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Impact of the Murray-Darling Basin Plan on regional Australia

CHAIR —Welcome. Although this 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 submission from you; thank you for that. Is there any additional material that you would like to leave with us, or would you like to make some brief opening statements and then have some questions directed to you?

Mr May —We will make some statements, please.

CHAIR —Thank you.

Mr May —Thank you very much for the opportunity to present to you today. I am the chairman of the Wakool Landholders Association and we represent 350 landholders just to the east of Swan Hill. Wakool is 210,000 hectares. It has 330,000 entitlements in total and lies on the floodplain between the Wakool River and the Edward River. I just want to mention today that I think in the past landholders have been really bad at selling themselves. Other groups in our communities have the ear of politicians and the ear of the media but landholders, generally conservative in nature and hard working, seem to sit back and just let things flow. I think it has been to our detriment in the past and I would like to highlight today a few of the achievements that we have made in our area and how that impacts on our environment and on the Murray-Darling Basin as a whole. Towards the end, we have a couple of what we see as solutions or some actions that we could sort of try to impress upon you that may be worth considering.

In the late 1980s and early 1990s, Wakool undertook a land and water management plan process. This process involved getting communities and government to work hand in hand to develop a plan that would put our area in good stead for the future. It involved some on-farm works and a lot of environmental works. I think it is a great template for any planning process. We sat down and had many woolshed meetings. People whom we were representing were in the engagement process; they were asked for their input and we developed strategies that would enhance our area. It was a great plan. The federal government in the end did not sign-off on the plan; the state government did. It was probably one of those administrative things that we overlooked initially and, when the Labor government came into power, our funding was redirected. In that time, though, we undertook a whole lot of on-farm works, which really hold us in good stead now.

The plan was based around salinity—and I heard the chairman earlier talking about salinity. Salinity still is a sleeping giant and, as far as Wakool is concerned, because we live in the floodplain, we really run the risk of having salinity problems again. I think we have had some sort of respite from the drought, but this extra flooding in the forests will impact enormously on our water tables. There was a subsurface drainage report done during our planning process that highlighted that a one- to three-metre rise in the watertable was due to flooding. I do not know whether anyone has really considered this because we have gone through the drought and salinity seems to be on the back foot. We have in our area a subsurface drainage scheme, which is a man-made piece of engineering that really brought our farming area back to life. Since the drought it has been turned off because water tables obviously went down. But even with the last rains we had of late, we have had to turn some pumps back on. So there you go: that is how water tables can be impacted so quickly. This extra flooding in these forests will impact on us no end. I just think that is worth considering.

Ninety-five per cent of the vegetation in the Wakool district is owned and cared for by local landholders. Our land and water management plan highlighted that the disposable income of a farmer was directly related to the amount of environmental work he did on his farm. I think we cannot lose track of the fact that the more you impact a farmer’s capacity to make money or a district’s capacity to make money you are going to have far-reaching effects on the environment. You can go and flood a few forests and think you are doing a wonderful thing, but it is that 95 per cent of the vegetation in our area that will not be looked after. We have made terrific inroads into protecting the native vegetation and doing all these vegetation works on our farms; so it is worth considering.

Some of the issues that are really concerning our landholders at the moment are the obvious ones, such as the engagement process. After we have been through such a rigorous planning process with the land and water management plans, to be left on the sidelines and not be involved in any of this basin plan has really affected farmers. To us, the MDBA has lost credibility—even politicians, sorry. But because we were not there in the planning process, we feel as though we have been left out.

The Water Act is an issue, and I know that the new chairman has given us some reassurance that this plan can be done under the current act. But the reality is that if we are going to do this plan, we want to make sure that it is non-contestable at the other end as well. Just to get the fundamentals—the ground rules—right is worth considering. The act was actually put together with these international agreements to gain control over the states; so for someone to say that it is not environmentally focused is not quite correct.

The consultation process to date has been non-existent. This has meant that the plan is surrounded with mystery and uncertainty. The community wants to be engaged and, in relation to the point I made before about farmers looking after their area, I cannot stress enough that we want to be involved in this process. Even with the land and water management plan, there were some issues there that our landholders were not very receptive to, but because we engaged them and because we went through it step by step, we won them over to the benefit of the whole district.

The science to date has been of major concern, and I think there has been of late a lot of stuff in the media. A lot of people who have heaps of credibility have come out and suggested that the science is not right. So I think we have to take that on board. How can we ever expect people to have ownership of this plan if we are not sure of the fundamentals? For example, the icon sites and the other 88 sites, why were they chosen? Did we go through the process? Did we have the discussion about what level of health we want these sites to have? This is pretty fundamental stuff and, just for the life of me, I cannot understand why this was not addressed initially.

