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Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR —Welcome to today’s hearing. 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 standings as proceedings of the respective houses. We have a witness submission from your group before us. Do you wish to submit any further submissions or information or make an opening statement? You will then be questioned on your submission.

Mr Court —We would like to make an opening statement.

CHAIR —Please proceed.

Mr Court —Thank you very much for the opportunity to present to the inquiry. To let you know, the Goulburn Valley Environment Group has been around for over 20 years and has been involved in a lot of environmental issues throughout the Goulburn Valley. It is based in Shepparton. We are here today to discuss the future and prosperity of the Murray-Darling Basin. We now have a great opportunity to capture the potential of the basin and, at the same time, improve environmental health without plundering its resources. I want to go through a couple of key points. We have tried to target it above water. Water is a very serious issue, but we have tried to broaden it to other issues. Water is a key element of the basin plan but, overall, we need to have other things.

I think we need to come to grips with the expectations of rural people. We all have to think very hard about whether we get the same level of services throughout the basin as we do in our major cities. Communications are important as we go forward, and obviously the National Broadband Network is something that needs to be considered and continued to be rolled out. We are saying it should be rolled out in every country town with more than 2,000 people and should be given priority over the cities. Population is a big discussion. We need to have that discussion in the country. If we are going to increase the population, where do they sit in the basin if they are there at all? Peak oil and where we are going needs to be considered. Some of us will have an awareness of that, but that is going to be an emerging issue and is going to influence what the basin does, how it provides products and its performance.

With regard to rural and regional expansion, no longer should the basin be considered a place to grow food and occasionally holiday. It has enormous potential in healthy landscapes and environments essential to supporting that vision. We have enormous potential to develop the basin itself with the whole situation with solar hubs. On climate change and carbon sequestration, 75 per cent of this continent receives less than 400 millimetres of rain. Half of this area is cropped. Those statistics are relevant for the basin with varying degrees of success: 10 years of drought, 10 years of support and occasional profitability. We need to rethink how we manage 30 per cent of this continent if we want to be around for our children’s children. The potential for carbon sequestration is enormous.

If we are going to move people to within the basin, we do not want to replicate what we have done with Melbourne. We have to be smarter than that with rural, city and town planning. We have to form a different vision for what our rural and regional towns will look like in the future. They are not just more of the same subdivisions that have been built out at Bendigo, Deniliquin or whatever. That is just a stupid way to go. Rail transport is a key. We need to look at that. With the floods we are confronted with a situation where, I would imagine, a substantial amount of the rail network is under threat. Some of it will be replaced but some of it will be dubious, and we do not want to repeat the fact that we do not replace railway now because it is too dear, because that would be a wrong step to take forward into the future.

Regarding sustainable diversion limits I would like to make a statement that has been throughout the press: allegations will be reduced in this process. It is the biggest furphy going around. Individual allocations will not be reduced by whatever is proposed under the sustainable diversion limits. In fact, there is some capacity to actually increase allocations under this process as that e environment shares in the losses. That has not even been argued about, and I think it is a major point that no-one seems to want to admit.

As far as the sustainable diversion limits are concerned, we consider the act to be sufficient to do the job. The environment must be given priority; otherwise, it is just more of the same. We will not achieve anything if we put social and economic factors first, so what we should do is give the environment the water it wants and then optimise, as the act says. What we have to do here is long-term rather than short-term planning. We have done too much short-term planning and now the challenge for Australians, the Australian government and you the committee is to pick that future for us that we can all see there. Sustainable diversion limits must be set at environmentally sustainable levels of take and must be able to support our key ecosystem services.

One of the big things that we have missed in this is: what is the value of that environmental flow? It is not just a bit of water that runs out to sea. Enormous amounts of salt need to leave the basin, enormous amounts of nutrients need to leave the basin—and, very importantly, we need to look at everything else that those ecosystem services support. The value of ecosystem services provided by the 18 Ramsar sites, as indicated by an ACF study, was $2.1 billion.

We must very cautious with engineering works. I heard the previous speakers talking about how they could cut environmental flows to key environmental areas; that really should be done only in survival mode. It does not necessarily mean we need the total amount of water, but we certainly need that. We must reduce engineering works or we will have more blackwater events.

