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RURAL AFFAIRS AND TRANSPORT LEGISLATION COMMITTEE
20/10/2010
AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO
Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences

CHAIR —I welcome officers from ABARE.

Mr Glyde —I want to go to a matter of administrative procedure, I guess. Since the last time we met in estimates—

CHAIR —Sorry, Mr Glyde. Senators, I cannot hear Mr Glyde. If I had my way, estimates would have been finished about an hour ago because the way we are pursuing it, it is a talkfest. There are no questions going on here.

Mr Glyde —Thank you, Chair. I just want to inform the committee that since the last time we met, the Australian Bureau of Agricultural and Resource Economics and the Bureau of Rural Sciences have merged. So we are now known as, strangely enough, ABARE-BRS.

CHAIR —ABARE-BRS. I kind of like that.

Dr O’Connell —We did not spend a lot of money.

CHAIR —There was no consultancy. I would say you have been working on that since we last met, so well done.

Senator NASH —Thank you very much. I have some questions around the MDBA plan and the modelling that has been done for that. There has obviously been a lot of discussion around it. When was ABARE first asked by the MDBA to do modelling?

Mr Glyde —I might pass to Mr Morris to go through it.

Senator NASH —The socioeconomic analysis, yes. Can you run through the timeline of when you were first asked and any pieces of work that have been done to date?

Mr Glyde —Yes. We will do that. I will turn to Mr Morris to explain that.

Mr Morris —Thank you. I will start off. If I do not get it quite right, Mr Gooday can correct me. It is, first of all, important, I think, to clarify that there are two pieces of work that we are talking about here that we have done specifically for the Murray-Darling Basin Authority in relation to the guide. The first piece of work was initiated in January this year under the former Bureau of Rural Sciences. MDBA put out a request for tender in December last year and BRS was given the opportunity to do that work. They commenced work on that in January of this year.

Senator NASH —What was the cost to the MDBA of doing that?

Mr Morris —The cost of that work was $109,090. That work was done in conjunction with the Centre for Rural Futures in the University of New England.

Senator NASH —And what was the title of that report, just so we can have some clarity?

Mr Morris —The title of that report was Indicators of community vulnerability and adaptive capacity across the Murray-Darling Basin: a focus on irrigation in agriculture.

Senator HEFFERNAN —Is that a public document?

Mr Morris —That was released on 8 October as part of the suite of reports that were released at the time of the guide being released. So that was released by the Murray-Darling Basin Authority on that day.

Senator NASH —Finish the timeline and then I will come back to that.

Senator BIRMINGHAM —When was that report completed?

Mr Morris —That report was provided to the MDBA on 13 April this year and that was as a report to client. Then, as I said, a final version, a publication quality version, was given to them on the day of release so that they could actually release the publication quality version. But the final report to client, so to speak, in our terminology, was provided in April of this year for that particular report.

Senator NASH —So, to be absolutely clear, the final version of that report from you was done by 13 April but it was not released publicly until the day of the guide to the plan’s release by MDBA?

Mr Morris —Correct. I am sure the MDBA had a number of consultants that were doing work for them. They provided them with work. It was really up to MDBA to decide when that work was going to be released.

Senator NASH —I am not sheeting them home to you. Do not worry about that.

Mr Morris —So we provided that one on 13 April. As I said, there were a number of technical reports that were released on 8 October. That was one of them. That was one of the reports. The other report was given to ABARE to do originally, and that was entitled Environmental sustainable diversion limits in the Murray-Darling Basin: a socioeconomic analysis. Formally we were contracted to do that work around about April, but we were actually asked to commence the work in about January of this year. So we have been working on it since that time. There was a series of reports probably when we were originally requested to do that work that were provided to the Murray-Darling Basin Authority reflecting the various options that they wanted us to run through the modelling. So the first initial set of preliminary results was provided in February this year. We then provided a series of additional reports and results over the course of the following few months, including in June and July. The final draft of the report based on the actual sustainable diversion limits that the MDBA was using in its final report was provided on 10 September this year. So clearly we could not obviously provide the final results and the final runs of the model until we knew what the assumptions on the sustainable diversion limits were. Then again, similarly with the first report, we provided a publishing quality ready version on the day of release so that the MDBA could put that on their website for public viewing.

Senator HEFFERNAN —Who did you subcontract the work to? Did you blokes do it yourselves, or did you subcontract it?

Mr Morris —In the first report—

Senator HEFFERNAN —The second report.

Mr Morris —In the second report, we did all that ourselves.

Senator HEFFERNAN —So, based on your version of the social and economic consequences of the sustainable limits of extraction, what were the figures you used that were going to be extracted to give you the effect?

Mr Morris —We used the three options that were provided by the Murray-Darling Basin Authority?

Senator HEFFERNAN —What were they?

Mr Morris —They were the 3,000 gigalitres, the 3,500 gigalitres and the 4,000. But they then—

Senator NASH —Just on that, when were you first—

Senator Ludwig —Just let him finish—

Senator NASH —It will help the remainder of the answer. I am not just interrupting, Minister. When were you asked by MDBA to model those specific figures?

Mr Morris —Sorry, I would like to finish off that answer, if I could. The rest of the answer was that you have to translate those numbers to the specific reductions that occur within the Murray-Darling Basin regions. So what we were actually given by the Murray-Darling Basin Authority was not just the overall reductions but also the sustainable diversion limits by region. So that is what actually goes—

Senator HEFFERNAN —So does that—

Senator NASH —Bill, I have the call. Just give me 10 minutes, okay, and then you can go for your life.

Mr Morris —To respond to Senator Nash’s question, during the course of the last eight months or so, we have run a number of scenarios and come up with a number of results.

Senator NASH —But at what point did the MDBA say to you, ‘We want you to do 3,000, 3,500 and 4,000?’

Mr Morris —The specific ones?

Senator NASH —Yes.

Mr Gooday —As Mr Morris has indicated, we have run a wide range of scenarios for the MDBA throughout the course of the year. The final set of results from our water trade model, which is the basis of the analysis we do, was provided to the MDBA on 1 September.

Senator NASH —I have that. Do you want to take on notice when they actually asked you to do those specific numbers?

Mr Gooday —My understanding is that the final scenarios—because there are a whole range of scenarios that we had done—were confirmed with the MDBA on 26 August to tell us which scenarios to include in our report.

Senator HEFFERNAN —So how wide was the range of scenarios? From where to where?

Mr Gooday —Over the course of the year, we looked at and included in our report a range of scenarios from, I think it starts at about a 15 per cent reduction through to over 50 per cent. I think it might be a 70 per cent reduction.

Senator HEFFERNAN —That is on extraction?

Mr Gooday —That is on diversions.

Senator HEFFERNAN —But the flaw in all of this is: what were the assumptions upon which you built those extractions? In other words, what was the decline in run-off that triggered all that?

Mr Gooday —We have used information directly from the MDBA that tells us—

Dr O’Connell —Look, I think at this point it is probably worth being clear that those variables were asked for by the MDBA. So this was provided by the MDBA.

Senator HEFFERNAN —Yes. If you take 3,500 gigs out of the system when Mother Nature is going to take 9,000 gigs out of the system, you still have not got in front. So I want to know what the Mother Nature assumptions were.

Mr Glyde —Senator, that is a question that we cannot answer. It is a question that the Murray-Darling Basin—

Senator HEFFERNAN —You cannot give these answers correctly unless you know that.

Mr Glyde —I think you have to understand the nature of the role that we were asked to perform by the Murray-Darling Basin Authority.

Senator HEFFERNAN —But it is a phoney role. You do not know because you cannot say what the economic and social consequences are. If you take 3,500 gigs, with great respect, you take out part of a 7,000 decline in run-off because of the two degrees increasing temperature and all the rest of it.

Mr Gooday —I point to our report. We are quite clear in our report what we have done. The MDBA have provided us with percentage reductions in diversions. We have assumed that those percentage reductions in diversions translate to the same percentage reductions in use. We had a discussion about that—

Senator HEFFERNAN —In run-off?

Senator BIRMINGHAM —Senator Heffernan!

Mr Gooday —In use.

Senator HEFFERNAN —No. I am talking about run-off.

CHAIR —Let Mr Gooday finish. It is not your call, Senator Heffernan. Senator Nash actually has the call.

Mr Gooday —So that is what we have done in our assumptions regarding the change in water use with respect to the change in diversions.

CHAIR —Mr Gooday, you have made that point clear.

Senator NASH —On that, what assumptions do you actually make to inflows into the system?

Mr Gooday —We do not make any assumptions.

Senator NASH —So everything is literally handed to you from the MDBA and you just do the modelling?

Mr Gooday —Yes.

Senator NASH —I will move to the issue of job losses. I am interested to know of the reporting that has been done on the job losses and the 800 figure that came out with the MDBA. Did that 800 job loss figure come from ABARE or has that come from somewhere else?

Mr Morris —That is a number from our report.

Senator NASH —Can you give us a very clear outline, then, how you arrived at the figure of 800 jobs being lost across that band of reduction?

Mr Morris —I think Mr Gooday was going to clarify my suggestion. You probably will not find 800 in the report. You will find a percentage figure in the report, which then translates into 800. I think it is important to think of these numbers in—

Senator BIRMINGHAM —Percentage of what?

Senator NASH —That is a very good question—percentage of what?

Mr Morris —Percentage of employment in the basin is what the 800 number relates to.

Senator NASH —Talk us through exactly how you arrived at that figure. Can you clarify for me on the way through if within all of that, when you are talking about job losses, you assume that even though someone might have lost a job in this particular region, if they get one somewhere else, they are not counted as a job loss? Can you just clarify that for me on the way through?

Mr Morris —It is really important to remember that these job losses are at basin level. When they talk about the 3,000 number, it is at a national level. These numbers are based on the fact that when you look at the gross value of irrigated agricultural production in the basin, you have a value of about $5 billion or $6 billion. Then you are comparing that with the national size of the gross domestic product of around $1 trillion. So we are talking about a size of production of about a half a per cent of our gross domestic product. You allow for multiplier effects, which we do allow for in our model because we use a general equilibrium model to look at these things. So we are actually looking at not just the impacts on irrigated agriculture; we look at the flow-on effects to processing, to food—

Senator NASH —As you should.

Mr Morris —and so forth. Even when you allow for that, the overall national impact in the context of the size of the sector compared to overall gross domestic product is going to be relatively small, particularly when you are taking 30 per cent of the water away. That is not the full size of that half a per cent of GDP I was just talking about. In that context and in a national context the numbers appear to be very small. What is very important to remember, though, is that there has been a lot of emphasis by commentators on those aggregate size numbers. But what these reports—

Senator NASH —For very good reason.

Mr Morris —But what these reports are really about, and what the issue should be really about, is what impact these reductions have on people and communities in the basin. And that is what our report talks about. It actually goes down to 22 individual regions in terms of the water modelling we did and about six regions for the Ausregion model for the economic impact analysis. But it is certainly 22 different regions in the context of the impacts on agricultural production. That looks at the effects on commodities and regions in that context. They are the areas where we are estimating that there is going to be a very substantial impact in terms of agricultural production and on income in certain regions.

Senator HEFFERNAN —Is that based on the history of the past use of the farming land or the scientific use of the future? Is that based on what grandpop did?

CHAIR —Senator Heffernan!

Dr O’Connell —I think we had better let Mr Morris finish answering the question, because he has only started a complex answer.

Mr Morris —The key thing is the results in the report, which were at the regional and commodity level. That is what we think the focus should be on. The fact is that the Murrumbidgee takes a big hit and a number of towns in that region in the southern part of the basin and the northern part of the basin are going to be particularly vulnerable to some of these hits. Rice, cotton and dairy production are going to be significantly affected by these changes. It is those sorts of results that should be the ones that are focussed on and how that might impact on the communities and on producers.

