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Carbon sink forests

CHAIR —Welcome. Before we go to questions, do you wish to make a brief opening statement?

Mr Martin —Yes. We are very interested in this legislation because one of the major issues with South Australia and our farming sector in the south of the state is the application of forestry—plantation forestry—and the outcomes from that and how it impacts on water and water allocation and a number of those processes. For the last eight years, since the beginning of the National Water Initiative, we have been working to make plantation forestry accountable as a significant water-affecting activity. To that end, in 2004 there were changes to regulations that took into account recharge impact—recharge for forestry—and last year changes were being made to take into account direct extraction.

However, having looked at the accountability of that part of forestry, the federation absolutely supports plantation forestry as long as, like every other landowner, it meets its responsibilities and obligations. There has been a huge expansion of the blue gum plantation forestry industry in this part of the state, encouraged by MISs. The development would have been much better if it had been planned as a proper forestry investment rather than just being subsidised with an MIS, which is interested in the MIS rather than the forest industry.

That basically is our position and our interest in this for a start. Also, with respect to resource management, we are heavily involved with the regional natural resource management board and in developing their regional plan about where water, land use and biodiversity fit into all of that. That is the role we see that we play and where we are interested.

CHAIR —Thank you, Mr Martin. Some interesting submissions came across from the other side of the border earlier today. Do you have any knowledge of what is going on in Western Australia with the mallee trees?

Mr Martin —We do some work there and have some understanding of the implications of some of that activity, which is similar to what happens in the upper mid-south-east of South Australia. It would be good if I had a map to show you. They are similar sorts of approaches about how mallee can take a place with carbon sequestration and how this might work in any future trading scheme.

CHAIR —Do you have some projects underway in that part of South Australia?

Mr Martin —There are a number of major projects. Prefacing all of this, a lot of the work that has been done in South Australia is about integrated natural resource management. The word ‘integrated’ is very important. We see these things as having a requirement. Single monocultures pose numbers of difficulties in management in regions. Where you can get really good outcomes with a better integrated approach with a variety of species, this is a beneficial outcome. One of the issues that I will probably raise with you later is about this concept of ‘additionality’. The way the sinks and the emissions trading are structured, it is very much aimed at a single issue—for example, you have a single species in your plantation and this has to be dedicated to carbon sequestration. We believe that you can get much better outcomes for everybody if you can do numbers of things. Down here we have threatened species, such as the red-tailed black cockatoos, which are a nationally threatened species. So if you can have carbon sequestration and get viable amounts sequestered, and if you could get a better environmental outcome, this has to be a plus. That is what we have been quite interested in as well in dealing with this.

Senator MILNE —I come from Tasmania, where we also have seen considerable displacement of rural communities because of managed investment schemes and water interception, so I know exactly what you are talking about. Several issues have come up today. One of them is the issue of encouraging multispecies plantings and plantings to be in the ground for 100 years, and the issue of water management. I will go to the water management issue first. Has South Australia now done assessments in each catchment of water availability et cetera? Is there a fair understanding of the hydrological system and what is available for the environment and for productive use otherwise in each catchment?

Mr Martin —It is much better developed in certain catchments. I will give you a little bit of my background. I sat on the state’s Natural Resources Management Council for five years, up until one month or so ago. Basically there is a system in this state with—I should be able to tell you this exactly—eight regional boards, and they have to develop their own water allocation strategies and plans, which have to be signed off under this process. They are not directly catchment but they are regional. This is a South Australian thing. The south-east one is very well developed with its water management, and Murray-Darling is well developed. Areas like the arid areas and Aboriginal lands in the north of the state have completely different water ones, although arid areas are the Great Artesian Basin. They were in the process of signing off on most of their water allocation plans for the five-year period that they have been through. They are now signing off on new ones at this point in time. I guess the answer to you is: fairly reasonable—very good in some places and reasonable in others—but it could always be better.

Senator MILNE —The reason I ask is that it was explained to us today that the way this will operate is that before the tax office gives the tax deduction for a planting for a carbon sink forest it has to go to the Secretary of the Department of Climate Change to sign off, and the secretary will determine that on the basis of the environmental guidelines that have been put out. One of those guidelines is in relation to interception activity in a catchment and whether a catchment is fully allocated, overallocated or approaching full allocation and whether water entitlements must be obtained. So my question to you is: at the moment, would anybody in the South Australian government be able to give an answer to the Secretary of the Department of Climate Change if they rang up and said, ‘There’s been an application to plant 1,000 hectares in X catchment’? Would somebody in the government in South Australia be able to say, ‘That catchment is already overallocated, underallocated, or whatever’?