We have concerns in our area because we are within the area of influence of Murray Irrigation Ltd, which is the largest private irrigation business or company in Australia. If we lose any more water, we run the risk of being unviable. For the people who go, that is not so bad. But for those of us who remain we cannot afford hikes in water charges and we cannot afford to have our local communities without professional people and without health services. Mark’s wife is involved in the health service locally and their funding is under scrutiny at the moment just to see where this plan goes. We love being local communities; that is what we want to do and we want to maintain. We do not want communities that are full of welfare. I think a lot of the socioeconomic work that has been addressed to date has looked at an overall sort of picture. We want to hone down just on communities and how they affect those communities, because it is completely different.

When we did our land and water management plan, everything was in the bucket; everything was in the mix. A major concern of our landholders is the lower end of the system: why isn’t it being addressed? How can you expect landholders up this end of the river to be forgoing prosperity at the expense of the lower end of the system? To get any credibility, everything has to be on the table. We are not talking about the Lower Lakes having to go without water, but there are times maybe when we go through extreme dry periods that they might have to wear the pain. We have to share the pain. So we just have to make sure that those things are addressed.

Finally—I do not want to take up all of your time—the myth of overallocation has been something dear to my heart. I am sick of being told that I am overallocated when I am on zero per cent. Why can’t the people, the authority or the media understand or get their heads around the concept that Murray irrigators’ general security allocations are probably the most reflective the entire current environment? If there is no water there, we get nothing. From 2006 to 2008 we were on zero allocation, yet we have these people who are always saying, ‘You’re overallocated; we’ve got to address this because you’re overallocated.’

CHAIR —I think in a lot of cases they have confused the allocation of entitlements as against your annual allocation of water.

Mr May —They are smarter than that.

CHAIR —No, they’re not!

Mr May —I would like to think that they are smarter than that. Just to give an example, this year we had Hume Dam spilling, yet our general security allocation was 67 per cent. It was because of the carryover from the previous year and the allocation of the 67, it did not reach a level of 100 per cent for allocations to rise. Although the dam was spilling, because there was no usage in the system because of the wet, there was no airspace there. To try to get that across to people is quite difficult.

To go back to our solutions, the water-sharing plans were developed over three years of consultation. The water-sharing plans actually mapped out different amounts of water for different parts of the basin, whether it be for consumptive use, environment, towns and the like. Those water-sharing plans were suspended when we went into the drought. We see that the water-sharing plans are a real plus. It is worth considering or worth letting them run their race. Now that everything has had a drink, we should not be in such rush. Let them run their race and see where it leads us, because they were done over time, over several years, not just like this planning process, which seems to have been rushed through.

The other solution begs the question about federal takeovers. We are quite concerned about complete takeovers of water. The MDBC model, the consensus model when we had representatives from each state sitting around a table and working things out, seemed to us to be the fairest, because we run a risk if we have one person calling the shots. Regardless of how powerful that person may be, there is still the opportunity for someone to get their ear, and they can make some pretty bad policy. We should be going back to a system where we have people on the authority who are representative of government or main groups and who then have the onerous task of having that information flow both ways. To date, we seem to have been just having individuals on these boards. They do not have to go back and report to their constituents or they do not get the constituents’ views and bring them back to the board. I think the BCC, the Basin Community Committee, was a fantastic example of how this failed. If the Basin Community Committee were doing their job—and I know there was a lot of secrecy and that things were said in confidence—they should have been highlighting, we feel, that this is not good enough for the communities that they are going to impact. Therefore, maybe we should be looking at the board structure and having the board selected by government with states having an impact on whether this bloke can be on there or not. Let us get the best people from the states and sit them on the board and then see where it leads us.

Let us take the politics out of this basin reform program. We do not need ministers saying that delays will not be tolerated and the plan has to be completed by the end of 2011. We need leadership that recognises how important a quality and credible planning process is and that allows the time necessary to achieve this with wide community participation because, at the end of the day, we are out there and we are going to be impacted and we would like to have some say. This thing can be worked out if you use the right planning process. Thank you.

CHAIR —Are there any questions?

Ms LEY —We as a committee have heard quite a bit about the proposals to sell water from the Wakool system, the Wakool part of MIL, to the government and the long series of negotiations. Can you describe to us how that went?