Senator NASH —If I had spent some time in ABARE, I would probably understand all the gobbledegook, and I mean that in the nicest possible way. What I am trying to do is get a plain English understanding. I appreciate that we probably do not have the time here now. I would like a plain English understanding of how you determined why jobs would be lost and that general equilibrium modelling that you were talking about. What I want to know is not the word. I want to know how that works. When you come out with a figure of 800 jobs to be lost, every single person who lives in the basin who is involved in a regional community knows that figure is complete rubbish in terms of people losing their jobs in the regions. I understand how you have extrapolated that all out to get a figure like that, but in the real world it is not going to sit like that. So when we get a figure like that in the national media, people in the cities think, ‘Oh, that is not too bad.’ I am trying to get a complete understanding of how and why that figure sits.

Senator Ludwig —I also wonder about whether or not you are contributing with that statement about the concern. I do not know what modelling you have done to say that figure is completely erroneous. Unless you are going to, then—

Senator NASH —No. I can actually explain that for you, Minister. I can actually explain that for you. When you actually travel through the regions and talk to businesses who individually employ 100 or 150 people and who say, ‘If this happens, we will shut down’, you do not have to do that very many times until you get to 800—and you start surpassing that very, very quickly.

Senator Ludwig —I would still be interested in your modelling that has got to a different count.

Senator BIRMINGHAM —Even the MDBA chair has said he thinks it is an underestimate.

Senator NASH —Absolutely.

Senator Ludwig —I am not suggesting one way or the other. I am just making sure that people do not make wild, unsupported allegations across the table. ABARE can be asked questions and they can respond to them accordingly. That is all I am making sure of.

Senator NASH —I am certainly entitled to have a view, Minister, as you well know.

Senator Ludwig —This is for questions. Of course you are entitled to have a view.

Senator NASH —Quite often views get put forward in questions. Senator Colbeck has a question.

Dr O’Connell —Chair, if it is helpful, I think it is probably important to understand that that percentage which results in those numbers—the 800 and 3,000, and Mr Morris can help me here—is looking at the effects over the medium to long term once the economy manages to adjust. It is not talking about the numbers of individual people that may be affected region by region and town by town. It is talking about a modelled result.

Senator NASH —Who is doing that?

Mr Glyde —Perhaps we should explain the broad nature of the modelling and the outcomes of the work.

Senator NASH —That would be great. What Dr O’Connell has just said is absolutely right. We are trying to get an understanding of those figures job by job, town by town, who is going to do that and when we are going to see those numbers.

Mr Morris —As Dr O’Connell said, the numbers that we produce are very much a net number. So when you have a very strong economy, as we have now, which is essentially at full employment or very low unemployment at least, there is quite a lot of movement of those resources into other jobs. So essentially the 800 reflects the fact that a larger number than that is obviously going to lose their jobs. But it accounts for the fact that a large number of those will find jobs in other sectors. That is what economic—

Senator NASH —So you might lose a job as a butcher but go and find one as a hairdresser?

Mr Morris —Well, it depends what you want to look at. Clearly, if you change policy and you close down a factory or whatever, that is going to have an immediate impact on the people who are actually engaged there. But a large majority of them will find jobs elsewhere. So it depends on whether you want to count the 500 people who lost their jobs as a result of a factory closure or the five people who remained more long-term unemployed. Our numbers are actually looking at the five, not the 500 people.

Senator NASH —I understand what you are saying. Your numbers are on the wash-up. After all this has been through the washer, it has all come out the other end, this is how it is going to look. I understand that. What I want to get to is what Dr O’Connell was referring to: who, what, when and where is going to do the other option that you were just talking about of the job losses, the closures, the gins and the mills closing down? Who is doing that and when are we going to see it?

Mr Morris —We have done some of that. That is the further work that the MDBA is looking to have done as part of their additional work. We have done that in two ways. One is we had the report earlier in the year by the Bureau of Rural Sciences. It looked at which communities were particularly vulnerable to changes in irrigation agriculture activity. That provides a snapshot, without looking at what reductions the MDBA was going to put in place. It was looking at which communities and which towns were particularly vulnerable. Another thing we did is when we did the second report on the socioeconomic side of things, we actually also looked at a regional level at the specific impacts of the changes in diversion limits on particular regions. So within that report you will see the 22 regions listed and the impact on the gross value of irrigated agricultural production. Later on in the report there is information on regional GDP as well.

Senator HEFFERNAN —I have to ask a question. Given your hard work in that area, did you allow for the quarantining of assets and a change to the use of water technology? Did you allow for non-paddy rice? Non-paddy rice is the reality. You would be aware that paddy is only there to control the variation in the temperature of the plant. We now have the science complete and the varieties available for non-paddy rice. Is all that in the equation? As I said to Senator Macdonald earlier, you have been given two, four, six, eight or whatever changes back to the environment. That means that if you trade all that water up the river instead of having some trade down the river, the freight factor and the environmental factor—

CHAIR —Senator Heffernan, this is going off at a tangent. I will give you the chance, but your colleague—

Senator HEFFERNAN —These are important assumptions.

CHAIR —You will have your time. Senator Nash has the call.

Senator NASH —You can finish the question.

CHAIR —Bear in mind that we are running out of time.

Senator HEFFERNAN —We are not going to run out of time, because this is too important.

CHAIR —Senator Heffernan, you do not have the call. Unfortunately, you do not ask questions,; you go on rants.

Senator HEFFERNAN —I do have the call.

CHAIR —You do not have the call. Senator Nash has the call.

Senator NASH —Senator Heffernan can finish.

CHAIR —So you are finished, Senator Nash?

Senator NASH —No. I am not. Let him finish his question.

CHAIR —This is getting ridiculous. Put your question, Senator Heffernan. If you continue to preach, I will ask you to pull it up and we will move on.

Senator HEFFERNAN —Do you allow for the change in science in the change to the behaviour of a particular area?

Mr Glyde —Senator Heffernan, I think all of those adjustments that you are talking about are things that will happen in the future. It is very hard to model—

Senator HEFFERNAN —You have been asked to give an impact assessment.

CHAIR —Senator Heffernan, let Mr Glyde answer. I do not even want to give you the call but your colleague has passed it.

Senator NASH —For one question.

Mr Glyde —It is very hard to speculate on how individual farmers in rural communities—

CHAIR —When Senator Nash says one question, trust me, it is going to be five. Sorry, Mr Glyde. I interrupted you.

Mr Glyde —Senator Heffernan makes a very good point in terms of the difficulty of being able to predict future behaviour. It is hard to know exactly how every single farmer and every single player in the agricultural economy will behave. We know they will make changes, because of the change to water availability. The sorts of things that Senator Heffernan is talking about will lessen the impact of the change. But in terms of the capacity of economics and of economic modelling to handle that, it cannot be done. What we have to do is go with what we have got in terms of the historical information about what the change might be. That gives us a platform from which we make some assumptions or estimations of what might happen, given that technology. How the future will go, which goes to the issue that Senator Nash is raising, is how that will affect everyone on the ground in the future. It is really hard to do at a farm level because of these changes in the behaviour of the individuals in the market. Within the level of the data that is available, we have been able to provide estimates at a whole-of-region and whole-of-national level, which, as we said, are interesting. But the really important thing is what is happening catchment by catchment. We have gone down to the catchment level in order to be able to understand at the farm level. It is beyond the capacity of models to be able to do that. That is what we are really grappling with.

Dr O'Connell —The work that was done on the resilience of towns is important here. That, combined with the impact of the work demonstrating which commodities are likely to take the hit, helps you start to get a sense, with further analysis—and that goes to having to go down to the granular level of towns and their supplies—of which particular towns are going to have trouble and need adjustment and which have more complex economies and more likelihood to be able to adjust more easily.

Senator NASH —Senator Colbeck has a question.

Senator COLBECK —I want to ask a question centred on that context. Does the definition of the models recognise potential tipping points for the sustainability of a particular industry? Does the definition go down that far, or are you just saying, ‘Okay, we’re going to take, say, 30 per cent to 40 per cent of the water out. We’ll assume that the production reduces in a proportional ratio, whatever that might be, to the reduction in resource’? Does it take into account that at some point in time—and it may be within that range—the sustainability of that sector disappears? Is that definition available in the modelling at any of the levels you are looking at, or is it a consideration?

Mr Morris —The model does not quite work the way you have explained. Trade actually occurs within the model so that if you take water away from one particular area, or if a user voluntarily sells his water, for example, then other people will buy water from other sectors. So you actually get water traded to the highest value end use within the basin. If you look at the reductions that we have estimated for various commodities, you are not going to get the size of reduction you are talking about that would actually result in an industry becoming totally unsustainable. With rice, I think, it was a 37 per cent reduction.

Mr Gooday —Yes.

Mr Morris —I do not like comparisons with the drought, but I will just use this one. We did have rice production at 1.6 million tonnes in 2000-01, and it was as low as 18,000 tonnes a couple of years ago. So we are not talking about reductions of that order of magnitude. If you had a rice industry of 18,000 tonnes long term, obviously you would not have a sustainable industry.

Senator COLBECK —But that is the point that I am getting to. At some point in that scale, and a drought is a thing that happens over a term, hopefully—we have seen some water now, and hopefully there is a cycle that is more beneficial than the last 10 years—there is a tipping point. That is the simple question I am asking. You have addressed it to a certain extent. The water may revert to a different use in a different place even.

Mr Glyde —We have a table that summarises for each agricultural sector and for each of the 22 basins. We could table what the percentage impact is. You will be able to see from that. It is in the report. You can see from that that we are not talking about 100 per cent declines.

Senator COLBECK —The assumptions for projections you are doing are effectively based on current technology because that is effectively where our knowledge is at. If you try and introduce another variable for that, you are not too sure where your numbers are going to go.

Mr Morris —I think if you introduce a new technology which is water saving or more efficient, it would tend to push the numbers down, so there would be less impact.

Senator COLBECK —Yes, I get that, I understand that, but I am not actually arguing that. I am just trying to get a sense of the baselines and the assumptions to the inputs. What Bill is talking about would have that effect if you were assuming those newer technologies. It would reduce the employment impacts if we were to go down that track. The question is: how far you can speculate on those inputs?

Mr Morris —I think it is worth putting on the record. I have spoken about the two reports which were specifically referred to by Senator Nash. There was a third report that we released at the same time as the other two reports. ABARE-BRS put out a media release on this on 8 October as well. That was a report that was done for the department of environment. It actually looked at what impact government buyback and infrastructure improvements would have in terms of some of the reductions in water availability in the basin. So this actually did address in part, but not fully answer, Senator Heffernan’s question. If you have infrastructure improvements, that actually saves some water for the environment, which reduces the amount of water that the government has to buy back. In terms of new technology or new improvements, infrastructure improvements can actually go some of the way to making the gap up but it cannot go the whole way.

Senator HEFFERNAN —But it also puts pressure on the recharge of the aquifer when you do not have the leakage to the aquifer. So that is another complexity. I have a series of questions. I just—

CHAIR —Senator Heffernan, you do not have the call. It is not your call. Senator Nash still has the call. So if Senator Nash handballs—

Senator HEFFERNAN —So 3,000 to 4,000 gigs—

CHAIR —Order, Senator Heffernan! We will be coming back with this after lunch.

Senator NASH —I have a question on modelling. I understand—and it is obviously not my field—that there are technical modelling workshops to review modelling that has been done. Has that been done on the modelling that you have done to test the assumptions and measure the appropriateness of what you have done? Has there been any peer review?

Mr Gooday —The MDBA had our work peer reviewed. So it was sent for peer review. As well as that, we presented some of the initial results, with obviously a dummy set of SDL reductions, to a group of representatives from state governments.

Proceedings suspended from 1.00 pm to 2.00 pm

CHAIR —I welcome everybody back.

Senator NASH —We were talking about the technical modelling that had been done. What I specifically wanted to know is has there been any technical modelling workshops done on the work that you have done?

Mr Gooday —We have been using the models for some years. The water trade model and the Ausregion model have both been peer reviewed as part of work that we have done in the past. For example, they were both used in the work that we did for the environment department earlier this year looking at the impact of the water buyback. We have had those models go to conferences like the Australian Agricultural and Resource Economic Society conference to obtain feedback there.

Senator NASH —But the specific lot of modelling for this has not been separately stand-alone through any kind of workshop?

Mr Gooday —No, the MDBA had it peer reviewed and there should be a report on that on the MDBA website.

