Wednesday, 8 August 2007
Water Bill 2007
That this bill be now read a second time.
For more than a century our greatest system of rivers and aquifers, the Murray-Darling Basin, has been managed between four states each of which has had competing interests with the others.
Federal management of the Murray River was called for in the 1890s, but the vested interests of the states prevailed. Over the years different forms of collaborative management have been undertaken, but neglected infrastructure, overallocation and diversion caps routinely ignored testify to the need for a different approach.
He introduced the changes with these words:
The water legislation of this country, fortunately for us, has proceeded upon one line of continuous and consistent development … The present proposals of the Government, however large they may appear at first sight, are after all, only the necessary consequence of what has gone before ...
Those words bear repeating today. The reforms set out in this bill are the most far-reaching in the history of water management in Australia. But they are indeed a necessary consequence of our recognition of the great challenges facing Australia’s environment and the farmers and communities that depend on it.
Our scientists tell us that we can expect throughout southern Australia a hotter and drier future. We must learn to do more with less water, we must make every drop count and to do that, we need a new approach where our greatest system of waters is managed in the national interest.
The Water Bill delivers the key proposals outlined in the National Plan for Water Security, announced by the Prime Minister on 25 January, 2007. The plan addresses modernising irrigation and the overallocation and overuse of water resources in the Murray-Darling Basin. It is supported by the $10 billion national investment program announced as part of the plan.
The Water Bill and the national plan build on the 2004 National Water Initiative agreement, signed by all governments. The key objectives of the National Water Initiative are to improve the efficiency of water use and establish clear pathways to return all water sources to environmentally sustainable levels of extraction. These are the objectives of the Water Bill and the National Plan for Water Security.
Central to the National Plan for Water Security is placing the Murray-Darling Basin on a sustainable footing. The basin is of national significance economically, socially and environmentally. It spans Queensland, New South Wales, Victoria, South Australia and the Australian Capital Territory, covering an area of one million square kilometres or 14 per cent of Australia. The basin is home to over two million people. A further one million people outside the basin rely on its water. The Murray-Darling Basin Commission estimates that the basin generates annual agricultural produce worth $10 billion.
The current governance framework for the Murray-Darling Basin was designed almost 100 years ago. In 1915, New South Wales, Victoria and South Australia signed the River Murray waters agreement, and established the River Murray Commission, which later became the Murray-Darling Basin Commission. The governance model requires the agreement of all basin jurisdictions before anything can be done by the commission. Thus, the core arrangements for decision making about basin water management have remained largely unchanged to this day.
In the 1920s, 2,000 gigalitres were extracted from the basin each year. Annual water use now often exceeds 10,000 gigalitres—a fivefold increase in water use.
While this increase in water use has underpinned massive agricultural development in the basin, it has also been the cause of a marked decline in the basin’s environmental health. In 2001, an assessment for the Murray-Darling Basin Commission found that more than 95 per cent of the river length examined was in a degraded environmental condition. There has been a reduction in the areas of healthy wetland, native fish numbers have declined, salinity levels have risen and algal blooms have increased in frequency. Put simply, with so much water being extracted, there is less water to flow through the system to maintain the basin’s natural balance and ecosystems.
There is also increasing evidence that the water resources of a number of catchments and aquifers within the Murray-Darling Basin are seriously overallocated and overused. Exacerbating this problem is the realisation that water flow into the basin is declining—the CSIRO estimates that by 2020 average annual flows could decline by about 15 per cent due to climate change, recovery from bushfire, increased groundwater use and the expansion of farm dams and forest plantations. These changes to water availability are eroding the security of water entitlements, making it harder for irrigators to earn a reliable income.
The volume of water extraction in the basin today, combined with record low inflows and the threat of climate change, were not envisaged at the time the River Murray waters agreement was signed. The lowest common denominator governance model established almost a century ago cannot address today’s problems in the basin. Reform is needed to ensure a governance model that is responsive to the current and future challenges facing water management in the basin. Reform is needed to ensure the viability of the basin’s water dependent industries, to ensure healthy and vibrant communities and to ensure the sustainability of the basin’s natural environment.
The Water Bill 2007 bill draws heavily on the comprehensive water bill that had been negotiated with most states in the basin over the past five months. The new bill reflects these negotiations in relation to the parts of the comprehensive bill for which the Commonwealth has constitutional power. Thus, a referral of powers from the states is not required for this bill, as was proposed for the comprehensive water bill.
This Water Bill relies on a range of powers which are provided to the Commonwealth under the Constitution. These comprise powers in relation to external affairs, interstate trade and commerce, corporations and powers to collect information and statistics.