Mr May —It is still in the mix at the moment. For those that are not aware of this, initially about 30 irrigators got together and thought, ‘We could do without our channel system; we’re willing to put it up as a retirement area, but we want government to recognise the value of retiring that area.’ Initially I was sort of alarmed but, at the end of the day, if the people who are remaining are going to survive, this is the option. Then there were so many hoops and hurdles that had to be jumped through. The government departments were listening, but it was very slow; actually, it has taken years. But now we are at the stage, with all the discussions that have taken place of late, that this is the future, it is back on the drawing board but nowhere near the prices that were originally floating around, which does not make it as attractive as it once was. But, yes, it is still in the mix. At Wakool we have been in the firing line pretty much all of our existence. We had salinity issues, we had all these things, and we have had Don Blackmore coming out and saying that we did not have a future. We have shown them that, hey, we can survive and this is just another bump in the road. But we are always feeling vulnerable, especially where we live.

Ms LEY —What do you think was the main sticking point in the negotiations? Was it just the unwieldiness of the bureaucracy that you had to deal with or was it that they said, ‘Yes, it’s good, but the price isn’t,’ and the fact that it took years? What really made it so difficult?

Mr May —Well, I’m not quite sure who is sitting behind me! There were government issues and there were landholder issues. This is where it gets really sad: you are playing off one landholder against another. We had the situation where one landholder said, ‘No, I don’t want to be involved.’ He saw his future as farming. It gets really messy. So that held the system up for a while. Those are the sorts of issues, and you have to make it attractive enough so that people want to voluntarily get involved. So there was a bit of everything; that was the problem. I saw that as a main stumbling point.

CHAIR —How many gigalitres of water are we talking about?

Mr May —I think initially we were talking about 40,000 megalitres or 40,000 entitlements.

Dr STONE —In your opinion, what is farmers’ current capacity to invest on their properties? I know about the drought and floods and so on, but what is their current capacity to raise on-farm water use efficiency with their own means and what could they do if they had extra support? What sorts of water savings are likely or possible, given what you are doing in Wakool, in terms of productivity?

Mr May —I am amazed and chuffed that, despite everything, there is still an enormous amount of interest in the on-farm stuff. Murray Irrigation are processing 140 applications at the moment. People see this as an opportunity. As far as we as a district are concerned, that is a fantastic opportunity, if people can become more efficient. At Wakool, with the land and water management process, we had a fantastic uptake rate, which is a credit to the area. This is the resilience of the farmers, isn’t it, that out of all this black sort of stuff that we have been going through they can still see a light. So, yes, there are fantastic opportunities. I have been a bit involved with a federal committee dealing with some of this stuff. The paperwork was just over the top and, with the water management plan, we had a proforma that was two pages long, not the 30 pages and not this sort of in-depth stuff. So there is a lot of work to be done there to refine the process. But as far as interest is concerned, yes, that is good.

Dr STONE —What sorts of technologies or different management systems are they looking at?

Mr May —This is where I think there are different technologies for different areas. At Wakool we are on the heavier soils, the floodplain—centre pivots and spray irrigation does not really lend itself there—whereas, to the east, Murray Irrigation with the lighter soils, hey, there are a lot of people interested in spray irrigation and there is a lot of interest in bay outlets, quicker water times, and some pipelines in the dairy areas.

Dr STONE —Subsurface?

Mr May —There is actually. There was one, I think, that was involved with subsurface; maybe he was a tomato grower or something. But subsurface does not really lend itself to our heavy clays. There is a mix for different areas.

Mr ZAPPIA —I just want to clarify: you said earlier that you currently are on 67 per cent allocation and your submission says it is 60 per cent. I just wonder whether it is 67 or 60 per cent. My second question, though, is this: under the current climatic condition, would growers be likely to use up all of their 60 or 67 per cent that they are allocated?

Mr May —As to the first part of the question—and I am sorry if I have confused you, because I was trying to make clear our allocation process—at the time of writing the submission, it was 60 per cent. The point I was making in talking about the over-allocation debate was that I was just using the example of earlier on in our season, before we got to 100 per cent, we had a carryover component—

Mr ZAPPIA —Yes, I understand that.

Mr May —You understand that. That stays up in the dam. Last year there was a 30 per cent carryover. So in regard to the New South Wales entitlement of water in the space of the dams—we had 67 per cent allocation plus the 30 per cent, which gave us 97 per cent—that filled up the New South Wales component of the dams. Although the dam was spilling, there was no usage, so there was no room. Once that allocation plus carryover got to 100, we went straight to 100. So the 67 was just highlighting the over-allocation issue.

Mr ZAPPIA —When you were on that allocation, would it be likely that most growers would have not used the 67 per cent that they were allocated?