Senator NASH —So, for the laymen over here, is the peer review a technical modelling workshop that the MDBA has done?

Mr Gooday —Yes.

Senator NASH —Did you have any farmers, irrigators, agribusiness type people, from their perspective, look over your modelling and the appropriateness of what you were doing?

Mr Gooday —The general results from these models have been presented in a variety of forums previously. For example, we presented at our outlook conference papers that use exactly the same sort of methodology and came up with similar sorts of previous results. So to that extent they have been given a public airing. The work that we did for the MDBA did not require us to consult. There was another set of work that was done by another group of consultants which was to go out and talk to people in regions. The resources we had for this project basically required us to use models that we had already used and tested and were available and ready to go.

Senator NASH —Has that modelling been refereed by anyone?

Mr Gooday —That is the refereeing I was talking about that the MDBA have had done.

Senator NASH —I do not think I got a clear answer before when I was talking about Dr O’Connell’s point about drilling right down to the job losses on the ground, that type of thing. I think you mentioned that that work is happening at the moment, but can you give us any indication of when we will be able to see some of those numbers from that work?

Mr Morris —Just to clarify, what I said earlier was that the future work the MDBA has recently put out a request for tender for might very well pick up on some of that in more detail.

Senator NASH —Just to be absolutely clear, that is not something that is going to occur under ABARE now unless you are the successful tenderer for this next piece of work?

Mr Morris —Correct.

Senator NASH —Also, in terms of jobs, how do you assess farmers? For farmers who own a property, a family farm, if they lose a farm, is that a job loss, even though they are not necessarily employed? How do you put farmers into the context of job loss?

Mr Gooday —Basically the models work off ABS data, so if you are a farmer then you are employed in agriculture. It is the same with labourers on farms.

Senator HEFFERNAN —The first foundation stone of this whole journey on the Murray-Darling Basin has got to be: what is the assumption on which you have been instructed to model for the Murray-Darling Authority—3,000 or 4,000 gigs, is it—exchange from work to freight and the environment? Do you understand? You have been asked to model the impact of that—correct?

Mr Gooday —We have been asked to model the impact of taking 3,000, 3½ thousand, 4,000—

Senator HEFFERNAN —You have been asked to model the impact of that, but on what foundation stone is your model built? Is the 3,000, 3½ thousand or 4,000 gigs transferred from work to the environment? What is the size of the pool from which you are removing that?

Mr Gooday —Perhaps I will just explain how our model works. It is based on ABS data on land use, water use and agricultural production. Our model has only got water use in it. It does not have any other hydrological characteristics other than—

Senator HEFFERNAN —To save you a long journey with a long bureaucratic answer, I know all that, but what I want to know is: how can you make assumptions on what Senator Nash and others have referred to—this generic 800-job thing—if you do not actually know how big the pool is that you are transferring the water from? You do not know the size of the pool, do you?

Mr Morris —We know how much water is left in the model for use in agriculture and that is a key thing in terms of working out—

Senator HEFFERNAN —But what is the size of the pool from which you are transferring the water?

Mr Morris —We have an aggregate amount built into the model.

Senator HEFFERNAN —But what is it?

Mr Gooday —Twelve thousand—the water use number is around about 10½ thousand gigalitres a year.

Senator HEFFERNAN —It is 12,000 or 10½ thousand?

Mr Gooday —The diversion number is 12,000 and the water use number—

Senator HEFFERNAN —This is at the river, and the farm delivery is 10½ thousand.

Mr Morris —So both numbers are right.

Senator HEFFERNAN —Can I just take you to a flaw in the whole argument of this. There is 23,400 gigs of run-off in the Murray-Darling—right?

Mr Gooday —We do not have that number.

Senator HEFFERNAN —It is true.

Mr Gooday —Go ahead.

Senator HEFFERNAN —We work with half of it, about 11,000.

Mr Morris —Yes, 12½ thousand diversion—

Senator HEFFERNAN —And we use about a quarter for freight, and we waste and evaporate a quarter. The assumptions you have just told me presume that Mother Nature is not going to remove anything from the system, and the science is saying, and the CSIRO and all those other geniuses are saying that somewhere between 3,500 gigs, with two degrees increase in temperature and 15 per cent decline in rainfall, especially in the 38 per cent of the run-off that comes from the two per cent of the landscape at the back of the parliament here and North-East Victoria, that we are going to lose a minimum of 3,500 gigs and a possibility, in a catastrophic analysis—and all science is vagary, and we need to have a step-up in the science to allow for the vagary—of 11,000 gigs. You have been told to build yours on an extraction of 9½ thousand net—is that what you said?

Mr Morris —10½ thousand.

Senator HEFFERNAN —At the farm gate.

Mr Gooday —I will get the number for you—12,300 is diversions.

Senator HEFFERNAN —Can I take you to that? That is at the river.

Mr Gooday —Yes, that is the number—

Senator HEFFERNAN —What was the figure at the farm gate?

Mr Gooday —It was 10,300.

Senator HEFFERNAN —That assumes no reduction in run-off. That ignores the science that says there is going to be a decline in run-off in the Murray-Darling Basin. There is going to be an increasing run-off in the south-west Queensland, Warrego, Paroo, Bongoa, Coopers Creek.

Mr Gooday —This is based on the work that the Murray-Darling Basin Authority have done and through their models—

Senator HEFFERNAN —For the record, Mr Chairman: it is completely flawed because it is based on no decline in run-off.

Mr Morris —I think it is worth referring you to table 23 in our report which provides a scenario of drier conditions, I suppose, in terms of the basin. Whereas in a normal base year we use the 10,375, in that scenario we looked at a dry scenario of 8,281gigalitres used. In fact we tried—

Senator HEFFERNAN —Yes. I am talking median. You have been told to model—removing three to four thousand gigs out of the pool and transferring it. You will accept that in transferring that water to the environment—depending on whether you trade your licences up the river, and whether the volunteers that want to sell their licences are all down the river—instead of having dual purpose water, which is the environmental freight water in the river for the fish so they do not have to grow legs, and it ends up as work water at the bottom of the river, that you could have a catastrophic setup with this higgledy-piggledy trading in water that if too much water gets traded up the river you have a double problem.

Mr Gooday —On the water trading issue, that has been addressed in the modelling, in that we have been provided with some constraints to place on water trade.

Senator HEFFERNAN —So in the water trading—and I am sorry to do this to you—but what does your information on which you have built your model assume the trade is going to be up the river or down the river?

Mr Gooday —I can point you to the results again, I suppose. Direction of net interregional trade flows, water trades out of the Murrumbidgee, New South Wales Murray—

Senator HEFFERNAN —Is this into catchment or—

Mr Gooday —Yes, between catchments.

Senator HEFFERNAN —But between different rivers.

Mr Gooday —Water is expected to trade into the Goulburn-Broken, Campaspe, Loddon, Victorian Murray, Lower Murray-Darling and South Australian regions. So most of the water trade is out of the Murrumbidgee, New South Wales Murray, and most of it is going into South Australian Murray, Victorian Murray.

Senator HEFFERNAN —You do not actually have a map on which you model where the water is. You understand it is going to have a serious impact on your presumption. I do not know how you do that because, as you know, this is non-compulsory acquisition.

Mr Gooday —That is right.

Senator HEFFERNAN —So they are assuming the people at the top of the river are going to trade water down the river. Do you know what the flow of the Upper Murray is, the median flow?

Mr Gooday —I have not got that in front of me.

Senator HEFFERNAN —Do you know what it is?

Mr Gooday —Not off the top of my head.

Senator HEFFERNAN —4,700 gigs. Do you know how much the Hume Dam holds?

Mr Gooday —Not off the top of my head.

Senator HEFFERNAN —3,000-odd gigs. Do you know how much the Eildon Weir holds?

CHAIR —Are there any questions there, Senator Heffernan?

Senator HEFFERNAN —Well, this is the difficulty with making a model on which you do not have enough information. Will you accept that for you to be able to accurately model—and congratulations on all the modelling work—the impact on economic and social consequences of removing 3,000 to 4,000 gigs from work to the environment and freight that, unless you know the pool that you are removing it from, you have got no idea where you are up to?

Mr Gooday —We point out in the report that there are a range of uncertainties. One of the major ones is the way in which water availability will change between years. We have looked at averaging.

Senator HEFFERNAN —But your model and your consequences are built on the present median extraction for the last umpteen years, which is that 12,000-odd gigs.

Mr Gooday —Absolutely.

Senator HEFFERNAN —So, do you think it is a fair thing to do to Mildura farmers and say, ‘We are going to take three or four thousand gigs.’ No, you do not tell them that. You have not told them what the modelling is. You have told them what the removal is going to be, but not the assumption on which the removal is based. Therefore the social and economic impact is, ‘We might be a bit inaccurate with that.’ But if you have the right science—and bear in mind that Carnarvon’s irrigation use is 40 times as efficient as the Ord, and 20 times more efficient than the average cross the Murray-Darling Basin—

CHAIR —There is a question coming, Mr Morris.

Senator HEFFERNAN —your assumptions could be completely wrong. Do you agree with that?

Mr Morris —I think what we are saying is if you take 3,500 gigalitres out of the system as it is currently configured, we would get the sort of impacts at a regional level as what we have here. Any model is going to be a simplification of the real world because the only real model of the world is the world itself. This is a simplification of the real world.

Senator HEFFERNAN —I accept it is a very big simplification.

Mr Morris —It is actually quite a sophisticated simplification in the world.

Senator HEFFERNAN —I do not care how sophisticated it is. If you do not actually have an assumption on what is in the pool, it is all right to remove three to four thousand gigs—but three to four thousand gigs from what? That assumes under your figures that you have given me, Mr Gooday, that there is going to be no decline in the runoff.

Mr Gooday —This is the information provided to us by the—

Senator HEFFERNAN —No, it is flawed for God’s sake. The CSIRO will tell you that the minimum decline in runoff is going to be 35 gigalitres.

Dr O’Connell —I think it depends also on what timescale you are looking at.

Mr Morris —We are looking at until the end of 2020.

Senator HEFFERNAN —Just to further enlighten you, the science is saying that the weather we have had for the last three years bar this year is slightly worse—the 2050 snapshot of the decline. The weather we have had for the last three years, which is about a 25 per cent inflow effective in the Murray system, is going to be slightly worse than the average by 2050. Do you understand that?

Mr Morris —Yes, and that is why we have done the sensitivity analysis with about a 20 per cent reduction in the use.

Dr O’Connell —I think the point you are making has been covered by the sensitivity analysis.

Senator HEFFERNAN —Yes, that is a nice soft word.

Dr O’Connell —No, that is designed to manage those resources.

Senator HEFFERNAN —But the sensitivity of your work is that, if there is a serious decline of the nature that the CSIRO has predicted, then your figures are custard.

Mr Glyde —I think what we are saying is that it is on the basis of the information that has been provided to us by the authority. You would need to ask them where they obtained that scientific information. I am aware that at least some of it came from the CSIRO and the work that they had done in the basin. That was a very large study. What we have done is taken their best estimates of that and we have modelled that. Now, where there is some uncertainty—and you have put your finger on one area of uncertainty and there are lots of other areas of uncertainty, as we have discussed with Senator Nash—the best way to try and deal with that, when you cannot actually come up with a prescription that most people would be able to agree with, is to say, ‘Okay, what would be the consequence if there were less water? What would be the consequence if water prices were higher?’ When you look at that, by the changes in the model results, which we present in the paper, you get a sense of how significant those assumptions are. At the end of the day you do have to come down to a point where you make a judgment and say, ‘Okay, that is the best information we have got. That is the one we will model,’ and that is what we have been asked to do.

Senator HEFFERNAN —The point you have put your thumb on is the median flow of the Murray-Darling Basin for the last umpteen years, which is 12,300 of extraction. That is the history of the farce you have built the model on, rather than the science of the future and that is where the whole thing has turned to custard.

CHAIR —While the Murray is turning to custard are there any other questions from Senator Heffernan’s colleagues?

Senator HEFFERNAN —Yes, I have not finished yet. The decline in 30-odd per cent in the Lachlan, or the Macquarie or the Gwydir: what were they built on?

