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Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR —I now welcome representatives of Environment Victoria to today’s hearings. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. We have received a written submission to this inquiry from you. Do you wish to present any additional submissions or make an opening statement and then be subjected to questions?

Ms O’Shanassy —We wish to make an opening statement.

CHAIR —Proceed, please.

Ms O’Shanassy —First of all, thank you very much for allowing the time to receive evidence supporting our submission from Environment Victoria. For the record, Environment Victoria is an independent environment group representing the views of Victorians on the environment. We have been working in healthy rivers for over a decade.

Our evidence will focus strongly on the clear fact that sharing arrangements in the Murray-Darling Basin are not working and that there are existing environmental impacts—which, of course prompted the development of the plan in the first place. But, importantly, we will identify some of the existing social and economic impacts that are currently affecting communities in and outside the basin. This is predicted to get worse under climate change, as we have experienced in Victoria. In the last two years we have seen floods, droughts and fires, which are all consistent with predictions of climate change and, of course, are predicted to get worse. So the impacts that we are currently seeing are likely to get worse into the future. Therefore, business as usual is not an option.

For us, very much, the plan and government’s response to that plan is the opportunity to manage those inevitable changes rather than letting those changes manage us and, therefore, determine the environmental, social and economic consequences of things like climate change and unsustainable water management. We are specifically focusing our evidence today on asking the inquiry to consider both the costs and risks of not taking action and not returning a sustainable amount of water to Murray River, and also the costs and benefits of what we would achieve if we did return a sustainable amount of water to the Murray-Darling system and, therefore, had a sustainable system. Further, we will focus on the transition needs that are critical to help get an outcome for the environment, our societies, our communities and our economy.

Finally, we would like to point out that trade-offs have already been made in the Murray system for decades. The environment is affected and we do not have balance in the Murray system. The Murray-Darling Basin Plan has put forward a proposal that, further to those trade-offs, three to four thousand billion litres of water returned to the river will unlikely return it to health as the plan actually identifies, and there will need to be trade-offs. Essentially if you develop a plan that is based on thinking that you are going to have economic and social consequences because you are protecting the environment that is what you will get. If you go in thinking you will get a trade-off you will get trade-offs. We, however, would like the inquiry and the plan to look at what the multiple benefits are that we believe can be achieved. In finishing, before Juliet provides some more detailed evidence, assuming that the only alternative to a sustainable river is an unsustainable river will have economic and social consequences.

Ms Le Feuvre —As Kelly said: change is already happening across the Murray-Darling Basin. We have seen 12 years of drought, we now have floods, there are indications of a changing climate, communities have been tested and farmers have been forced to change and adapt their businesses and make difficult decisions. But the decline in environmental condition began well before all of this. We have already lost 85 per cent of Victoria’s river red gum forests, water bird abundance is down by about 80 per cent since the early 1980s—in that short time frame—and native fish populations are around 10 per cent of their pre-European levels. We cannot afford to lose any more.

One of the key questions for this committee is: how is change in the Murray-Darling Basin going to be managed. If we allow it to happen in an unplanned way both communities and the environment are going to suffer. The broad acceptance of business as usual is no longer an option. Many submitters to this inquiry have discussed the costs of returning water to the environment. We would like to talk about the costs of not returning water to the environment and the benefits and opportunities that ecological restoration of the Murray-Darling Basin will bring.

Under the Commonwealth Water Act the Basin Plan has a very clear mandate to determine how much water is required to return the basin’s ecosystems to health. The basin authority has determined that the amount of water that is required is 7,600 gigalitres. This is the amount required to return all the basin’s catchments to good condition. The 3,000 and 4,000 gigalitre scenarios that are discussed in the guide to the plan mean that Victoria’s catchments will remain in poor or, at best, moderate condition and that trade-offs will need to be made between upstream and downstream assets. There will not be enough water to look after both the floodplain ecosystems, the red gum forests in Victoria and to keep the mouth of the Murray open. We cannot afford to make this kind of choice any longer. The ecological decline that we have experienced has been as a result of this kind of decision making in the past.

The focus on the environment is both the plan’s strength and its weakness. For the first time it gives primacy to the environmental needs of the basin, and we strongly support this approach of using science to determine the amount of water required. But the Basin Plan does not and cannot consider how the change is to be managed. For this we need a much broader whole-of-government approach to transition away from irrigation and support communities to diversify, to move to new and different industries including but not limited to dryland agriculture and the provision of existing services and to attract fresh investment. Later on we will hear from the Australian Conservation Foundation who will show that much of the employment growth in the basin has been in sectors other than agriculture over the last few years.