As for sustainable diversion limits—which is what we are all here for—to put it into the Goulburn Valley context, irrigators had 1,000 gigalitres of entitlement prior to the Commonwealth buying water, and the environment had no water at all. That is a tragedy because, if we had had environmental water over the 10 years, there would have been enormous environmental gains and we probably would not have the blackwater events that we are currently having.

Within the 4,000-gigalitre target that has been suggested, the Goulburn’s contribution is 593 gigalitres. We are already well on the way to achieving that target of 593 gigalitres. We have achieved 300 gigalitres through Commonwealth buyback as of, say, December last year, and the plan works under NVIRP. We can but meet these targets that are currently at the 4,000 limit—not that I am advocating 4,000; I think we should do a proper study for the whole 7,600 gigalitres.

But what we have to do is reduce the footprint of irrigated agriculture—for example, by 30 per cent in Victoria. That means a combination of infrastructure works, as planned under the food bowl arrangement, integrating targeted Commonwealth buybacks; and spending money on farm efficiency. We have made enormous improvements in irrigated agriculture efficiency and performance, but we have only just touched the edges of that, and some of the work that you will probably see tomorrow in the Goulburn Valley shows just how far we can go, that that is a way.

We really need more money for R&D; we have to shrink it, make it more efficient. As far as supportability goes, Goulburn-Murray Water have 6,500 kilometres of channel—that is the irrigating authority in Victoria. The plan is to reduce that to 2,500 and then have other means to connect the balance of people once we shrink away. We have to reduce the asset base if we want affordable irrigation into the future. We must not just replicate what we have now.

So what we are advocating is that we resile from areas we never should have irrigated—and some of them, unfortunately, are under water at the moment. We have created an enormous amount of environmental damage in that area, stuff that someone has to pay for, and we need to pull back and strengthen it. We also need to actively support increased levels of funding.

Before the drought, for every two hectares we irrigated, we passed by one. We were inefficient then. We extended our irrigation system far beyond its capability, mainly because the Eildon filled within one year, instead of eight years, and influenced what we did not in regional Victoria. We have the chance now to do a hell of a lot better for the future. We must not make the same mistakes and we must support the sustainable diversion limits that are proposed.

CHAIR —Thank you, Mr Court. Dr Jerie, did you want to make some comments—

Dr Jerie —No, thanks.

CHAIR —or be subjected to questions? Okay. Any questions?

Mr McCORMACK —Thank you for your submission. Given that Australia’s population is going to increase rapidly over the next 10, 15 or 50 years and, as experts predict, the world’s population will increase by half as many again by 2050—or whatever the figure is; the fact is that it is going to increase—and Australia feeds a lot of those people, do you support Australia becoming a net importer of food? Also, do you think it is actually possible to have twice the production using half the water on half the land?

Mr Court —Using half the water on half the land and doubling production is an aspirational goal. We can work towards that. Obviously that is just an expression of how we can get more efficient. As far as world population is concerned—

Mr McCORMACK —Do you think it is possible?

Mr Court —Yes, I am quite sure it is. We have only touched the edge with the technology. And I am talking about technology, not necessarily additives, super and all that because that is another issue going forward. With peak oil and so forth we have to be extremely careful about all that. But without doubt we can improve the efficiency. Farmers and irrigators have done a good job—do not get me wrong—but we can go further. It is just a matter of who pays for this improvement. Farmers cannot necessarily afford it; someone has to pay for it. I am quite convinced we can improve it. Dr Jerie may have something to say on that.

Dr Jerie —I think the potential to improve water use efficiency is very large. It depends on the nature of the supply as well as the on-farm management. It is not necessarily intrinsic to the provision of environmental flows and so on but more aligned to the sort of development that you see under NVIRP in northern Victoria. There is a really large potential to increase food production with less water. I am not saying that we will even approach the aspirational goal, but that sets the direction in which it should move. The economics of that will have to be worked out by individual producers as well as by governments, which inevitably control the infrastructure.

Mr McCORMACK —Are you in favour of Australia becoming a net importer of food?