Mr Gooday —Again, the MDBA provided us with the reductions in diversions for each catchment. In our model, southern basins connected the northern basins, so there is no trade between any of those regions, and we just modelled those the same way we modelled the rest.

Senator HEFFERNAN —There is. The Culgoa used to deliver 28 per cent of its flow to the Darling. It now delivers 3½ per cent.

Mr Gooday —I am talking about trade in entitlements.

Senator HEFFERNAN —In the midst of all this, they are about to issue in Queensland a 469 gig licence to Cubbie Station which is completely unsustainable in the midst of taking water away from everyone in the south.

Mr Glyde —We can comment on the work we have done, Senator. That is about all we can tell you about.

Senator HEFFERNAN —So, just to finalise the work you have done, your model is based on the mean flow of recent years rather than any scientific snapshot of the future flow?

Mr Gooday —And we have done a scenario looking at a dry sequence—

Senator HEFFERNAN —And what did that scenario say?

Mr Gooday —a dry sequence of years. It said that the percentage reductions in gross value of irrigated production and profit in percentage change terms would be slightly worse that you see in the average scenario.

Senator HEFFERNAN —That is a lovely bureaucratic expression, but if we lose 40 per cent—

Dr O’Connell —The model is aimed to do a projection of 10 years. This is not—

Senator HEFFERNAN —Hang on, we are building something that is going to have a 50-year life.

Dr O’Connell —We can only talk here about the model.

Senator HEFFERNAN —Yes, all right.

Dr O’Connell —The other issues need to be dealt with by the Murray-Darling Basin Authority.

Senator HEFFERNAN —But, if the science in the CSIRO prediction is 40 per cent right, in most river systems in the southern Murray-Darling Basin, in most years there will be a zero allocation for general purpose water. Do you accept that?

Dr O’Connell —But at what time?

Senator HEFFERNAN —By the way, I should declare an interest: I am probably the only one here that has an irrigator’s licence. But in the Lachlan River, for instance, we have had a zero allocation of general purpose water now for four years. If you have a decline of 5½ thousand gigs in the system, based on the proportion of run-off—all those dams in the north in proportion hold very little water compared to the south. And Tasmania, as we know, holds more than the rest of them. If it is 5½ thousand gigs in decline in run-off—right?

Dr O’Connell —By when?

Senator HEFFERNAN —By 2040.

Dr O’Connell —By 2040? My point is that goes to the Murray-Darling Basin Authority’s role, not ABARE’s role.

Senator HEFFERNAN —My point to you, Dr O’Connell, is that if we are going to get to 2040 and we are at 2020 it is the same gradient.

Dr O’Connell —But we are talking about a contract which ABARE undertook for the MDBA to model out to 2010 on a certain set of assumptions.

Senator HEFFERNAN —Yes, but that is a short, politically convenient time line.

Dr O’Connell —My point is that is all we can manage here. I understand your points, but your points are ones which really the Murray-Darling Basin Authority has to manage—that is, what is the long-term projection for water—

Senator HEFFERNAN —Anyhow, thank you for your indulgence to the committee, but out of all of that is that the assumption is—

CHAIR —I would take it, Dr O’Connell, that Senator Heffernan is not interested in your answer.

Senator HEFFERNAN —The assumption is—

CHAIR —Dr O’Connell was halfway through an answer and you cut him off.

Senator BIRMINGHAM —We understand Senator Heffernan’s point.

Senator HEFFERNAN —For the record, the assumption on which this model is built is there will be no decline by Mother Nature in run-off for 12,300 years.

Senator BIRMINGHAM —The assumption is actually a three per cent decline, but—

CHAIR —While you are all assuming, why don’t you assume out in the back room and we can get some questions going. Assume until the cows come home; I do not care. Senator Birmingham.

Senator BIRMINGHAM —Thank you. Just quickly, you did indicate that you had modelled some higher and lower predictions of reductions in the range between 15 and 50 per cent. Do you have data for those here? Is that data being published anywhere or made available anywhere? It is not, as far as I can see, outlined in the socioeconomic report that has been released.

Mr Gooday —It is in the socioeconomic report that has been released, on page 79.

Senator BIRMINGHAM —In the appendices, is it?

Mr Gooday —Yes, from page 79 through to 81. This includes some of the variability work that we have just been talking about as well.

Senator BIRMINGHAM —That provides a mix there on the impact on the gross value of irrigated agricultural production. Yes, I see that. Thank you.

Mr Gooday —Yes, it does it by region and by commodity.

Senator BIRMINGHAM —Okay.

Mr Morris —So on page 70 there is the cut by region.

Senator BIRMINGHAM —Excellent, thank you. That is very helpful. I will dig through that later and I will give you further questions on notice if need be. I want to question an assumption about the sectors to which the model seems to assume that water trading will go. The big winner out of those assumptions, if I look at the tables you have on pages 28 and 30 of the report—tables 12 and 16—the big winner seems to be the grape industry, where the value of production there without interregional trade takes an 11.4 per cent whack but with interregional trade comes back to 5.1 per cent. For a sector that is in oversupply at present, it strikes me as surprising that you would expect so much trade of water to flow to the grape industry. Can you justify why?

Mr Gooday —The model is a long-run model, so the returns to the different agricultural activities in it are returns that we have seen based on the 2000-01 and 2005-06 ABS census data. That is the latest data that is available to be able to do this. And using that data it does show that we would expect water to trade to those activities.

Senator BIRMINGHAM —So there is an assumption there that, as a higher valued commodity in that period of time of data you have got available, that water will, by default, trade to that commodity even though that commodity is currently in oversupply and has more recently seen significant drops. If we are looking at the immediate 10-year period or rather the immediate five-year period—because beyond that, again, who knows how cycles will change—it is highly improbable, I would have thought, that there will be a lot of people buying additional water for grape plantings.

Mr Gooday —We saw quite a lot of water trade in that direction during the drought.

Senator BIRMINGHAM —Sorry?

Mr Gooday —We saw quite a lot of water trade in that direction during the drought.

Senator BIRMINGHAM —A lot of purchase of temporary allocation during the drought to keep vines alive at that stage. It is a different equation to buying a permanent entitlement to continue plantings. So you do think that that is a reasonable expectation? Because it has some particular impacts when you translate it through to the economic impact on regions like the lower Murray in South Australia, which has got one of the least impacted forecasts of economic impact, largely because of the trading assumptions that enlist around grapes especially.

Mr Morris —I was just clarifying a point with my colleague. The way these changes are occurring in the model is that most of them occur in the second half of the next 10 years—so, after 2014-15—and, therefore, what the situation is today is sort of less relevant than what it might be over a longer period of time. Now, we know that the grape industry has gone through lots of fluctuations over time in terms of profitability, and so, in order to look at it over a 10-year time frame, particularly when we are thinking about changes that are probably not going to really happen until the second half of that period, you really do have to look at what the profitability has been over the long run. The profitability of horticulture generally and grapes in particular has been higher than that of rice and cotton, for example, and irrigated cereals. So that is why we look at it the way we do—because we do know there have been fluctuations over time, but we have to look at it in a longer-run sense because of the way the pattern of productions are going to occur.

Senator BIRMINGHAM —Thank you. I am sure some of those communities that are facing 25 per cent reductions to water but only five per cent reductions to their expected gross value irrigated production will have questions about whether that is realistic, and we will put that back through the MDBA process.

Mr Morris —Yes.

Senator BIRMINGHAM —Lastly, because I know the committee wants to move on, the 800 and 3,000 employment figures—you have talked about 800 as a regional figure or a basin figure and 3,000 is a national level. Elsewhere in this report, you have gone to the value impact on irrigated production. Can you give us a jobs impact for irrigated production?

Mr Morris —No, we do not have that specific level of detail. But, as I tried to explain to Senator Nash perhaps in economic gobbledygook before, I think the main results that should be focused on in this report are the results that happen at the regional level, and what is important at the regional level is what is happening with the percentage reductions, the gross value of irrigated production and the regional impacts on gross income at that level. While we do not have a specific employment impact, you can actually derive, to some degree, the likely impact from those gross value of irrigated production figures.

For example, there is quite a significant impact in the Murrumbidgee region predicted by the model. I just happen to have in front of me a page there, and we have about a 20 per cent reduction in the gross value of irrigated agricultural production in table 11 for Murrumbidgee. So you can imagine that will translate, in the short term, to quite a significant impact on employment there. But as I said, over the long term, the question is that some of those people who are made unemployed—and I am not trying to diminish the adjustment costs and the adverse impact on those individuals—will find jobs in other industries. And that is what our 800 number and our 3,000 number relate to. It is sort of the net impact after that time.

Senator BIRMINGHAM —And I understand what it relates to. If you do have any work, or if you are simply telling us that the best thing we can do to assume the impact on employment numbers, then, is to look at these figures on the percentage impact on the gross value of irrigated agricultural production and, essentially, extrapolate them—which would, in the table 11 for the Murrumbidgee which you highlighted, be a 20 per cent reduction in employment in irrigated agriculture in the Murrumbidgee—if that is the best figure you can tell us to work with, I guess that is the figure we will work with.

Dr O’Connell —I think you should just be cautious against thinking there is a one to one relationship between a percentage drop and jobs. That is not the way the labour market works—but we might go to an economist.

Senator HEFFERNAN —Do your assumptions for the Murrumbidgee assume that the people in the Murrumbidgee are going to do what grandpop did, in other words, that they are still going to have paddy rice? I mean, we have gone to zero tillage; when I was a kid, crops were six foot high—they are now 15 inches high. We ploughed the paddock three times before we put the crop in. We have moved on in dry land farming, which is the bigger producer in the Murray-Darling Basin, by the way. Are you assuming—

Dr O’Connell —I think we have covered this issue.

Senator BIRMINGHAM —Your question there is, do you model in any technological advances, or are they the ones that are current practice?

Dr O’Connell —We have gone through this.

CHAIR —Senator Birmingham, that is exactly what he meant.

Mr Morris —And to the extent that you have new water-saving production techniques that would actually probably lower these impacts on the farm sector.

Senator BIRMINGHAM —So you do not model those types of advances in.

Mr Morris —No.

Senator BIRMINGHAM —It is a historical point in time.

Mr Morris —Not quite grandpop, maybe, in the last couple of years.

Dr O’Connell —But current practices.

Mr Morris —Current practices.

Senator BIRMINGHAM —Your practices, Bill, not your grandpa’s.

Senator HEFFERNAN —Assuming the paddy rice—

CHAIR —He had just fallen asleep. We just put him to sleep and he has come back again, thanks to you, Senator Birmingham.

Senator HEFFERNAN —And you will accept that the science is now complete on non-paddy rice.

Senator BIRMINGHAM —He was happy to prove that—

CHAIR —Senator Heffernan, you are like a seagull. You just come in here and then you blow out again.

Dr O’Connell —I think the point that Mr Glyde made earlier was that, to translate, you get advances in—

Senator HEFFERNAN —This is a fairly serious issue that has happened in the last week in these communities. They have not been told that this is based on the historical amount of run-off and past agricultural practices without new science. I mean, there is a lot of hope in this equation—if we could just put the hope out there.

Dr O’Connell —We have explained, I think, in some detail that it is not either easy or possible to predict how technological developments will occur over the next period. This is looking at the next 10 years, so it is unlikely that there will be radical shifts.

Senator HEFFERNAN —You do not think so?

Dr O’Connell —There will be shifts, I am sure that is right; but we are quite overt in saying that this does not comprehend significant shifts in technology. So to the degree that there would be significant shifts in technology, as Mr Glyde has said, will reduce the impact of all this. So if there are the changes you are talking about, those will create additional flexibility in the process.

Senator HEFFERNAN —This is so flawed, taking this with no science and with no changes to the run-off. I mean, this is a lazy document.

Mr Glyde —I would have to—

CHAIR —Senator Heffernan! Senator Birmingham, are you done?

Senator HEFFERNAN —Can I ask one thing on a completely different subject? I want to ask on foreign investment in Australian agriculture—

Senator FORSHAW —No!

CHAIR —I will take that as a no.

Senator HEFFERNAN —I want to ask on foreign investment in Australian agriculture—

Dr O’Connell —Is that related to the ABARE issue?