The committee will be aware of many strands of government investment in regional Australia. There are billions of dollars already on the table. There is direct investment by the Australian government such as over $9 billion in Water for the Future, and the Victoria government has invested over $1 billion in irrigation infrastructure modernisation. There is a huge amount of indirect Australian government investment through programs like Strengthening Basin Communities, the Priority Regional Infrastructure program, the regional priority round for the health and hospitals fund and access to education investment for regional universities and TAFEs. The incoming Victorian coalition government is setting up a $1 billion fund for regional renewal. If you add all this together you have a very significant amount of cash on the table to provide the economic foundation for transition to more sustainable water use and to open up fresh opportunities for the basin communities.

However, successful implementation of the Basin Plan needs a framework for managing change and integrating government investment. We are well aware that irrigation should become more efficient and effective and occur in the areas which are most suited to it. The crucial first step is a process for deciding which areas are to remain in irrigation and which will be retired. We commend to the committee the work of the community in the Torrumbarry Irrigation Area and the CSIRO in developing the traffic light approach to making these decisions.

The process started with an acknowledgement from the community that their water use was unsustainable, that their system was too leaky and inefficient to have a viable future, and that, if they did not plan for change, it would be to their disadvantage. To just give you one small example of the problems of the Torrumbarry Irrigation Area: one of their storages is Kow Swamp, which is a medium sized storage. That storage loses in evaporation the same volume of water—about 38,000 megalitres—as the City of Bendigo, where we are now, uses in a year. That is just an indication of the sort of problems in the irrigation system.

The CSIRO study, which was carried out in 2009, concluded that irrigated land use in the area could be reconfigured using the traffic light concept into three planning zones based on soil, environmental and location characteristics. Different water investment strategies would be applied in each zone. There is the green zone which is suitable for sustainable irrigation. This is priority location for investment in irrigation infrastructure modernisation and efficient water delivery. It is a low priority for water purchase unless they provide really low-cost water. The amber zone is prioritised for the environment amenity. It is a location for investment in ecological restoration and rural amenity. It encourages changes in land use from irrigation to biodiversity and carbon plantings. It is a high priority for water purchase based on potential for water delivery cost savings, public good, environmental and salinity benefits. Then there is the red zone, the new dry land. It is a priority location for investment in new dryland farming and a high priority location for water purchase.

The environmental and economic benefits achieved by using this reconfiguration design at the Torrumbarry Irrigation Area are significant. Twenty per cent of the water used for irrigation can be returned to the environment—about 60 gigalitres. Water delivery infrastructure operation, maintenance and replacement cost savings are in the order of 40 per cent. Agricultural profitability increased by 24 per cent. Cessation of irrigation in the red zones would reduce salinity measurement at Morgan in South Australia by up to 13 EC units. This equates to a cost saving of more $50 million over 30 years in salinity mitigation. In addition, over 10 million tonnes of carbon dioxide equivalents can be sequestered annually by encouraging planting in the amber zones. The CSIRO study, from which this data is taken, shows that if the same volume of water is allowed to leave the district in an unplanned way these benefits will be lost and the value of agricultural production will decline rather than increase.

The CSIRO traffic light has been used to some extent in the Northern Victorian Irrigation Renewal Project as an input to establishing the zones for exemption from the four per cent limit on water trade. However, the exemption zones depended heavily on the design of the modernised backbone, which was determined before the traffic light approach was devised. So the full benefits that the CSIRO envisaged may not show up in the amber area.

CHAIR —Juliet, could I ask you to conclude your comments, because part of today’s proceedings is to question your submission. If you have new material, by all means leave it with us, but we would like in the time allowed to question the submission that you have presented.

Ms Le Feuvre —Just a couple more brief points, then. Failure to take the economic costs of environmental degradation into account is a major omission from the socioeconomic allowances in the proposed basin plan. The increase in salination of the Murray-Darling Basin is the most obvious and best quantified example. To be brief, current water use means that the average salinity of rivers will rise significantly, endangering their use for irrigation and urban purposes within 20 to 50 years, and about 3.4 million hectares of land in the eastern and southern reaches of the basin will be salt affected within 50 years. Average salinity in the Loddon River and the Avoca River already exceeds the 800 EC threshold for desirable drinking water, and the current blackwater events being experienced throughout the Murray-Darling Basin are another example of the costs of environmental decline. The presence of dead fish and blackwater is not good for anybody, and the impacts on drinking and irrigation water are obvious. It is perfectly conceivable that the provision of increased environmental flows during the drought years would have flushed some of the organic matter through the system and reduced the impact of the blackwater.