Mr Martin —Let us talk about the south-east, which is the high-rainfall area. There are two high-rainfall areas in South Australia: Mount Lofty and Fleurieu in the south-east, where the majority of the forests and expansion in these industries is in this state. The figures for the south-east are available and are being used, and a water allocation regime is being put in place right at this moment, basically, to accommodate new forestry and to make it meet its obligations with water allocations in overallocated areas for both extraction and recharge. The legislation and changes to legislation are going through the parliament at this point in time. We are involved with it. Getting legislation through is a slow business, as you well know. But, for this part of the state, yes, all those things can be accounted for and are being accounted for.

There are a few issues with the forest industry, which tends not to be happy, but the south-east is in the fortunate position that the water has been well managed. And people need to be really clear about this: forestry is being offered and will be given a water entitlement allocation or property right, whichever they finally settle on, of all their prior use, and we can do that within the whole process without overallocating. That is 287,000 megalitres, which is a significant issue for the forests. So their water is guaranteed, but they are going to be fully accountable.

Senator MILNE —What I am trying to establish here is that, if someone applies to the tax office for a tax deduction and the Secretary to the Department of Climate Change comes to the south-east catchment authority or whatever, you would be able to quote to them the fact that, yes, they could put in so many thousand hectares but they would have to buy a water right, which would cost X.

Mr Martin —That is right: they could. There is water made available for forestry. There is some water still available for forestry, so they do not actually have to buy straightaway. But that has restrictions on it depending on the management area and its allocation status.

Senator MILNE —Would you support an amendment here that says that the tax deduction cannot apply to catchments without that level of assessment having been done? In other words, if you cannot say whether they need a water right and whether the catchment is allocated or not then they should not be able to get a deduction for planting in that catchment.

Mr Martin —Yes. We are in the process of making that available to everybody and basically, unless you can have it you should not be allowed to proceed, because it has caused all sorts of trouble here. There is all sorts of trouble on Kangaroo Island that we are trying to sort out, with plantation forestry going ahead without a water allocation and then somehow, under NWI, it has to be brought back into balance, and that is much harder when you have encouraged people to go and do something without getting the proper authorisation.

Senator MILNE —Thank you. That is our problem here—that this will be available now in terms of a tax deduction but that it will be three years, in some cases, before the water allocation issue is dealt with, in which case do you then have retrospectivity and do you drive up the price of water to everyone in the catchment? Anyway, thank you for that. I appreciate it, Mr Martin.

Mr Martin —It is not just driving up the price. If water forestry eventually comes into the budgeting and all allocations have to be cut back, everybody is then responsible for the cutback. So we have a major concern, along with you.

Senator MILNE —Thank you, Mr Martin.

Senator O’BRIEN —You said that forestry in the south-east region has been allocated 287,000 megalitres. How many megalitres in total are allocated?

Mr Martin —It is about 30 per cent. I do not have exact figures, though I should know this perfectly, but I think it is about 13,000. The figure we are talking about is about 30 per cent of the water.

Senator O’BRIEN —Who else has to have an allocation?

Mr Martin —There is a major allocation for irrigation, there is a major allocation for stock and domestic, there are allocations for industry and then there are some environmental allocations.

Senator O’BRIEN —So forestry is the only operation where there is no direct water application which requires a water licence?

Mr Martin —At this point in time, it does. It requires a licence for impact on recharge. We are in the process—when I say ‘we’, that is industry, the government and whomever—of getting the final detail, and it is almost off the press, about how forestry will be given its water allocation and how it will be required. One of these things is about prior use. When the resource was proclaimed in this state in the different management areas, with each as a single operation, existing users—irrigators, business and such—got their prior rights, and the same will apply to forestry. They have prior rights, and how much water they were using has been accounted for for quite a while informally. That is why, for instance, the south-east of South Australia is in the fortunate position that it actually can give forestry its water. It had always been taken into account. It had always been recognised that plantation forestry was a major user of water. It had always been followed up.

Senator O’BRIEN —We have been given an illustration, with some figures, of the south-east region prepared by the Bureau of Rural Sciences. They say that the total area of the region is 27,868 square kilometres and that 132 square kilometres of that—half of one per cent of the area—is plantation hardwood and that 3.6 per cent of that area is softwood and mixed plantation. Most of the area is in fact annual crops and highly modified pastures. What would that account for?