Dr Jerie —I would totally reject the proposition that you put forward. The prospect of Australia becoming a net importer of food, even as we approach a population of 30 million or 40 million, is not supported by the current volumes of production with current resources, setting aside the water situation for the moment. Australia is way ahead of that. If you want to ask that question, it is about how Australia should contribute to dampening food riots in other parts of the world. That might be more relevant.

Mr Court —Sixty per cent of our on-farm production is actually exported. There is a bit of a furphy that gets brought up around that, for obvious reasons. We do import a lot of produce, but we really have to look forward in this global world. Bringing oranges from Mexico to Australia does not make a lot of sense, so we really have to come to grips with all this. From a total footprint point of view, what should we be doing? It really will come back to us as individuals: what do we want to waste our money on into the future? We have to step back. The world’s population will be nine billion. Whether our population is 30 million or 60 million makes no difference to the world, but we have to live in the world and we have to balance that through immigration and our humanitarian effort.

Ms LEY —I am reflecting on the brave new world that you have painted in your submission—caps on population, the rollout of the NBN to rural communities, a fast, efficient rail network, the establishment of solar hubs, state-of-the-art manufacturing, R&D et cetera. How much is it going to cost and who is going to pay for it?

Mr Court —I do not have detailed costings, Sussan, but these are aspirational—

Ms LEY —You do not need to provide detailed costings, but, in a general sense, if you make proposals, the task of public policy makers is the allocation of scarce resources. In a general sense, how would the costs, benefits and results be manifested? Please just paint the picture.

Mr Court —With respect to communication, we all know that that is about a $40 billion project. Irrespective of that, we are saying we support that. In relation to peak oil, if we do not do something about how we live and the way in which we use our resources, oil will not run out; it will just become so dear it will cripple this nation and a lot of other nations. We have got to be smarter about it. I think we currently import two-thirds of our oil. We have to be smarter about that. In relation to the rail network and all those sorts of things, we have to look at that and see where it fits. In regional Victoria, for argument’s sake, we only have 20 per cent of the rail network that we had in 1880. The world has moved on.

Ms LEY —I appreciate where you are coming from, and I do not ask you to elaborate on your proposals. Would you say that costs, in terms of government spending, would increase as a result of what you propose?

Mr Court —Obviously they will over time, but the long-term situation is that they will be cheaper. It depends on the vision with all of this. If we are going to go through a buyback program with water there are costs, and there are obviously some concerns there for individuals, but the long-term benefits outweigh it. So we have to have this regional plan for Australia and the Murray-Darling Basin that takes all this into account. This is not easy, but we have got to move forward—and not too far forward, but we certainly have to make sure that we are setting the foundation for beyond 2100.

Dr Jerie —I will add something to that. There is also a more short-term aspect to this concept. As Terry said earlier, there is more to the development of northern Victoria than the water question. The list that you read through is simply a number of factors that to us seem to have a very high potential for contributing towards the overall economy of this region. The precise funding mechanisms we certainly did not go into.

On a much more micro level, to illustrate this point, you have situations like, for instance, the economy of Mildura—an area which has suffered reductions in irrigation water supply of, let us say, 30 per cent annually over the last decade of drought. But the economy of that region has increased. From ABS figures which were in the media a few months ago, the amount of employment over this period has increased—

Ms LEY —That is not the evidence we heard from the City of Mildura when we visited. We have some very specific data on the reductions in economic activity in Mildura, a town that would not be there were it not for irrigated horticulture.

Dr STONE —And levels of indebtedness increase.

CHAIR —We have a difference of opinion. Mr Zappia?

Mr ZAPPIA —Terry, thank you for your submission. Correct me if I misunderstood what you said. I thought earlier on you made the point that under the sustainable diversion limits, growers would not get a reduced allocation but in fact might even get more water. If that is what you said, can you please elaborate for my benefit what you meant by that and how that would be achieved?

Mr Court —What the argument is about is reduction of entitlement, and that is where it should have stayed. But that has gone through to reduction of allocations. Entitlements are what landowners or irrigators hold. They may have 500 megalitres of high-reliability water. Through the resource management process, on an annual basis you are allocated so much. What has happened over the last 10 years is that, in the Goulburn system, they may have averaged, say, 60 per cent, so they get 60 per cent of their allocation. This year, for argument’s sake, it is 100. So some individuals sell their water to the Commonwealth and they are out of the game. The rest of the people that stay in the system still have their 500 megalitres. The environment gets allocated the water the same way as other entitlement holders. So irrigation allocations remain unchanged if everything else is equal. But there is a chance that, because the environment has now got some water, it may share in the river losses that are now being picked up by other irrigators, so there might be a marginal increase in allocations. But there are no reductions in allocations. Does that answer that, Tony?

