Tuesday, 17 October 2023
Water Amendment (Restoring Our Rivers) Bill 2023; Second Reading
I'm pleased to rise today to speak in support of the Water Amendment (Restoring our Rivers) Bill 2023. This is an important bill in relation to very, very significant intergovernmental public policy coordination that has been in place for over a decade. But, during the course of the previous government, it was given insufficient attention, which has led to very, very poor outcomes for the community and poor public policy outcomes more generally.
The Murray-Darling Basin is the largest and most complex river system in Australia, covering over a million square kilometres. It's very complex in the sense that it covers a very wide range of environmental forms, a very wide range of weather systems and, in a political sense, a very wide range of jurisdictions. It covers four states and, as the previous speaker on this side pointed out, a territory, the Australian Capital Territory. All of that means that there is a sensitivity and a vulnerability to that river system as well as a need for coordination. What we've seen is that that river system has been susceptible to natural droughts. In addition to that, it has been susceptible to increasing risks: greater variability in rainfall and greater variability and susceptibility to extreme events as a result of climate change and increasing human use. Those issues had been emerging in the lead-up to 2012, when the Murray-Darling Basin Plan was put into place, over a decade ago, and some of those risks have only become more severe in the interim. That's why the mismanagement of the river system in the last decade is so tragic.
The key elements of the plan were that there should be water for consumption, water for the environment, investment in infrastructure, monitoring of water quality and water markets and trade, and other elements as well. All of those elements, to me, also reflect that there needs to be balance. We need to balance a range of different constituencies and a range of different uses of water. The water uses that we're trying to balance include: water for irrigation and the huge amount of agricultural production that we see in the basin; water for drinking and other uses by the communities that live in the basin area; water for industrial uses and other uses; and, of course, water for the environment. The way in which we balance all of those uses needs to be informed by experts—environmental experts, public policy experts, economists—and the views of those in the community, First Nations groups and other stakeholders. It's critical that we achieve balance across all of those different constituencies. I think it's really important to note from the outset that, in developing this bill, the minister and the government have undertaken exhaustive consultation with other governments, all of the stakeholder groups that I talked about and experts. What we've landed on is a bill that represents a major step forward, by giving state governments and those who are implementing the Murray Darling Basin Plan more time, more funding and, importantly—I'll speak about this a little bit later in relation to the strengthening of the trading arrangements—more transparency and accountability.
The Murray-Darling Basin Plan, developed in 2012, was developed two years after the Millennium Drought broke. The purpose of the plan was to provide more water for the environment, certainty for farmers and protection for native plants and animals, particularly in view of the fact that Australia's environment lurches from rainfall, plenty and drought. It's critically important that we who are living and producing in this environment manage the scarce water resources sensibly for ourselves, our human communities and our production, as well as for the environment. The way in which we live in that environment and use water to produce in that environment impacts on the environment. It's particularly poignant, if you will, that we're discussing this bill, given that it's highly likely that we are heading into an El Nino event. We need to protect ourselves, our communities and our production from future droughts, but also, of course, protect the environment.
As previous speakers on this side and, indeed, the minister in her contribution noted, those opposite, when they were in government for almost a decade, delivered two gigalitres out of the 450 that is required by the environment. At that rate it would be in the year 4000, roughly, that we would achieve the goal—a fanciful number, of course. What it shows is that essentially nothing was being done. Since we've come to government, in nine months the rate has picked up dramatically, but, even allowing for the fact that we've upped the rate substantially—26 gigalitres in just nine months—more is needed. More is needed in terms of infrastructure investment, more is needed in terms of voluntary buybacks and more is needed to get the water trading system working better, and that's exactly what this bill will deliver. But I do think it's worth noting that we've been put in the situation we're in because those opposite basically sat on their hands for decade. We see that refrain so often on so many bills in this place, but it's certainly worth making explicit when it comes to this one.
Part of the negotiated outcome—this bill does reflect a negotiated outcome between the federal government and the governments of New South Wales, Queensland, South Australia and the ACT—is to give the states a new deadline, to give them more time to finish key projects and also to bring forward further projects that can be delivered within the new deadline. That's a key element of the package.
I also think it's important to talk about the way in which this bill, and what it will put into place, strengthens trading arrangements. The basin provides great economic benefits. There are tourism benefits, which exceed $10 billion a year, and farmers in the basin produce something in the order of 40 per cent of Australia's agricultural output. It's critical that we have trading arrangements so that, if we are to see water being put back into the environment, it's done in the most efficient way.
Markets are really a very important way to achieve this outcome, and I want to speak very briefly on the fact that markets are critical because they bring information into the process of achieving an outcome, in a way that other mechanisms often don't. If you have a trading mechanism, then what you will have is different people—different farmers, different users of water—bidding in to provide water to the environment, or whatever it might be that the trading mechanism is trying to achieve, and providing information about how much they value that water. That is incredibly important because, if we are going to buy back water, we want to make sure that we are doing it in a way that has the least impact on local economies and that is the most efficient way. Markets are the most efficient way in which to reflect all of the detailed, nuanced information that each user of water holds and that a regulator or any other entity won't necessarily hold. That's why it's critically important that markets function efficiently. Of course, markets, where they involve voluntary transactions, will involve mutually beneficial transactions, and that's why it's so important that the buybacks that we're talking about are voluntary.
When the ACCC looked at water trading arrangements, they found that water trading has brought substantial benefits to many water users across the basin. Water markets allow irrigators to increase their available water seasonally and to earn income by selling water rights, when they are more valuable, to somebody else or release capital for investment in their businesses. But the ACCC also found that it is critical that people are able to trade in confidence and that improving the efficient operation of water markets is likely to enhance the financial operation of water markets and is in turn, I would argue, likely to enhance the balance of social and environmental outcomes. What the ACCC found when they investigated the operation of water markets is that there was insufficient regulation of market manipulation, that the insider trading prohibition was too narrow and that that was having significant negative impacts on the efficiency of the markets. Essentially they found that they needed more transparency.
The coalition received this review in 2019, with a whole series of recommendations about how to make those water markets work better. No action was taken. Again, this is something that comes up perennially in bills under consideration in this place, but it's certainly worth noting that the ACCC made a series of very clear recommendations, many of which are reflected in this bill. Those opposite had it in 2019. No action was taken.
This bill makes a number of concrete measures that will significantly improve the functioning of water trading. First, it will introduce a framework to create an enforceable mandatory code for market intermediaries. Second, it will create civil penalties for manipulation. And, third, it will double the penalty for insider trading.
I'll just reiterate that at the heart of what this plan is trying to achieve is balance. We are trying to protect the environment with water flows reserved for the environment, but we're trying to do that in a way that is the least disruptive to local communities and to the broader agricultural economy across the Murray Darling Basin. A key element of that is to allow water to be traded, to allow farmers and other water users and other holders of water rights to swap water with other uses or potentially with the government for environmental protection. This bill will significantly improve the functioning of those markets.
I'll conclude by saying that this bill has the support of stakeholders right across the gamut. As I mentioned before, it has the support of the New South Wales, Queensland, South Australian and ACT governments. The consultation took over a year and involved a range of stakeholders, including farmers, scientists, environmentalists and First Nations groups. A range of environmental NGOs support the full delivery of the plan reflected in this bill. And so many scientists have worked towards devising the goals and the targets in the plan, and they stand behind the implementation of the plan which this bill supports. This bill is an important step towards getting us back on track in delivering the very important Murray Darling Basin Plan, and I'm very pleased to support the passage of this bill.