On the other side of the coin to the environmental degradation are the benefits and opportunities that environmental restoration brings. A key omission from the Basin Plan is the discussion of ecosystem services, even though their consideration is mandated by the Commonwealth’s Water Act. Ecosystem services are loosely defined as the benefits people receive from ecosystems, and traditionally they have been taken entirely for granted and not given financial value. However, international bodies such as the Millennium Ecosystem Assessment and the United Nations Environment Program are beginning to take much more notice of ecosystem services and are exploring the links between biodiversity conservation and human wellbeing. The United Nations Environment Program in its report Mainstreaming the economics of nature concludes the following:

Ecosystem conservation and restoration should be regarded as a viable investment option in support of a range of policy goals including food security, urban development, water purification and wastewater treatment, regional development, as well as climate change mitigation and adaptation.

What I am trying to say is that the provision of ecosystem services and the restoration of the basin provide benefits as well as negatives. The United Nations Environment Program has attempted to quantify the economic value of the ecosystem services provided by the Murray River in 2007. The figure they came up with was $4.7 billion per annum, and that is just for the single Murray River system, not for the whole basin. They are putting a pretty high value on it. ACF will be taking up some of these issues in their submission.

Finally, much has been made of the scale of changes in water use required to meet the objectives of the Basin Plan. In fact, especially here in Victoria, we have made considerable progress towards meeting our sustainable diversion limits. On the Goulburn, which according to the Sustainable Rivers Audit is the river in the worst condition in the entire basin, current investment and buyback in the modernisation of the irrigation system and in on-farm efficiency will get us at least halfway to meeting the sustainable diversion limit, even under the 4,000 gigalitres scenario. So we are already well down the track.

There are other opportunities which have not yet been included. For example, the incoming Victorian government is suggesting that water that is currently being delivered to Melbourne could be returned to the Goulburn and offset against the sustainable diversion limit. So there are opportunities there which have yet to be explored. Whilst we take all this into account, the 4,000 gigalitres is readily achievable, and we can look at progressing beyond that towards the 7,600 gigalitres target.

To briefly sum up, change is already happening, change needs to be managed and the full impacts of change need to be taken into account, including the costs of business as usual and the benefits and opportunities afforded by a healthy basin. Science shows that the Murray-Darling Basin needs 7,600 gigalitres of water, but the Basin Plan has only the one lever to pull, which is the amount of water. It needs the support of a whole-of-government approach to transition and regional renewal, and the traffic light approach can be used to develop a framework for managing that change. Access and services provided by a healthy basin provide billions of dollars worth of value which have not yet been factored into the plan.

Ms LEY —Juliet and Kelly, where does Environment Victoria get its funding from?

Ms O’Shanassy —Our campaign work, which is emulated by the work in the Murray-Darling, is independently funded, primarily through our donor and member base, our supporter base. We do receive government funding in two areas from the state government. One is to deliver sustainability services to vulnerable communities and the second is to help communities input into healthy river work that the Victorian government is doing, so that we can train community members to be part of stream flow management planning and sustainable water strategy planning.

Ms LEY —What proportion of your funding is public compared to donations?

Ms O’Shanassy —All of our campaign funding is independent. About half of our organisational funding is independent and the rest comes from government—

Ms LEY —What do you mean by independent?

Ms O’Shanassy —From donors’ philanthropy, not from government.

Ms LEY —Is your donor list public?

Ms O’Shanassy —No.

Ms LEY —Do you receive any funding from the federal government?

Ms O’Shanassy —We have in the past. We do get a small grant from the GVEHO process, which is the only grant we get from any government, to pay the rent and to exist as an organisation. Otherwise, it is all tied to delivery.

Ms LEY —I know my colleagues have got questions. Juliet, I want to focus on one of the things you said about birds. You talked about the bird numbers being reduced during the drought. How much have the bird numbers in the basin increased now because of the recent rains?

Ms Le Feuvre —I would have to refer to Richard Kingsford’s latest data, which I do not have to hand. If you like, I can take that question on notice and provide you with an answer.

Ms LEY —But your suggestion is that the bird numbers are 80 per cent reduced and going to be decimated on an ongoing basis.

Ms Le Feuvre —The figure of 80 per cent is taken from the guide to the plan. It is the information which is provided in the guide to the Basin Plan, and obviously that was produced before the effect of the floods could be measured. I know Richard Kingsford has been flying around in recent months looking at bird numbers, but I do not have the data to hand.