Senator HEFFERNAN —No, this is a completely—

CHAIR —Who knows what he is going to say? Who knows what is going to come out there?

Senator HEFFERNAN —It is theirs, it is ABARE—

CHAIR —Senator Birmingham, you did have the call. We are running out of time.

Senator BIRMINGHAM —No, that is fine. I will do other stuff on notice.

CHAIR —Do you have any more? If you do not, Senator Nash?

Senator NASH —Mr Glyde just wanted to answer something before I ask.

Mr Glyde —Just for the record, I would have to reject that this is a shoddy piece of work. As Mr Gooday said, these models are tried and tested. They are the best that we have. There are other institutions around the country that have worked also with the Murray-Darling Basin Authority, including Monash University, using its model to help to have a variety of information. This is the state of the art as far as it goes in terms of trying to estimate the socio-economic impacts of the scenarios that the Murray-Darling Basin Authority has put forward to us. And our role has been to try and do the best we can in terms of estimating those socio-economic impacts, and I believe we have done that.

Senator HEFFERNAN —And I agree with that—it is only as good as the assumptions you put in. Can I just ask—

CHAIR —Senator Heffernan, no you cannot.

Senator COLBECK —We go on to agricultural productivity later in the afternoon.

Senator HEFFERNAN —Do you do any work on foreign investment in Australian agricultural land?

Mr Glyde —We do not collect data on foreign investment.

CHAIR —Thank you, Mr Glyde. Now, Senator Heffernan, your colleagues have tempted me to dong you on the head with this, but I have resisted. Senator Nash?

Senator FORSHAW —We could bind him up with something.

Senator NASH —I just have some very quick questions to finish up on. Is the referee report you said the MDBA did something available that the committee could look at?

Mr Gooday —I believe it is on their website.

Senator NASH —So are 1,200 other bits of technical information.

Mr Glyde —Yes, if it would help, we could provide it to you.

Senator NASH —That would be very useful, thank you. Does the modelling that you have done find that employment actually increases in the basin after the SDLs and the Water for the Future program is complete?

Mr Gooday —I think the general conclusion—

Senator NASH —I just think I read something that suggested it increased under the modelling.

Mr Gooday —By point zero three—

Mr Morris —I think the way you look at that number is that if you pump a whole lot of government money in to improve infrastructure in the basin—a bit like pumping money into the economy more generally—there will be a spike in employment as a result of that. So all those people you employ to actually reline channels and do whatever waterworks you are doing, that causes a very small increase in employment in the basin.

Senator NASH —That is only temporary—is that what you are saying?

Mr Morris —Yes. But for the economy as a whole, the employment impact is still negative.

Senator NASH —Okay. And does the model allow people to move from region to region, and how does the buyback actually impact on that?

Mr Morris —Implicitly, it assumes that if people lose their jobs in one region, they can potentially get employment elsewhere—

A phone having rung—

CHAIR —Excuse me for a second, Mr Morris. Senator Heffernan, you know better than anyone and that is twice now. Just take it and get out. I have had a gutful of your damn phone ringing. Sorry.

Senator NASH —And what are the population movements when the buybacks occur? Have you looked at that under the current buyback program that has already occurred? Has there been any work done on that?

Mr Gooday —No, we have not been able to look at that.

Senator NASH —And does the modelling assume that irrigators will actually stay in a community after that buyback program?

Mr Gooday —Yes, the modelling that we have done assumes that the payments for the water go to households in those regions.

Senator NASH —Yes.

Mr Gooday —And then they spend some of that money inside the region and some of the money outside the region, the same as every other household in the region.

Senator NASH —I am very happy for you to take this on notice—can you just give us some more detail around what underpins that? I would like to see the evidence behind it because I only have it anecdotally, but I think a lot of the payment for that water is going straight to the bank to retire debt. So I would be very interested in your underpinning, I guess, and how you have arrived at that, given that the experience on the ground says something really entirely different.

And could I just could ask, also on notice, a last question. Mr Glyde, you very kindly supplied for me an answer to a question on notice—very recently, Minister. It was question ABARE 05. If you could just take on notice: over the five years that you gave me the allocations against entitlement, could you break those allocations down further? What proportion of that was government allocation for environmental purposes?

Mr Morris —Yes. I will take it on notice.

Senator BIRMINGHAM —If I can just add, while you are taking some of the details on notice: if you could explain the mobility of people and your assumptions about their movements, and how that compares with mobility in metropolitan areas and what assumptions you have made within the modelling, I would be interested.

Mr Morris —Yes, I am happy to do that.

Senator COLBECK —Can I just ask a couple of quick questions in relation to the new happy marriage between ABARE and BRS and the impact on resource and budget allocation?

Mr Glyde —Essentially there has been no change to the level of resources in the reply to ABARE-BRS. We simply put the two organisations together. A year or so ago we had previously merged what we would call the back office functions, so the people who are involved in the communications activities, the HR activities, finance, publications et cetera. They had been previously merged and we had a saving as a result of that.

Senator COLBECK —A rationalisation?

Mr Glyde —Yes. It was a rationalisation of the support services to provide that and we had done that before we actually had the formal merger. That is the only resource change that has happened and that happened I think in the previous financial year.

Senator COLBECK —So no change in the number of personnel and no change in the budget allocation?

Mr Glyde —Mr Morris might be able to give you the real details. He has got a very impressive spreadsheet here.

Mr Morris —The final full time equivalent staff numbers for 2009-10 for when you combine ABARE and BRS were about 233 and the budget for this year in terms of staff numbers is currently 245, so it is a little bit greater. When you combine ABARE-BRS from last year and then look at the combined organisation this year our budget is about two per cent lower, but the reason for that is mainly driven by the fact that late in 2009-10 we got some additional supplemental funding from the secretary’s reserve to do some additional projects and that really counts for most of the change, and plus there are a couple of departmental-wide budget savings that were also applied to us, such as the travel savings from department of finance. So in terms of staff numbers they are higher; in terms of budget they are little bit lower.

Senator COLBECK —So your budget progressively shrinks a little bit due to those particular savings issues that are being applied over time?

Mr Glyde —The point I am trying to make was that the merger was not driven by a financial imperative to get there.

Senator COLBECK —No, I was not saying it was driven by financial imperatives; I was just trying to find out if there were any financial implications for the agency, and particularly in terms of funding.

Dr O’Connell —Sorry, Senator, just in terms of that late injection of funds for a specific project, that is the kind of thing that could easily happen this year because as we go through the year if there is something we can—

Senator COLBECK —What was the value of that?

Mr Morris —That was about $900-odd thousand if you combine ABARE and BRS, but as for—

Senator COLBECK —But on a semi-regular basis you would be contracted by various agencies to do various projects so it would be hard to have a baseline through the organisation of where it sat because you effectively respond to the projects that come your way.

Mr Glyde —Exactly.

Mr Morris —We have got about half of—

Mr Glyde —Yes.

Mr Morris —For this year, for example, the organisation gets about 51 per cent of its budget from direct appropriation from the department and about—

Senator COLBECK —And that would be for standard projects and things that you do on an ongoing basis?

Mr Morris —Yes, so commodity forecasting, a lot of the climate work we do, some of the maintenance models and things like that, and then we get the other half from direct appropriation but a fair proportion of that comes from the department as well where they ask us to do specific projects that might be funded under administrative money or under departmental money. We also get money from a range of other departments. As you know, ABARE-BRS covers minerals and resources issues at the moment and so we get about $2½ million—a little bit more than that—from the Department of Resources, Energy and Tourism to do that work.

Senator COLBECK —And you do some stuff under Fisheries too, as I think we will come to.

Mr Glyde —Yes.

Senator COLBECK —I think that will do on ABARE but I know that you have a habit of hanging around because you tend to get caught up in other stuff. I think I have anticipated one of those already so thanks for that. Minister, I know it is a complete departure from the program, but can I just read something that has just come back to me from Forest Contractors in Tasmania. I will not read the preamble because it relates to me and not to you. It says:

You may also mention that some long-established contractors have resorted to selling their family homes in order to stave off financial collapse.

I just want to put that on the record to reiterate my concern about the urgency, and I recognise that you have been there to talk about this. I am actually moving quickly on the issue of forest contractors in Tasmania.

Senator Ludwig —I really thank you for that. The opportunity I had with a range of stakeholders did indicate the dire financial circumstances that they were in. I did not want to mention it on the record because it tends to sometimes be quoted out of context. I am moving as quickly as I can. There are matters that we are working through and I do recognise, as I have said already, that there are many certainly facing difficult circumstances.

Senator COLBECK —Thanks, Minister.

CHAIR —We will now call officers from Sustainable Resource Management, including Caring for our Country, Landcare, and domestic and international fisheries. Senator Macdonald, are you leading the charge here?

Senator IAN MACDONALD —Can I just start by finding out how the Caring for our Country program is divided between this department and Environment, shortly so-called. Has there been any change since the new administrative orders?

Mr Thompson —There has been no change to Caring for our Country since the election.

Senator IAN MACDONALD —Some people noted that the announcement was made by the minister for agriculture rather than the minister for the environment. Was that just a matter of convenience?

Mr Thompson —The announcement of the open call projects was a joint media release by Minister Burke, Minister Ludwig and Parliamentary Secretary Dr Kelly.

Senator IAN MACDONALD —Yes, but the actual physical release was by Senator Ludwig, I was told. Is that not right?

Mr Thompson —It was a joint media release announced the—

Senator IAN MACDONALD —Yes, I know it was a joint media release; I have got a copy of it. I thought the actual oral announcement was by Senator Ludwig; is that not right?

Mr Thompson —I could not say who made the actual oral announcement. Some projects were announced during the election, some—

Senator IAN MACDONALD —Is that right, Senator Ludwig? Did you just announce this the other day or was it the three of you?

Senator Ludwig —It was a joint announcement.

Senator IAN MACDONALD —It was a joint media release, but did you orally do it in front of the cameras or was it—

Senator Ludwig —No. It was a media release.

Senator IAN MACDONALD —No. I have been wrongly advised. That is something of a shame; there was some hope that perhaps the agriculture department was going to play a greater role in this. As to the basis upon which the Caring for our Country grants were made, what is considered in funding the various grants?

Mr Thompson —The business plan that was released earlier this year for Caring for our Country had a range of outcome and target areas that went through from National Reserves through by adversity coasts and sustainable agricultural practices, and projects were essentially assessed against the contribution those projects would make to the targets in those areas. For example, in the sustainable practices one the projects were assessed against things like the contribution the projects might make to improving land management or land cover in grazing lands or those sorts of things.

Senator IAN MACDONALD —So what did the base level funding cover?

Mr Thompson —The base level funding is provided to the regional bodies for spending broadly against the same outcomes and targets except because the regional bodies have an ongoing relationship with their communities and the institutional arrangement in those regions, we also expect them to contribute to maintaining community capacity and expanding knowledge because they have got some particular skills in that area, and against some of the targets they had a slightly broader scope and the example I would use would be in relation to wetlands, they were allowed to address all the wetlands of national significance rather than a smaller number where a broader range of people might be able to contribute to them. Regions were allowed to address all the ones that were on national lists in their regions essentially.

Senator IAN MACDONALD —These Caring for our Country grants relate to country not to people. I notice in the base funding, for example, some strange figures. Victoria got $64 million, admittedly some of them were for two years, some for one year, one or two or a little longer. New South Wales only got $24 million, and Queensland got $44 million. Is there some rational explanation for that?

Mr Thompson —The regional base funding to regional bodies, which was how that core funding was divided, was agreed a couple of years ago, and that was on the basis of a range of factors, but a very significant one was the extent to which national environmental or resource management issues occurred in those regions. In relation to the competitive funding, which I think is what you may be referring to, which was—

Senator IAN MACDONALD —No, I am talking about the base funding—$64 million versus $24 million versus $44 million—where $64 million goes to the smallest state. It has the biggest population, I concede, but it is the smallest state with less natural resource issues, one would think.