Mr ZAPPIA —Thank you.

Dr STONE —Terry, you say no reductions in allocations. As you know, in the guide there have been various figures put to different irrigation sectors or valleys for targeted reduction in SDLs. In Campaspe, for example, it is 45 per cent, Loddon River about 45 per cent, Goulburn 35 per cent, and so on. We are not suggesting that if you do not want to sell your water you will be made to. The guide is not suggesting that. The guide is saying that there will be, somehow, enough stressed or willing sellers to achieve that reduction of 45 per cent on the Campaspe et cetera. I am asking you, therefore: are you saying that there is no impact on the costs of delivering irrigation to the rest of the survivors when there is that amount of water taken out of the system?

Mr Court —No.

Dr STONE —Then what do you see as the impacts on the environment if those volumes are removed out of the system—on top of the 35 per cent we have already lost during the drought?

Mr Court —We did not get it through the drought, through allocation. What I am saying is that, sure, the allocations will not be impacted upon, but what we have to do is shrink the footprint of irrigated agriculture. We cannot leave everyone covering this 6,500 kilometres of channel in the Goulburn system. We irrigated over 800,000 hectares at prime and 200,000 to 300,000 of it should never have been irrigated. So what I am saying is we have to resile and shrink the irrigation district so that the costs are then shared between those people who remain in the irrigation system.

Dr STONE —I hear what you were saying: you are saying shrink the food bowl of Australia, fine. Tell me: are you then arguing that you should now go from the non-strategic voluntary sale of your water through the tender process to perhaps targeted buying? Is that what you are proposing to those parts of the irrigation system which you are saying should never have been watered and should not be watered now? Are you saying that what you propose is a better system?

Mr Court —What I am saying is that it is quite clear and it is known where we should not be irrigating in northern Victoria from a salinity point of view, from the soil suitability point of view and so forth. What we need now is to combine the food bowl project with the Commonwealth buyback and with on-farm efficiency. It will include targeted buyback of people on the system who should no longer be there, and that is what we have proposed in our submission, yes. It is an integrated approach. At the moment it is not integrated and people are selling water off the ends of it or somewhere and you will have this issue of stranded assets. We really have the opportunity now to move forward with a combined effort.

CHAIR —One of the issues we have as a committee is that obviously we all come from different states and there are different water products and different water politics that have developed in different states and we are trying to come to grips with that. In New South Wales, at least, the point you made about the license entitlement and the allocation of how much water the entitlement holder actually gets in any one year is a real distinction that a lot of people—I am not saying on this side of the table, but in the public arena—do not fully comprehend. It is very important that we understand that because one of the things that this committee is trying to do is gauge the socioeconomic impacts of reductions in entitlement, not necessarily reductions in allocation, and that will be different in different areas. In Mildura, for instance, which we visited the other day, they have a very efficient system. Traditionally they have virtually had 100 per cent of their entitlement allocated to them, other than the last few years. This is very different to parts of New South Wales where during the past few years there has been zero allocations in some parts and historically may well have only been 50 or 60 per cent of their licence allocated to them. So the socioeconomic implications of change can vary quite significantly if you talk about entitlement or allocation. I think it is an important point.

Mr Court —I think so. The allocation processes within the states occur differently and we have different reliability levels of water. Victoria has the highest reliability level so that confuses the issue as well. As you would be aware in regional Australia the banks left a long time ago, local government has been aggregated. We live a different life. We now use the vehicle: people travel 100 kilometres each way to a farming enterprise from a major city. We have to be mindful about how we do all of this going forward. We cannot necessarily preserve everything in this process; it is not possible.

CHAIR —As there are no further questions, we thank you for taking the time to be here today. If there is any information coming out of the questions that you have been asked, or given the various comments that members have made, then you are welcome to provide answers to those as well. There will be a transcript. If you have any issues with that, please let us know.

[11.36 am]