Mr Martin —I am just not quite getting your question, and I actually have a bit of an issue with those figures. There are two sets of figures that people are dealing with. One is for the whole of the south-east and its water management, which gives you a very low impact of forestry. There is a completely different set of figures for the area where it has been legislated for forestry to have its own water allocation—those 287,000 megs and the resulting controls. In actual fact water usage for forestry accounts for, I think, 42 per cent of the water on 30 per cent of the area. I think that is the right way around with the figures.

Senator O’BRIEN —Can you describe the area you are talking about? I am looking at this document, which depicts the south-east region as covering 27,868 square kilometres.

Mr Martin —That would be the whole of the NRM board area right up to the other side of Bordertown, way up into the upper south-east, heading up towards Murray Bridge.

Senator O’BRIEN —Murray Bridge is in the next one. It is in the Murray-Darling Basin region, which is a bigger area of 56,959 square kilometres.

Mr Martin —It is bigger. The area with the impact of the plantation forestry on the water is basically only half the area that you are quoting. Because of rainfall change—and you go out of the higher rainfall area where they actually want to grow forest into a drier area—it basically nearly halves the figures. It is up to the forestry industry to use the figures they wish to use, but they have used figures which make it look as though forestry is only a minor percentage of all of this. There is a completely different set of figures for the area where there is the impact on the watertable—the underground aquifer, where it impacts on recharge and direct extraction and where the forests actually are. Those figures are about half of what you are looking at. I am sorry; that is only a rough estimate, without actually going and getting it. Forestry is a major water user in the bottom part, and that goes over the border into Victoria.

Senator O’BRIEN —Yes, the Victorian region has a significant amount—

Mr Martin —Yes, because we have this border-sharing agreement up and down the border, 16 kilometres on each side, which has special legislation. I can make sure you can have those figures, with really good documentation to show exactly where the plantation forests are. There are about 100,000 hectares of radiata and there are about 30,000 or 40,000 hectares of hardwood. The other issue that overlies this area as well is that there is in fact what we call farm forestry allocation.

Senator O’BRIEN —The figures for the whole of the region for hardwood, according to BRS, at 1 June 2008 were about 13,200 hectares—132 square kilometres at 100 hectares a square kilometre. You just said 30, so the figures that BRS have given us do not line up with your figures—and they are for the bigger region, not the smaller region that you are talking about.

Mr Martin —The difficulty with the regions is that the bigger region has completely different land use altogether.

Senator O’BRIEN —Two-thirds of the region as a percentage is annual crops and highly modified pastures—that is the south-east region generally. We are talking about approximately four per cent of the larger region—not the smaller one you are talking about—being plantations of hardwood or softwood or mixed varieties.

Mr Martin —I think that is probably the figure that they quoted.

Senator O’BRIEN —But I just picked you up on that. You said that you thought 30,000 hectares of hardwood, and their figure would equate, on my calculations—and I freely admit I am not always right—to about 13,000 hectares.

Mr Martin —There is a lot more than that. If I may, I will make sure that I forward to you the exact figures for the region.

Senator O’BRIEN —Okay, that is fine. I am working off a Bureau of Rural Sciences document which was created on 1 June 2008. We presume it is up to date.

Mr Martin —We can send you the latest department figures which will show you where the plantations are and the exact areas. At this point in time there are 100,000 of radiata—

Senator O’BRIEN —It says there are 1,000 square kilometres of radiata.

Mr Martin —and there are at least 40 of blue gum. One of the difficulties with this is to pin that industry down to giving you figures of what is in the ground, if they actually know that. This has come back to haunt them, I have got to say to you. When government has tried to make certain allocations of water available their figures are somewhat difficult to deal with—and I am trying to find a really fair way of saying that.

Senator O’BRIEN —Thank you very much, Mr Martin.

CHAIR —On that, Mr Martin, thank you very much for your time, and before I let you go I must sincerely apologise for mucking you around. We really do appreciate your being so flexible and accommodating for the committee. Thank you very much, Mr Martin.

Mr Martin —That was a pleasure. As I said, I can check up and I will get those other figures sent through to you.

CHAIR —Wonderful. Thank you very much. All the very best. Thank you very much to the secretariat, to Broadcasting and to Hansard. The committee now stands adjourned.

Committee adjourned at 4.52 pm