While the Commonwealth is using these Commonwealth constitutional powers to implement the plan in the absence of cooperation from the Victorian Labor government, the Australian government remains committed to cooperating with the states to improve water planning and management in the Murray-Darling Basin.
As already noted, the bill relies in part on the external affairs power of the Constitution. The Commonwealth is committed to the implementation of international agreements such as the Convention on Biological Diversity and the Ramsar Convention on Wetlands. The bill will greatly enhance the government’s capacity to give effect to these agreements and achieve environmental outcomes in the basin.
The Water Bill 2007 establishes the Murray-Darling Basin Authority. For the first time in the basin’s history, one basin-wide institution will be responsible for planning the basin’s water resources—requiring planning decisions to be made in the interests of the basin as a whole and not along state lines.
The Murray-Darling Basin Authority will be an expert, independent body which will report to the Commonwealth Minister for the Environment and Water Resources. Its primary responsibility is the preparation of the basin plan. Once the bill is enacted, the Commonwealth will move quickly to establish the authority. The chair and chief executive officer of the authority will be appointed on a full-time basis, while the remaining four members will be appointed on a part-time basis.
The central element of the basin plan will be the introduction of a sustainable and integrated cap on groundwater and surface water diversions. The basin plan will set limits on the quantity of water that may be taken from the basin’s water resources as a whole, and from particular water resource plan areas. The cap will be enforceable by the authority.
The basin plan will be informed by the CSIRO Sustainable Yields Project and detailed socioeconomic analysis. In formulating the basin plan, the authority must conduct public consultation processes and make available the information used to develop the basin plan. These consultations will be important to the authority’s considerations in setting the cap. The first basin plan will be made within two years of the authority being established.
The allocation of responsibility for any reductions in water availability between the Commonwealth and the states agreed under the National Water Initiative will remain. I assure Victorian irrigators that the Commonwealth will meet its share of the risk in Victoria, as it will in other jurisdictions, as set out in the National Water Initiative.
The bill also codifies the provisions of the National Water Initiative whereby the Commonwealth agrees to take on its share, together with the state governments, of the liabilities for future reductions in water availability. An example of a liability would be changes in government policy, such as imposing a new environmental objective. The taxation implications of the risk management scheme will be addressed in its detailed design, and the government is committed to fully consulting the irrigation sector in this regard. Subject to all basin states signing the intergovernmental agreement, the Commonwealth would also assume the liabilities of basin states under the National Water Initiative, in relation to changes in knowledge.
Let me reiterate the Commonwealth’s commitment—clearly stated in the bill—that we will not compulsorily acquire water entitlements. Entitlements will only be purchased from willing sellers.
The authority will exercise its functions in a consultative manner. Central to this consultative role is the formation of the Basin Community Committee under this bill. At least eight members of the committee shall be persons who either are or represent water users.
The authority will also be responsible for advising the minister on the accreditation of state water resource plans for consistency and compliance with the basin plan. To ensure a smooth transition for water users in the basin, the bill will honour existing state water plans—including any subsidiary instruments such as resource operation plans in Queensland—for the life of those plans.
This legislation will not impact on the security of entitlements. It will not affect state water shares under the Murray-Darling Basin Agreement.
A Commonwealth environmental water holder will be established. Water recovered through the roll-out of the irrigation efficiency program and the structural adjustment program of the national plan will be used for environmental water purposes across Australia. The Commonwealth environmental water holder will be required to ensure that this water is delivered to achieve environmental watering objectives. This would include environmental watering objectives for icon sites currently being pursued under the Living Murray Initiative—in particular, the provision of additional water to the Coorong and Murray mouth. The basin plan will also include an environmental watering plan and a water quality and salinity management plan to coordinate the delivery of environmental outcomes across the basin.
This bill establishes a new role for the Australian Competition and Consumer Commission (ACCC). The ACCC will monitor and enforce water charge and market rules in the basin. The rules will reflect the water charging and trading principles in the National Water Initiative, ensuring that the water market in the basin works efficiently and that there are no inappropriate barriers to trade. The minister will make the water charge and market rules under part 4 of the bill, having regard to advice from the ACCC and following consultation with affected parties. The rules can provide the ACCC with the ability to determine bulk water charges and exit and termination fees but not to determine access fees set by irrigation infrastructure operators. The government undertakes to respect existing price paths set by state regulators. The bill will also ensure that the development of any new rules takes into account the historical obligations imposed on some irrigation companies and that any new requirements are phased in appropriately. There is also provision for the ACCC to accredit state regulators to determine bulk water charges under the water charge rules.