Ms Lauder —The regional base level funding—as you know, we gave a five-year allocation to each of the regions. Last year, in 2009-10, a number of regions applied for three and four years, and so did not apply this year. So as you said, in Victoria we have approved $64 million this year because last year a lot of those regions had only applied for one-year funding. So now all Victorian regions have applied for the remaining three years of funding, so it looks like a large amount, but it is not an indication of how much funding is available across regions, just how much has been approved this year.

Senator IAN MACDONALD —Some of Victoria’s are two years and some are three years.

Ms Lauder —Yes.

Senator IAN MACDONALD —And yet they still seem to get a lot more than, for example, Queensland, which is a much bigger state, much bigger issues. Most of those seem to be over two years, a couple over one year, some over three years.

Ms Lauder —The five-year funding available for Queensland regions is $110 million over the five years of Caring for our Country. Admittedly the Victorian regions are slightly more, but not by much, $142 million.

Senator IAN MACDONALD —And New South Wales?

Ms Lauder —$168 million.

Senator IAN MACDONALD —You may as well go the other states, while we are there.

Ms Lauder —South Australia, $75 million; Tasmania, $28 million; Western Australia, $101 million; Northern Territory, $12 million; and ACT, $4 million.

Senator IAN MACDONALD —Northern Territory, this is base funding you are talking about there over five years.

Ms Lauder —Yes.

Senator IAN MACDONALD —So New South Wales, on the five-year basis gets considerably more than Victoria, than Queensland and the rest of them bringing up the rear. It is almost, one would say, related to populations, roughly speaking.

Mr Thompson —No, it is not quite, Senator. The biggest difference, if it was based on population, is Victoria would be closer to the top of the list and Northern Territory—

Senator IAN MACDONALD —New South Wales is bigger in population than Victoria, isn’t it?

Mr Thompson —Yes.

Ms Lauder —The decisions were made based on the Caring for our Country outcomes. So the document about what we would achieve over the five years and where they were going to be delivered—for example, where cane toads were or Tasmanian Devil, et cetera—helped guide the level of investment. For Queensland, for example, we had a large election commitment, Reef Rescue, as you know, and so those things were taken into consideration, that went outside the regional base level funding.

Senator IAN MACDONALD —Perhaps you should give me the same figures across the open call process and what is the other one called? Closed call process, is it—Landcare projects.

Mr Thompson —Yes, we can do that.

Ms Lauder —So the open call—

Senator IAN MACDONALD —No, all three together, do you have that?

Ms Lauder —No, I am sorry.

Mr Thompson —We have them all as separate numbers. We will have to get back to you on adding them together. We can do that. We should be able to do that today.

Senator IAN MACDONALD —Quickly, without wasting too much time, quickly go through them with the open call and then Landcare.

Ms Lauder —So the open call that was announced on Monday included Landcare projects as well. You know, it was the holistic Caring for our Country projects. So Landcare—

Senator IAN MACDONALD —Let us be sure of that. They have come out in two separate lists. Do you have them there in one figure, do you, one combined figure?

Ms Lauder —The $60 million worth of projects?

Senator IAN MACDONALD —Across Australia?

Ms Lauder —Across Australia.

Senator IAN MACDONALD —Victoria had $64 million base funding.

Ms Lauder —Yes.

Senator IAN MACDONALD —Five open call and 0.8 for Landcare.

Ms Lauder —Yes, I have that combined for the open call—Landcare and open call.

Senator IAN MACDONALD —Okay. Give me the combined.

Ms Lauder —So New South Wales—I am rounding figures—$13 million and they have 38 projects; Northern Territory, $2 million for seven projects; Queensland, $13 million for 41 projects; South Australia, $7 million for 18 projects; Tasmania, $3½ million for nine projects; Victoria, $6 million for 19 projects; WA $10½ million for 27 projects; and then there were nine projects worth $17 million that were considered multi-state.

Senator IAN MACDONALD —If you add those together with the base funding, tiny little Victoria seems to have done pretty well. Big Queensland and big Western Australia and big Northern Territory, they are the states where there are, some would say, parochially perhaps, but I think a fair observer would say the real natural resource management issues are in those bigger land area states, and yet they seem to have done relatively poorly. I have done the analysis on the amounts delivered north of the Tropic of Capricorn, and the percentage there, even if you add in Reef Rescue, was 22 per cent for more than 50 per cent of our country. Is there some explanation of that?

Mr Thompson —There would be two things, and Michelle Lauder may wish to add to them.

Senator IAN MACDONALD —Sorry, could I just add, my analysis was done on an annual basis, so where it was a three year grant, we have divided it by three to get an annual basis, on average, and we find what I said before. Sorry, Mr Thompson.

Mr Thompson —There are two significant factors to be taken into account. One is, as Michelle Lauder has mentioned, the extent to which the issues in that area are of national significance, and that was how the base was done. One of the other factors that was taken into account in determining the base funding was the not resulting in too much of a dislocation from past levels of funding, recognising that some states have capacity, regions and bodies able to deliver projects. So rather than reduce a state that was delivering quite effectively by a lot of money it was reduced by a bit to enable some others to go up. If we look at comparisons between years, when we are adding things like Reef Rescue, Queensland is receiving significant funds. And the other factor that drives the open call is the quality of projects and the capacity of the projects. And I think in the case of Victoria the quality and capacity of the regional groups and the Landcare groups and the like in Victoria, who have been in existence for a long time, have historically been quite high and they have got capacity to deliver, so it is the combination of those things.

Senator IAN MACDONALD —So it is not what is needed, it is how good you are at writing out a submission that gets the success.

Mr Thompson —It is both, Senator.

Senator IAN MACDONALD —That seems an odd way for the national government to distribute funds.

Mr Thompson —No, we allocate money against the extent to which they could address an important target. So the extent of the problem is taken into account, but also the design and capacity of the project to deliver against that target. We do not look at it on a state basis. We look at the quality of the project and some states come out as very good projects.

Senator IAN MACDONALD —Not me, but a cynic might say that the bulk of the money has gone to those states which have state government-run natural resource management areas like catchment management authorities which are state instrumentality versus the states that have community groups running it and, perhaps, are not quite as good as putting pen to paper as the state governments, most of whom badly need the cash and would put a lot of effort into getting in a good submission that might appeal to Canberra to help alleviate some of their other financial difficulties.

Mr Thompson —Just in terms of capacity of regions and groups, it probably is fair to say that some of the groups in Victoria and New South Wales do have high levels of capacity deliver and perhaps that is because they have had state backing in the past. In other states like Queensland capacity is improving those regions which have been receiving significant money, particularly the ones in the Queensland coastal areas who have been working with us on Reef Rescue. Their capacity is as good as any other region over the country.

Senator IAN MACDONALD —I would say better, but that is a parochial comment, and I am sure the minister would agree with me these days. But, unfortunately, the minister has not been able to show bias in a parochial way, which I am sure he is not supposed to, in any case. But, Mr Thompson, you mentioned Reef Rescue. I am saying if you add Reef Rescue in, Queensland still do relatively poorly in the north of Australia where all the big issues are: Barrier Reef, rainforest, Cape York, Torres Strait, Kakadu, Pilbara, Kimberley. They seem to have got 22 per cent of the largess of the federal government, whereas the popular states in the south, which I am sure they have problems and I do not want to begrudge them and good luck to them, but it does seem to me to be an unfair allocation across the continent of Australia for managing our natural resources.

Mr Thompson —As we said, the process is driven by a range of factors; quality of projects, extent to which they approach the targets and outcomes that were agreed by the government. We are proposing and have commenced some preliminary work on a review of Caring for our Country, which I think the stakeholders are all aware of.

Senator IAN MACDONALD —Yes, I want to come to that.

Mr Thompson —And some of these sorts of issues about the effectiveness of the program and the balance of effort across different areas will, no doubt, be something that people will be providing advice and commentary to us on.

Senator IAN MACDONALD —We will come on to that. But if it is the quality of the project and the quality of the submission, can I ask you what the solution might be for those who did not have quality projects or quality submissions? Perhaps they should slip down to Victoria and borrow some of their pen-pushers to put in a better submission, should they?

Mr Thompson —One of the things we do work with the regional bodies on is encouraging knowledge-sharing between groups on how to design good projects, how to deliver good projects, how to report against them. And the regional groups do learn from each other and there is funding in there for things like knowledge-sharing and annual knowledge workshops where all those regions get together and work on projects. One of the examples in Queensland which you may be familiar with is the regional groups operate as a consortium sometimes to actually help the weaker groups with their capacity and their ability to run good projects and good programs. And we see some of the knowledge and skills that those regions that have got universities and very strong boards working with the ones in the less populous areas. And we also use our facilities to help them.

Senator IAN MACDONALD —Burdekin Dry Tropics has a university and quality staff and, I have not heard from them, but to my calculations they have done not terribly well, so I do not sort of accept that. And, again, Mr Thompson, I am no expert in the field, I hasten to add, but I do know, and I know Queensland because that is where I come from, that some of the people involved in natural resource management in Queensland are second to none. These are people with PhDs in some areas, but in other areas huge on-the-ground experience and I find it just a fraction disturbing that the allocation of funding on the broad seems to be a bit unfairly done. How much longer, as things stand at the moment, is this same arrangement going to continue?

Mr Thompson —The current program and arrangements for Caring for our Country have forward estimates and targets and outcomes set until 2012-13.

Senator IAN MACDONALD —And there will be another funding round next year, but not for base funding. I assume the allocations this year are for the balance of the program. Is that correct?

Mr Thompson —The base level of funding for regions will, essentially, as you say, be unchanged. Most of them have now committed, or will have committed, the total allocation by region for the last two years of the program. I think there is one of two where there might be some new approvals of base level funding, but by and large 90 percent has been allocated. There is a competitive one still open.

Senator IAN MACDONALD —You see, I am concerned that places like Corangamite, and bless their souls, I could imagine why the government would be fairly keen on Corangamite just at the moment, but they get $5.5 million over two years. I am not familiar with the area, but I suspect that the area that they cover would be fairly small in square kilometre terms. Would that be right?

CHAIR —I would not like to walk it, Senator Macdonald, if that is what you mean.

Senator IAN MACDONALD —I would rather walk it than walk the Kimberley one, for example.

Senator BACK —Hasluck!

CHAIR —I have walked Hasluck.

Mr Thompson —They are a modest size Victorian region and they are smaller than some of the larger regions in Queensland and Western Australia.

Senator IAN MACDONALD —I just make the point that Corangamite gets $5.5 million over two years, which is $2.75 million a year, while the Burdekin dry tropics, based in Townsville, gets $1 million. It is a much bigger area, much bigger issues. Is there any possible explanation for that apart from the significance that Corangamite had in the last election?

Mr Thompson —I would say the issues that came into that are the nature of the environmental problems. Because the population is larger some of the threats to the environmental resource can be high. If we are looking at sustainable agriculture there can be more farmers involved as opposed to more area involved, so a lot of area in the Burdekin but, perhaps, less farmers per hectare than in Victoria. That might be some of the key factors.

Senator IAN MACDONALD —There would not be less farms in that area, but certainly in the Southern Gulf catchments which got a tiny 672,000 for the year to cover all that area that has just been partly inundated in flood waters, that has huge mining resource issues, that has part of the gulf area and the issues there; very, very large Aboriginal populations and they seem to have got a pittance compared to what one can only assume would be wealthy Corangamite.

Mr Thompson —Some of those issues will relate, as I said, to the national responsibilities and targets in the area, and in the Southern Gulf, the problems to do with mining are not issues. I presume they are things relating to land disturbance and pollution; they are not ones that are covered by Caring for our Country, so it can vary depending on the gist of the problem.

Senator IAN MACDONALD —I guess what you are telling me—and if you went through individual things, I guess we could perhaps pin these down, but we do not have time for that—in the broad is the Torres Strait, for example, over three years gets $2.4 million or a tiny $822 million for Caring for our Country. Now every time I hear a government spokesman, the Torres Strait Islands are about to disappear under a deluge of water. There are other problems with incursions from New Guinea of pests, both animal and vegetable, and yet they seem to get a tiny amount compared to wealthy Corangamite. Is there something I am missing here?

