggesting that there are not a lot of communities in the basin who are under a lot of pressure, but we are not convinced that a lot of that pressure has been caused by the Basin Plan. There are also communities which are booming. There are communities which have been subject to substantial amounts of water recovery and their populations have increased, not decreased. The wellbeing study so far has shown that there is no direct link between individual or community sense of wellbeing and their exposure to water recovery under the plan. I think they are important studies to be done. We support those studies. It will take time to tease out those factors.

CHAIR: You did say in an earlier statement—it might have been your opening statement—that implementation of the plan is not perfect. Which aspects would you highlight as not being perfect?

Ms Le Feuvre : We have heard a lot of complaints about how the modernisation programs are rolling out. If this committee could make some recommendations about how to improve those programs nobody would be happier than us because we want to see sustainable agriculture in the basin. We are not in the business of putting agriculture out of business. We want to see it done better, and it is really important to us that we have our communities functioning well.

CHAIR: I guess the question is: what would be your definition of 'better'? What would that comprise?

Ms Le Feuvre : Better for us is infrastructure which allows irrigation to be as effective and as efficient as possible in the right places. So you identify where the good areas for irrigation are and where are the not so great areas and focus in on the good stuff. You make it as good as you possibly can so then you can have more of an integrated landscape. You have some bits which are intensive agriculture and other bits which are for ecosystem services, as Terry described. We can make the whole thing work better. If we are investing all this money let's make it work better. That would be a really great outcome.

Mr Court : The implementation processes around the food bowl notion, the creation of another body, taking it out of Goulburn-Murray Water's hands, then ongoing processes and bringing it back into Goulburn-Murray Water's hands, and the threat of royal commissions and all that—that is not a good place to actually deliver a project, so what we need are clear directions here to Goulburn-Murray Water and they do the job. Do not change the organisation just give them a chance to finish this job.

CHAIR: One last question for the Australian Conservation Foundation, several years ago during severe drought—during the millennium drought—your website was calling for government to commit to increasing environmental flows for the basin to 1,500 gigalitres over a 10-year period—1,500 gigalitres per year—a figure supported by the best available science and now you are supporting a plan that calls for 3,200 gigalitres. Which is the right figure?

Dr Harriss-Buchan : The one which was the best available science of the day. In previous years we were calling for 1500 gigs, because that was what the scientists of the day suggested was the appropriate amount. That 1500 was to be applied to the Murray only; it was not intended to apply to the whole of the basin. In terms of scope, 1500 was the River Murray only and the 3200 was for the entire Murray-Darling Basin. The amount of scientific information from which that is drawn has changed significantly over time.

CHAIR: Can you identify that scientific information between the period when you were calling for 1500 gigalitres and when you change your policy to 3200 gigalitres? I accept your point that the 1500 was for the Murray only. What was the science that led you to change that figure so substantially?

Dr Harriss-Buchan : We do not do our own scientific research into these things. The Murray-Darling Basin Authority does. It is an enormous process, and it landed on the figure of 2750 with an additional 450, which is required to maintain additional flow targets. We do not do our own science—

CHAIR: Previous witnesses have indicated that that increase to 3200, or 2750 plus the 450, was not based on science—there was an element of science—but a very significant amount of it was political negotiation or political compromise. You have chosen a figure with this substantial political element to it, and yet you are attributing it to science. Do you accept that?

Dr Harriss-Buchan : No, we are basing those numbers on the Murray-Darling Basin Authority's work.

CHAIR: Are you accepting the Murray-Darling Basin Authority's number irrespective of how it was arrived at?

Dr Harriss-Buchan : That is the best available science. Nobody thinks it is perfect—no-one does—but if we wait until we get a perfect number that everyone can agree on, we will still be having the same arguments in 60 years' time. It is the best available science of the day.

Senator MADIGAN: Mr Court, the constraints management strategy has one scenario of flows of 20,000 megs a day downstream from Eildon. The Molesworth Choke has a channel capacity 9½ thousand megalitres per day. Would you have concerns about flows of 20,000 megs per day, say, for 10 days at a time? Do you understand that inundation of pasture for more than seven days requires that pasture to receive significant rehabilitation?

Mr Court : I am not right over that particular detail—Mr Pettigrew could answer that.

Mr Pettigrew : It would be better if I answered that. I have had more experience than Terry in that area. Certainly there were scenarios of 20,000 going through the upper Goulburn—that is recognised by everyone as not being acceptable. It puts too many people at risk and affects too many people. The whole point of the strategy and the consultation was to find out those things, and it certainly found that out loud and clear. There is only a certain amount of water that can go through the upper Goulburn. We realise that to have environmental flows we have to rely on the tributaries providing the bulk of the flow and being able to top it up. So, yes, it is recognised that those figures will not happen—they just will not happen. No-one would accept them.

Senator McALLISTER: I simply want to follow up on Mr Pettigrew's offer in his opening statement to talk a little about what is driving price volatility and higher prices in the temporary trade market.

Mr Pettigrew : The Basin Plan, as I said earlier, is a soft target in many ways and gets the blame for the current temporary price of water that we are seeing and, to some extent, the permanent price that is sneaking up. Really, we have had prices much higher in the past—up to $1000 in 2002 and 2003—and at that time I was sitting on the board of Goulburn-Murray Water and worrying like hell that perhaps the water market might not even survive. The price of the water then was probably the least of our concerns. We needed a market to survive for industries to have any chance of pulling through that drought.

What has been driving it at the moment has certainly been the weather outlook, allocations and there are industries out there that can afford to pay much higher prices for water that we are competing within this region. Cotton is sneaking down into the southern Riverina, across the Murray from us. And you have got the huge investment in horticulture almonds coming into the Mildura areas, predominantly. But this is our market. Prices were at 272, I think, at last Wednesday's market, the local market here. We do not know what the price was for the 20 gigalitres that were sold. I suspect it was around 280 or something like that, probably. Under the circumstances, with the weather outlooks that we have been facing, I do not think that is a surprise at all. Whether the Basin Plan were in place or not, I do not think it would be much different.

CHAIR: Thank you very much, ladies and gentlemen. We appreciate you coming along.

Proceedings suspended from 10:41 to 10:52