The Murray-Darling Basin Authority will be able to charge fees for the services provided in performing its functions and these fees will be subject to the water charge rules set by the minister. The authority will only be able to charge fees for services it provides and will not be able to charge fees that duplicate those already raised by states or in relation to the Murray-Darling Basin Commission. Further, the authority may not charge certain fees unless the ACCC has advised that such a fee is reasonable.
Under part 7 of the bill, the Bureau of Meteorology will collect up-to-date, accurate and comprehensive information on water use and availability across Australia. This will be a critical input to the basin plan. In collecting this information, the bureau will consult with industries, such as hydroelectricity providers, on how to ensure appropriate commercial confidentiality is preserved.
Further, the bill also provides for the metering of stock and domestic water use under the basin plan. As I have previously done in this place, let me confirm that there is no intention to require metering of stock and domestic bores, except in special circumstances where a groundwater system is under stress or where there are local disputes about water sharing. Those circumstances are canvassed in the National Water Initiative.
Better metering and monitoring of water, of course, is a vital element in the national plan and essential for sustainable and informed management of our water and, in particular, our groundwater resources. In the rare cases where metering of stock and domestic bores is warranted, the cost should not be borne by the landholder other than with his or her agreement.
The Water Bill 2007 contains enforcement mechanisms to support compliance with its provisions. These include injunctions, enforceable undertakings, civil penalties and enforcement notices. These mechanisms are intended to ensure desired outcomes are achieved.
The cooperation of basin states remains an integral element of this reform and its effective implementation. The basin states will continue to have a major water management role. The water entitlement regime will continue to be defined and managed under state legislation. The basin plan and the new cap on extractions will take effect through water resource plans made by the basin states. State water agencies will continue to manage storages, river flows and water deliveries.
The Murray-Darling Basin Commission and the Murray-Darling Basin agreement will continue to operate for the time being. The bill provides that the Murray-Darling Basin Commission must not act in a manner which is inconsistent with the basin plan. The commission will continue to run River Murray Water and its major storages, coordinate the management of salinity interception works, and perform a range of natural resource management activities, including the Living Murray Initiative.
The Commonwealth objective remains a comprehensive Commonwealth water law. To that end, the Commonwealth will seek to negotiate an intergovernmental agreement on water with the basin states, under which they will refer their powers to underpin such comprehensive legislation within 12 months of signing. The Commonwealth government would then proceed with the remaining elements of the comprehensive Water Bill, including directions on flows, managing shared river control works in the basin and making available water determinations for shared water resources.
The Commonwealth government will proceed immediately to roll out the programs announced under the National Plan for Water Security. These programs include $3 billion to address overallocation and overuse of the basin water resources, either by buying out water entitlements or by helping to relocate unviable irrigators or irrigators who are unable to operate their businesses efficiently. That is the structural adjustment element. The sum of $1.6 billion is allocated for on-farm investments in irrigation efficiency and $70 million for hotspot assessments as part of the Improving System Delivery Efficiency program. The amount of $617 million will be provided for more accurate metering and monitoring, including upgrading bulk off-take and on-farm metering, and $450 million in investment will be provided for water information.
As the Prime Minister announced on 30 July 2007, funding of up to a further $3.55 billion for the improvement of off-farm delivery system efficiency, river operations and storages programs will be available to each state as they sign the IGA.
It must be noted that the Commonwealth is only proceeding with the implementation of this plan on the basis of its own constitutional powers because the Victorian Labor state government refused to cooperate with the referral of powers sought by the Commonwealth.
New South Wales, South Australia and Queensland have agreed to refer their powers, but the Victorian government has refused to do so, seeking instead special treatment, with Victoria-specific arrangements—in other words, one rule for the rest of the basin and another rule for Victoria. That conception was always going to be unworkable and unacceptable, not just to the Commonwealth but to every other state.
Indeed, Victoria’s proposal would perpetuate a fragmented management system for the Murray-Darling Basin and undermine the cooperative basin-wide approach the plan seeks to achieve. That is unacceptable to all other parties—the Commonwealth, the other states and the ACT.
That is why we are pursuing the reforms through this legislation now.
This Water Bill is the first water reform program introduced into this parliament in 106 years. It is truly a nation-building bill, not only for this generation but also for the generations to come. It will ensure the sustainability of one of Australia’s great natural assets. It will underpin our nation’s water resources and it will secure the future for the industries, the communities and the environments that rely on them.
I commend the bill to the House.
Debate (on motion by Mr Crean) adjourned.