Mr Thompson —In the case of Torres Strait, again, it is going back to what are the objectives of the Caring for our Country program and mitigating climate change is not one of the issues that Caring for our Country directly contributes to. It can help with adaptation. The issues of animal and pest disease incursions directly across Torres Strait are handled by our quarantine people and Biosecurity Australia. In Torres Strait, some of the issues we are dealing with there are ones related to turtles, dugongs, coastal management and working with Indigenous people to build their capacity to manage that land, and then some of that base capacity is then used in other programs.

Senator IAN MACDONALD —Mr Thompson, I guess you are saying that if I have a complaint with the national goals then I should be arguing with those who set the national goals.

Mr Thompson —What I would say is that we call for projects and we assess projects against the national goals and targets that are agreed in the design of the program.

Senator IAN MACDONALD —If the national goals and targets result in one half of Australia—that is, the northern half, which has, in my view, the most significant natural resource management issues—getting 22 per cent of the total bucket, then clearly there is something wrong with the national goals and targets. That is perhaps a comment, but if you could try to tell me I am wrong I would be grateful.

Mr Thompson —I have not got the number here in front of me, but we could give you perhaps later today a summary analysis of how much money is spent from Caring for our Country overall by those three categories you were interested in—base, Landcare and competitive components—for Northern Territory, Western Australia and Queensland. And we do have numbers for remote and regional Australia.

Senator IAN MACDONALD —Remote and regional Australia. It is all regional Australia. We have this topic called northern and remote which includes the rangelands in Northern Australia which is one of the target areas which we do track expenditure in.

Senator IAN MACDONALD —You could give them to me. I have done my own assessment and that is how I get down to 22 per cent.

Ms Lauder —The thing we could add in which would be helpful is what has previously been approved for 2010-11, 2011-12 and 2012-13 rather than just looking at what was announced this week.

Senator IAN MACDONALD —Yes, you have said that. I have the figures here over the five years and I can do the same assessment there, but I would be very surprised because in all states there are two and three year things—admittedly, in Victoria there are more three years than two years—but, just for example, Burdekin dry tropics has been allocated for one year only and that is the current year. What happens to it for the balance of the year?

Ms Lauder —Sorry, Burdekin dry tropics only got one year of funding because they chose to only put forward a one-year application, so they will apply next year.

Senator IAN MACDONALD —So they will get more next year?

Ms Lauder —Yes. It has been allocated for them, yes.

Senator IAN MACDONALD —I thought you said earlier that you had allocated through to the out years.

Ms Lauder —No, we have allocated 90 per cent to the out years, so there is still a small amount that is left for the regions that have chosen not to apply for the full amount at the moment. Burdekin would be one of those. I had thought all of the Queensland regions had applied for all of them but possibly Burdekin has not. They still have—

Senator IAN MACDONALD —Burdekin, according to your figures—

Ms Lauder —$2.6 million that they have not sought allocation for and—

Senator IAN MACDONALD —Cape York is the only other one.

Mr Thompson —Senator, why I would like to give you those figures if we have them—and maybe you are working from some slightly different numbers to us, or only for one year—is because the numbers I have for the value of the approvals that have been made by ministers to date in total by jurisdiction, in total over the five years of Caring for our Country, is that Queensland has got $391 million in total—that is everything—and that is the single highest state allocation.

Senator IAN MACDONALD —Tell me the others.

Mr Thompson —New South Wales, $282 million; Victoria, $196 million; Western Australia, $152 million; South Australia, $120 million; Tasmania, $86 million; ACT, $5 million; Northern Territory, $60 million; and there is $400 million in that category called multi-jurisdictional. That probably includes things like cattle, which is across four jurisdictions.

Senator IAN MACDONALD —So you have those figures—and I would appreciate if you could give them to me—in the break-up by the year and for the balance of the program that are allocated.

Mr Thompson —Yes.

Senator IAN MACDONALD —Could I just clarify something? Under the open call successful projects—Landcare, there are a couple of projects observing fishery interactions for threatened endangered protected species. How does that come into Landcare?

Mr Thompson —In the broad sense, Landcare works with primary producers who are trying to adopt sustainable practices and that fisheries one is treating the fishing industry as a primary producer trying to undertake fishing in a sustainable way. I think we have talked before about the interaction of targeted fishing operations and their interaction with wildlife being one of the key issues that the fishing industry are trying to avoid. It is a little bit like the farmer and how they use their land; this is about a fisherman and how they use their resource to minimise environmental impact.

Senator IAN MACDONALD —Okay, so the Landcare title is strictly—

Mr Thompson —That is Landcare in the broad.

Senator IAN MACDONALD —Okay. I have no objection to—

Mr Thompson —We do not wish to exclude fishermen from a program of this sort.

Senator IAN MACDONALD —No, and I am glad that you have included them. I am just a bit confused as to why it is called Landcare when it is clearly sea care or fish care. Nothing turns on it?

Mr Thompson —Nothing turns on it. It is Landcare of the sea.

Senator IAN MACDONALD —Okay. One of the successes of the NHT Landcare program was the engagement of local and regional stakeholders in decision making and their increased commitment to funding leverage from non-Commonwealth sources. That was always one of the great benefits of it in the old days. Are you able to tell me what dollar funding or in-kind equivalent has been able to be leveraged from investors such as state and local governments, land owners and land managers, industry and community groups in providing Caring for our Country/Landcare funding over the last three years? Is that possible to get?

Mr Thompson —We would not be able to give you an overall figure for that because that is not something we collect on a regular basis. It would be something which—

Senator IAN MACDONALD —I have asked you this at practically every estimates though, and you have attempted to—

Mr Thompson —We do have some of the amount of money that some other bodies have put in, but it is not a comprehensive analysis. Because we do not control other people’s budgets it can be a hard number to get a consistent number on, but the indications from the case studies we have looked at we get through from some of the ones in—in Victoria they have talked about a multiplier of between four-to-one and six-to-one, and I think there is about a two-to-one that we have got out of some of the Reef Rescue type investments.

Senator IAN MACDONALD —I am told, and would you agree with this, that the trend is clearly downwards from leverage from other sources—that is, these groups are more and more relying on the Commonwealth, less and less are they able to leverage funding. One of the reasons, they tell me, is they are competing with people they used to collaborate with. I am told that the trend is downward. Would you agree, disagree or do not know or take it on notice?

Mr Thompson —We would have to take any sort of answer in that space on notice, but we have no comprehensive information to say whether it is upwards or downwards. We have heard anecdotally, and it has been observed—it is not a secret—that in some states some of the state expenditure has shifted from area to area.

Senator IAN MACDONALD —Dried up.

Mr Thompson —But what amount of money groups have been able to obtain from the private sector or from landholders, I could not say, other than we have seen some quite good examples developed in some places of regional or large Landcare group engagement with the private sector for contributions to projects. There has been some work in Queensland with Coca-Cola, and there is some work in other states with agribusinesses operating at the regional level.

Senator IAN MACDONALD —Mr Thompson, you talk to the same people I do. You would have heard a general comment that it is more and more difficult to get other funding apart from the Commonwealth.

Mr Thompson —I have heard that general comment, but I do not have strong evidence.

Senator IAN MACDONALD —You would be able to get the state government funding, because this is what I have asked for in previous years, and if you could update what I have asked previously, as to what is your latest information on contributions that the various state governments have contributed. Originally, when this all started with NHT it was supposed to be dollar for dollar as I recall. I am quite sure it is not that now, but I am just wondering if you can get for me the contributions by the state, appreciating that in many instances you will have to get that from the various state departments, and that is no easy task either. I accept that. But if you could—

Mr Thompson —We can take that on notice. We will attempt to get what we can from the states.

Senator IAN MACDONALD —There is a review and reform supposedly of arrangements for the NRM, which you mentioned before, and there is to be a mid-term review of Caring for our Country. Is that correct?

Mr Thompson —Yes, that is what we have spoken to stakeholders about.

Senator IAN MACDONALD —Who is going to undertake that review?

Mr Thompson —The planning for that review is at quite an early stage and so those detailed arrangements are under consideration, but we would envisage something that involved some quite solid evidence-based work and a lot of engagement, consultation and input from the whole range of Natural Resource Management stakeholders.

Senator IAN MACDONALD —So when do you hope/plan/estimate that this review will take place?

Mr Thompson —We expect to start the review shortly, in the next month or so. We would like to report next year. We have scheduled a stakeholder discussion on 11 November with a whole range of people. That is the sort of discussion that would contribute to the mid-term review. We will also be getting feedback on this year’s business plan and any other comments they might have on the program in general. It is one of those regular type meetings we have.

Senator IAN MACDONALD —Will you be getting an independent consultant to do the review or is it going to be people from your department or people from the state departments or—

Mr Thompson —As I said, it is still quite early days in designing the review. We have not decided that yet.

Senator IAN MACDONALD —So that is not certain. Can you, on notice, give me a list of the stakeholders you will be consulting, if that has been done yet, even in broad terms, for example, ‘All Landcare groups in New South Wales’.

Mr Thompson —In broad terms we would be consulting with as many people as possible who have an interest in this space. We can sort of give you that broad categorisation, but we do some of these reviews now by saying, ‘Put your comment on the web page’, type thing, so we would be quite keen for people who are not necessarily on our mailing lists to identify themselves and make a contribution. We are after the broadest range of input as possible.

Senator IAN MACDONALD —Is it correct that you already have a document entitled Australia’s NRM governance system: foundations and principles for meeting future challenges, prepared by the Australian regional NRM chairs? You have got that?

Mr Thompson —We have been provided with a copy of that document, yes.

Senator IAN MACDONALD —I have had a glance at it. It presents, perhaps for the first time, what seems to be an overarching NRM strategy and policy framework which seems to me to reflect the expertise and experience of on-the-ground regional practitioners. What sort of emphasis or relevance will that document, coming from all of the NRM chairs—a pretty wide and experienced and talented cross-section of Australian people in this area—be given in the review process?

Mr Thompson —As you say, it is a document based on a very comprehensive set of experiences and literature. It is a document that we would be certainly taking into account in the review. The group putting it together did consult with us quite a number of times while they were putting that document together, and so we are familiar with it and it is something that sums up a lot of academic work in the field as well. So, yes, it will be a quite useful and significant input to any review.

Senator IAN MACDONALD —And you are aware, I know, of the Senate inquiry into this and the Senate report, which I am aware that you have, which was written after a lot of evidence had been heard by the committee. Will that be taken into account, the conclusions of that?

Mr Thompson —Yes.

Senator IAN MACDONALD —I have heard a rumour, and it is only rumour, that this farcical Regional Development Australia—that is my terminology; you do not need to agree with that—is going to be incorporated into the Caring for our Country NRM groups. Is there any veracity in that rumour or is it—perhaps that is not the right way. Perhaps I should be asking you has the department done any work to incorporate Regional Development Australia within the Natural Resource Management groups? That is perhaps a better way to ask.

Mr Thompson —No. I am aware that there has been some discussion amongst some of the NRM stakeholders about what is the possible relationship between Regional Development Australia and NRM groups and my understanding of where the government is at on how it is doing its regional rollout is some of the detail of that is still being worked through. We have not done any work about subsuming regions within RDAs or anything of that sort.

Senator IAN MACDONALD —Regional Development Australia is a creature of the regional development ministry, whatever it is called these days, it keeps changing. This program of Caring for our Country has been has been administered in the early days well, I might say, by agriculture and environment, perhaps not so well in recent times—that is a personal view, of course—but still, there is some expertise in the department in those areas. Does the department have a view on the sense or otherwise of incorporating Natural Resource Management goals with development goals in the region?

Mr Thompson —As I said, the department has not done any substantive work in that field.

Senator IAN MACDONALD —I would assume that if that were to happen that would come as a direction from relevant ministers or from the government, to say: ‘This is what we want to do. You departmental people from all departments, go out and make it happen.’ Is that how it would happen or—

Dr O’Connell —I think we are getting into hypotheticals there, Senator. I think Mr Thompson is clear that we have not been working with that thinking in mind. A lot of things could happen, but I do not know.