Ms O’Shanassy —Of course for full recovery of ecosystems and bird numbers you need ongoing water supply to ecosystems as opposed to the floods that we are seeing and 15 years of drought. That is why the Murray-Darling plan needs to return water—so you have water every year for the environment. Some wetlands need it every five years and some every 10 years, but certainly most of them need it more than every 10 to 15 years, which is what they have been getting.

Ms LEY —I think there are about 35 weirs, locks and barrages on the Murray River alone. In order to return, as you have suggested, 7,600 gigalitres to the environment, to provide that much flow down the river, effectively they would have to not function. What would you see as the implications for river communities as a result of that?

Ms Le Feuvre —I think it is easy to look at only the costs side and not to look at the benefits side. Resilient communities are communities which are diverse and which do not depend on a single industry for all their income. Obviously there are some communities in the basin which are heavily dependent on irrigation. They will be the ones which will be most affected, which is why we are suggesting that we take a whole-of-government approach to help those communities adapt. The Basin Plan is mandated to look after the ecological needs of the basin. We need a parallel process to support the communities to adapt to the change required.

Ms LEY —As part of that, would you accept that all of the weirs, locks and barrages on the River Murray should be removed? In order to return that volume of flow, that is effectively what you would do.

Ms O’Shanassy —What we need to do is have that option looked at. It has been ignored, but it is not up to an environment group to determine what the infrastructure needs are to return the health of the river; of course that needs a full investigation. What we are saying is that that has not occurred. The authority has essentially said, ‘We believe that will have too much social and economic impact without the evidence to show that and without looking at the benefits of doing so.’ So we cannot answer that question, but we can say that we expect that government should look at that. As we say, the only alternative to a sustainable system is an unsustainable one, which, by definition, cannot sustain communities or the economy.

CHAIR —In your submission you support the traffic lights approach that is being carried on in this region and you also mention the need for a targeted buyback to assist that approach. What do you think of the buyback concept generally? Are you supportive of buyback anywhere or of a targeted buyback in support of programs like the traffic lights approach?

Ms Le Feuvre —We are supportive of buyback because that provides the environment with an entitlement that is equivalent to an irrigator’s entitlement, so the same allocation rules apply to the environment as to everybody else. That gives the environment a degree of security, a legal entitlement to water, which it does not otherwise have. So long as environmental water remains above cap water or conditions and somebody else’s entitlement, it is highly vulnerable, particularly to the drought years that we have just experienced. Obviously in the flood years like we have now the opposite applies, but under drought conditions it is highly vulnerable, which is why we have supported the whole concept of buyback all along. It is a secure entitlement.

We have also been strong supporters of the idea of targeted buyback, because that way you would get multiple benefits. We have submitted in the past to the Productivity Commission on this and have supported the view for quite some time that to get the maximum benefit out of it you need to use something like the traffic lights approach. It is one example of how to sort out which are the good bits for irrigation and how you do it: where the most productive areas are, where we can we get maximum bang for our buck in irrigation modernisation, on-farm efficiency—all those things. We are strong supporters of those things in the right place at the right time so that we can get the so-called factor four—that is, twice the value of production for half the amount of water used. We would like to see that happening in the irrigation areas. The areas that are less suitable for irrigation, because of soil capability, proximity to natural assets, environmental conditions or salinity impact, can then be targeted for buyback, have their infrastructure closed down and get the savings that way and then be retired for other uses, particularly access and services amenities, if that is what is appropriate—carbon sequestration, dryland farming, solar farms or whatever else. There are a whole range of things which could be brought in at that point.

Dr STONE —I have three questions. You repeated a few times that the science in the Murray-Darling Basin guide had indicated that 7,600 gigalitres of water needed to be returned to the environment. Did you attend any of the Murray-Darling Basin Authority community meetings?

Ms Le Feuvre —Yes.

Dr STONE —Then you would have heard in particular the chairman, Mike Taylor—he was the chair then; he has since resigned, as you know—agree that the science in the report was wrong. For example, in relation to the social impacts—I am talking about social science in this point—there were not only a few hundred but thousands of jobs to go missing if this business was not handled right. There were other indications. For example, they say the Campaspe irrigators’ system should return 45 per cent to the environment, but that system has in fact already been shut down for irrigation. So there is an acknowledgement that, oh dear, a lot of the science in the report is not right, and that is why in fact the minister has invited us to question the science very comprehensively.

So I am saying to you: beware of parroting that phrase. I know you do it with good intentions, but in fact there is a problem with the science that has been used for the authority guide, and that is acknowledged by the authority itself and by scientists. The 80 per cent bird loss was during a drought. When you get past a drought, as we are now—we have the ibis rookeries, the waterbirds and all of the aquatic species—as of course you would expect, there is a different regime. The second point I would like to refer to—

Mr GIBBONS —Was that a statement?