Mr May —Yes. If people gear up—I mean, we have gone from very low allocations to quite high allocations—this year there will be a considerable amount of carryover because of the wet irrigation season. Generally, yes. Murray Irrigation’s—and this is where the water-sharing plans which were mentioned earlier come in—history of use is 140 per cent, and we have come back and are capped at 87. So to answer your question, yes, once people gear up for it. With our commodities, the crops we grow, we can easily use that.

Mr Martin —It has to be realised that, in that allocation process, a lot of people had Snowy Borrow, which is water that is flowing back to the Snowy system. So a lot of people had 40 per cent owing; so that was 40 per cent of their allocation that they could not use. So some, in effect, only had 60 per cent of their allocation that they could actually use. The process allocation came late, and a lot of people do not want to use the water unless they have it in the bank; so they sit. Then, if the window gets too late for sowing a high-water use crop such as rice, it just gets too late and they are not willing to risk it; so it alters their whole planning completely. So there are a few variables in that scenario that you actually spoke about.

CHAIR —Just in relation to your 40 gigs of water, are you able to tell us a price where the cutting point is?

Mr May —No, I am not privy to the price. I would not like to say.

CHAIR —But it is an issue of price now, is it?

Mr May —Definitely. Two years ago we put a plan to the federal government to put together a scheme. It was a 20 per cent scheme that people could sell up to 20 per cent of their entitlements to government for a price that reflected current market value, the on-farm adjustment and the socioeconomic value—the regional sort of view. That was not accepted. But as for the price, we have to sharpen our pencils. At the moment, the government is willing just to pay market price plus a decommissioning fee, which does not really take into consideration the other effects—the regional effects.

Mr Martin —Some years ago, because we bore the brunt of ‘Why are you irrigating that area?’ we offered to put the whole Wakool district up and see what support there was. We had to get support from our landholders. We did a survey of our landholders and we got quite good support, but there was quite a difference in price between what was offered to us and what they wanted. So the whole thing was taken off the map.

Mr May —There was really an exercise just to take that out of the equation as well. Because we have had 10 years of water reform, a lot of people have just had enough and are saying, ‘Hey, let’s see how much they’re going to give us for all the water.’ So we said, ‘We’ll try it out.’ We were serious in our convictions—there is no doubt about it—but the reality was that we had to get a lot more people on side than we did. That took that out of the equation then; so it was not an option.

CHAIR —We get sort of conflicting messages wherever we go, not in the same balance. Some people suggest that the government should be right out of the water market other than in a strategic sense; others say, ‘Well, the only buyer of water in the market is essentially the government while all this uncertainty is on.’

Mr May —Exactly. If you wanted to buy water, you picked your time beautifully in the rip-roaring drought, didn’t you? Hey, that is why we put together that proposal originally, because we could see people hurting out there and this was a way of maybe giving some people some opportunity to get some of the money from the government, yet keep their community and their region intact. So I have to agree with those sentiments—that it came along and it did help some—but if you were the one buying the water, you could not have picked a better time, could you?

Ms LEY —You have made the point, I think quite well, that the amount of water already apportioned to the environment has not been identified and assessed in the plan, and that is something that we are also trying to categorise and just get an audit of, for want of a better expression. What types of environmental water already exist in your area?

Mr May —In our area? We have the Barmah-Millewa, we have the Living Murray stuff. We have wetland watering from the wetland watering group, which has been taken over by the CMA. There also is—

Ms LEY —Is that the only water the CMA administers? The only environmental water is the wetland water?

Mr May —No. This is my understanding: there is water in train for the Wakool River system, as we are a Commonwealth environmental water holder. But basically the point I was making about the water-sharing plans is that we were willing to take a cut on our history of use and that water that was there went to the environment. Run of river, transmission flows can all be regarded, in our view, as environmental water. We had zero allocation between 2006 and 2008, yet the river was running water. So there is a lot of water out there that has been earmarked for the environment and I think that should be acknowledged. At the moment I think a lot of people’s perception is that we are starting from a zero base, which is not correct. And this gets back to my earlier comment about how we are so bad at selling ourselves as farmers. We should have been out there telling people, but not many people want to listen to good news.

CHAIR —Thank you, gentlemen. Thank you for taking the time and for your submission. We spent a bit of time in your area a while back.

Mr May —I hope you enjoyed yourselves; I am sure you did.

CHAIR —The fellow at Coleambally said that was the centre of the universe, so you must be just down the road.

Mr May —You do not want to believe those people!

—You will get a transcript of the proceedings and if there are any corrections, please let us know.

Mr May —Thank you very much for this opportunity.

[2.05 pm]