Senator IAN MACDONALD —What I am just trying to work out, Dr O’Connell, is there is no push from the department that would lead to advice to the minister saying, ‘Let’s do this.’ If it were to happen it is more likely to come from the minister down, saying—I mean, that is hypothetical. The question that is not hypothetical is that there is no view within the relevant departments that the goals of the Caring for our Country would be better served if we somehow incorporated with that farcical group called Regional Development Australia. I should not say that.

Dr O’Connell —I will leave the commentary parts out. The basic point is that we are driving on now in partnership with the NRM regions and that is the way we are doing our work and that is the forward prop we have got for doing our work. I think that is all I can say.

Senator BACK —I just want, speaking of the north and fishing, to draw to your attention and ask you if you are aware of a proposed commercial aquaculture project to be established at the Curtin detention centre outside Derby in WA.

Mr Thompson —No, I am not.

Senator BACK —I asked this question yesterday. The Deputy Secretary for Immigration did, in fact, advise us:

... there is certainly work going into an aquaculture project that the people at the centre are in fact participating in. That centre is involved in essentially a barramundi hatchery arrangement and it involves the establishment of small ponds.

But it is interesting, because the evening before I actually asked the officers in the environment portfolio and they were not aware of it either. I was asking them: would such a project require assessment under the EPBC Act. Prior to estimates we did contact the Western Australian department of agriculture. They were not aware of it either. Would a project of that nature require any involvement with certification by, licensing by, your organisation?

Mr Thompson —Broadly speaking, no. Aquaculture is something that is administered under state legislation. Unless it triggered some matter under the EPBC Act, which is a matter for the environment department, essentially until they come to export something there probably would not be any involvement from this department.

Senator BACK —So it would only be if they were contemplating the export. It would not be if they were contemplating sale of the product into a domestic market in the north-west?

Mr Thompson —No.

Senator BACK —So it would purely be that. Good.

Senator COLBECK —So you do not have an experience or contact or feedback from the aquaculture sector about the time that it takes them to get an approval for a proposed aquaculture site?

Mr Thompson —In most of our discussions with the aquaculture sector they do raise the issue of the licensing processes that they have to go through with the states and the land access arrangements that they go through with the states and local government. That is something they raise with us but it is not something that is within the Commonwealth power to intervene on.

Senator COLBECK —So you have not had any discussions—and I know there has been work done on a national aquaculture strategy—with the industry about trying to get some sort of common approach on that. I have heard people talk about it taking up to 10 years to get an approval for one of these sites.

Mr Thompson —We have had discussions with some individual states about nationally consistent approaches and there has been some work done in Queensland to try and streamline approaches where that is possible. There is work going on through the Commonwealth-state ministerial council type of process in this area as well.

Senator COLBECK —There would be some discussions about—

Mr Thompson —There are discussions going on in that area.

Senator COLBECK —nationally consistent approaches. Okay.

Mr Thompson —Yes.

Senator BACK —It was as a result of a concern expressed by an aquaculturalist in the area that we raise this because, exactly as Senator Colbeck has said, the aquaculturalist has been frustrated for some years in his efforts to become licensed. He has then been frustrated to learn that a group, presumably with no competence, is spending Commonwealth moneys on what is a very high risk venture. That was the catalyst for bringing this forward.

Mr Thompson —As I said, I have no awareness of the exercise, but we would not normally be informed of every aquaculture development as it happens.

Senator COLBECK —Perhaps you are not the right agency and Senator Ludwig will certainly tell me if that is the case. Would there be any difference in approval processes for such a proposal on Commonwealth versus state privately held land?

Mr Thompson —I am not familiar enough with the relevant legislation relating to aquaculture to know.

Senator COLBECK —I do not think it is necessarily an aquaculture thing. I think it is a Commonwealth planning-type approval thing and, perhaps, even in transport tomorrow we might get—

Dr O’Connell —We could take that on notice, but I think the short answer probably is that there would be a difference between state land and Commonwealth land.

Senator COLBECK —I am just thinking of some things I have come across where the Minister for Infrastructure Transport, for example, has approved a big box development on an airport site, because that is property owned by the Commonwealth.

Dr O’Connell —It is not just property owned by the Commonwealth. It is the specifics under airports, but we can provide you with what we know. I think there will be a difference in terms of the regulatory framework, yes.

Senator COLBECK —Certainly with defence bases.

Mr Thompson —We have not had any proposals that I am aware of to date for aquaculture on Commonwealth land.

Senator COLBECK —So if the Commonwealth were to be proposing something of that nature would it come to you through any form of process that exists at this point as part of the approval process?

Dr O’Connell —There is no approval process that we would be directly involved in for Commonwealth land.

Mr Thompson —It would be the department of the environment.

Dr O’Connell —The department of environment, it could well be.

Senator COLBECK —You may be asked for some advice?

Dr O’Connell —Possibly, but not essentially. I guess that would be the point.

Senator COLBECK —You have not been asked for any advice on the management of such a facility?

Dr O’Connell —Of the case in point I do not think we have had any engagement at all.

Mr Thompson —No.

Senator COLBECK —If the Commonwealth is going to run one I would have thought yours would be the department they would come to to ask for such advice or outsourcers?

Dr O’Connell —Or possibly a state government that is also engaged with the aquaculture. I do not know what the basis for the arrangement is; how big it is or how commercial it is; whether it is—

Senator COLBECK —Three ponds, is that right, Senator?

Senator BACK —Ponds; they have not specified—

Dr O’Connell —So it depends how big this is and whether it is at a recreational level or a commercial level. I have no idea. So I think probably we would need to know more about it before we could sensibly comment on it.

Senator COLBECK —Thank you.

Senator IAN MACDONALD —Where would we ask about programs involving weeds?

Mr Thompson —Here, Senator.

Senator IAN MACDONALD —Can you just bring me up to date on what weed programs we do have at the moment?

Mr Thompson —Two broad programs, Senator. A range of weeds are addressed under Caring for our Country. In total, I think, we have committed around $45 million out of Caring for our Country to date addressing the weed problem.

Senator IAN MACDONALD —So that goes out as part of the national goal allocations to the various NRMs?

Mr Thompson —Yes, to various people, so that is work on the ground. And we have also now established the National Weeds and Productivity Research Program operating out of the Rural Industries R&D Corporation to do research into better methods of weed control.

Senator IAN MACDONALD —So that is replacing the old CRC for whatever it was called?

Mr Thompson —It is not replacing it, but it is doing some work in that same area, yes.

Senator IAN MACDONALD —There is no CRC in the weeds area anymore, is there?

Mr Thompson —There is no CRC for weeds now. No.

Senator IAN MACDONALD —Okay. And can you just tell me the funding for that research work?

Mr Thompson —$15.3 million over four years.

Senator IAN MACDONALD —Okay. We are not going to get a lot done for that, are we? Are you aware—and perhaps if you cannot help the minister might be able to—of any election commitment on weeds?

Mr Thompson —There were two election commitments on weeds. One was the $15.4 million for the National Weeds and Productivity Research Centre.

Senator IAN MACDONALD —So that is a new program?

Mr Thompson —That is a new program. And the other one was for some research on fireweed.

Senator IAN MACDONALD —How much is in that?

Dr O’Connell —Just to clarify those, the research centre was a 2007 election commitment, so it is an election commitment that has kept on from the—you are talking about this current election?

Senator IAN MACDONALD —Well, I was.

Mr Thompson —Both of those were two 2007 election commitments.

Senator IAN MACDONALD —So nothing new this time.

Mr Thompson —Nothing new this time.

Senator IAN MACDONALD —Okay, and where are both those at?

Mr Thompson —As I said, the weeds and productivity research centre is established within Rural Industries R&D Corporation. The first tranche of projects was worked on by the department and they are happening, and Dr Troy can provide a bit more detail on that. The fireweed research program was to look at the development and application of methods to control fireweed, which is a weed emerging in coastal areas. A tender has been let for that work to take place. I think it is with a researcher from the University of New England.

Senator IAN MACDONALD —Okay. Can you tell me how much of the Caring for our Country fund that—I assume, the national goals—was earmarked for weeds?

Mr Thompson —The way the Caring for our Country is established, it does not actually earmark money for weeds. Weeds is supported insofar as that contributes to other targets like addressing biodiversity decline or assisting with sustainable agricultural practices. And I think the number is correct. About $45 million over the last three years has been announced as contributing to weeds and pest animals.

Senator IAN MACDONALD —In allocations to NRM groups?

Mr Thompson —NRM groups, landcare groups, farmer groups.

Senator IAN MACDONALD —Okay. And those groups have always done work in their regions, in their localities, on weeds: that is correct?

Mr Thompson —Yes.

Senator IAN MACDONALD —That has always been part of their business plan. There used to be—your department used to administer—a $40-odd million separate program for weeds. That has now finished, hasn’t it?

Mr Thompson —I think that was the Defeating the Weed Menace R&D Program.

Senator IAN MACDONALD —That is it, yes.

Mr Thompson —That one has now ceased. I should add that, in addition to the $45 million that we know was about weeds, many groups do weeds as part of their other projects, and there is something like $47 million worth of projects where weeds are part of the activity. Many groups think addressing weeds and pest animals is very important, so it becomes a significant investment.

Senator IAN MACDONALD —A final couple of questions relate to feral animals. I think we heard at the previous election there was some silly amount allocated for camels, or something, wasn’t it? How is that program going?

Mr Thompson —I think it is around $19 million that has been allocated for camel culling across Central Australia, targeting camels that are causing particular problems for important areas. The program has commenced. It commenced last year and is running on track.

Senator IAN MACDONALD —So how does it operate?

Mr Thompson —It commenced last year and is running on track. It started at quite a small level, but it should be at a larger—

Senator IAN MACDONALD —But how is it operating? Does it go through NRM groups or is there a contract?

Mr Thompson —It was a project put out to tender and it was won by a group called Ninti One, which is the commercial arm of the old Desert Knowledge CRC, and they are still continuing to run it. They have a board that is a consortium of environmental groups, science and agricultural interests, and they are running the project on our behalf.

Senator IAN MACDONALD —Is this the one Fred Chaney runs?

Mr Thompson —I have not seen his name associated with it, but he may do. It operates out of Alice Springs.

Senator IAN MACDONALD —Alice Springs, yes. I think that is it. And so that is a three- or four-year program?

Mr Thompson —It runs through until four years—in 2012-13 it should be completed.

Senator IAN MACDONALD —Apart from that with camels, and apart from Caring for our Country funds and the particular NRM groups, is there any national government program relating to feral animals, particularly pigs?

Mr Thompson —It is a significant part of Caring for our Country and a whole range of things. And pig control, for instance, crops up under World Heritage because it is from protection of the World Heritage sites up in Cape York and the like—from pigs to turtles. But the only other program outside of Caring for our Country—and Caring for our Country is quite significant, with $1½ million for the biological control of rabbits and $2 million for supporting the Weeds of National Significance and $9 million to try and keep foxes out of Tasmania, and then work that was put into cane toads, plus there has been work on ants and rats on various islands. The department still runs through ABARE-BRS the small pest animal mitigation program, which is about developing best-practice methods of feral animal destruction.

Senator IAN MACDONALD —And you mentioned Heritage in relation to, again, pigs in the World Heritage areas. As far as you know, they do not have funds from the heritage area for those sorts of works, do they? It is only part of Caring for our Country.

Mr Thompson —They would be able to give you more detail about that. That would be a question you would have to ask the environment department. But there is funding within Caring for our Country for addressing World Heritage and iconic environmental sites, and pest animal control is one of the important measures of protecting those sites.

Senator IAN MACDONALD —And finally, is the ghost nets program still being funded through this Caring for our Country program?

Mr Thompson —Yes it is, and it is still being delivered through that consortium of the Northern Australian Indigenous Land and Sea Management Alliance, involving Queensland, the Northern Territory and Western Australia.

Senator IAN MACDONALD —It was being done through the Northern Gulf NRM.

Mr Thompson —They are involved too. It is a consortium of the regional bodies and that Indigenous organisation that runs across the top of Australia.

Senator IAN MACDONALD —Okay. That is all I have then, thanks, Mr Chairman.

CHAIR —Thank you, Senator Macdonald. Are there any further questions before we go to fishing? Thank you.

[3.48 pm]