Dr STONE —It was a statement, I guess because I thought it was important to put it on the record. The second point is about the ecosystem services. You mentioned—rightly, I believe—that we have ecosystem services generated out of a healthy environment. Are you aware that the people who generate the ecosystem services are the people who manage the farms, the landscape and the catchment? They are the private sector farmers.

Ms Le Feuvre —Ecosystem services are not generated by people; they are generated by the ecosystem itself. Obviously you have got to have people who manage that.

Dr STONE —That was my point.

Ms Le Feuvre —Yes, it is true, and they are not properly rewarded for the management work that they do. An example of where they are sometimes supported in providing an ecotender type approach is where they are paid to maintain the landscape. We would like to see that approach developed, and a whole market developed, for those kinds of services as well. There is a huge area there which is completely unexplored. You are absolutely right: we need the people to look after the access and services, but they are actually provided by the ecosystem itself.

Dr STONE —But they are managed by humans to produce those. They include things like managing soil, biodiversity, vegetation and controlling feral animals and weeds, and so on, as you are aware. The people who do that in our society are, more than 90-plus per cent, the farmers. They produce the ecosystem services. Management is a by-product of food and fibre production. You are proposing that the red area should have all the farmers removed and that they should sell all their water. That would reduce the farm population very substantially and it is estimated that 3,000 jobs alone in northern Victoria would be lost. Who then do you think is going to manage the provision of those ecosystem services—the good quality water, the air quality, the soil quality, the management of weeds and feral animals, and the protection and regrowth of biodiversity—if you remove the land managers, the farmers?

Ms Le Feuvre —We are not proposing to remove land managers at all. If you read through our submissions, we are not fans of depopulation. We want to see the population sustained, maintained and helped to provide those very existing services that you are describing. At the moment, farmers are not rewarded for doing that sort of stuff. That is taken for granted. Nobody pays for ibis rookeries, be they on private land, public land or wherever; they just are. That is the sort of thing we would like to see farmers encouraged to be doing and to be able to provide them with an alternative income stream to the ones which they currently have.

Dr STONE —So from the public sector.

Mr TEHAN —Given that we have now hit a La Nina weather pattern that seems to be creating a lot of rainfall across eastern Australia in particular and that scientists are saying, ‘Because of research we just do not know whether there is a link between La Nina and climate change,’ shouldn’t we be a little cautious about how far we go? If we did have a sustained period of La Nina weather, we might have seen that the drought was an aberration and that we could get back to more medium-term rainfall levels, which means that going to the extreme of the plan might be foolish.

Ms Le Feuvre —I think the climate change modelling shows that extreme events on either end are going to become more common. So we are going to be spending less time in the middle and more time either in extreme drought or in extreme floods, as we have experienced over the last 12 to 15 years. The new normal is something else; it is not in the middle anymore. That does make planning really difficult. I completely appreciate that is a real problem when you have a system which is already highly variable becoming even more variable.

Mr SECKER —Is it more variable?

CHAIR —I think we let the witnesses have their views. We can make adjudications on their evidence.

Ms O’Shanassy —There is clear evidence that climate change is a real phenomenon that will occur. Whether it is or not is something that we cannot determine at this point in time. But what the scientists do say is that what we are seeing is aligned with what we would expect to see under climate change and that we expect it to get worse. David Karoly, who is one of the key authors for the international panel on climate change and professor at the University of Melbourne, stated clearly that he believes that the La Nina impacts that we are seeing are worse because our oceans are already warmer and therefore are having a greater impact. The bottom line is it is the risk that you want to take. We accept the science of climate change because it is overwhelming. Whether you do or not, do you really want to take the risk of letting the changes that we have seen happening and that are expected to get worse dominate and dictate what happens in the Victoria, New South Wales and Queensland Murray system or do we want to try and manage it? The science is very clear; it is a matter of accepting it.

Mr TEHAN —The reason I asked the question was that the President of the Australian Meteorological and Oceanographic Society, who is at Monash University, went on the record and said that there is just no evidence whatsoever, because no research has been done on the impact between La Nina and climate change. So that was the reason why I asked that question.

CHAIR —We will have to bring your part of the proceedings to a conclusion. Thank you very much for taking the time to be here. The proceedings are recorded, there will be a transcript and it will be sent to you. If you have any concerns about names or wording in the transcript, please let us know, and if you have any additional information then we would be only too pleased to have it. Thank you very much.

Ms O’Shanassy —Thank you.

[9.26 am]