House debates

Monday, 17 August 2015

Grievance Debate

Murray-Darling Basin

5:17 pm

Photo of Sharman StoneSharman Stone (Murray, Liberal Party) Share this | | Hansard source

On 18 June 2015 the Senate referred the Water Amendment Bill 2015 provisions for inquiry and report. The closing date for submissions was Friday, 31 July. Given that this was, in effect, one of the best kept Senate secrets, there has now been an extension of time for people to make informed submissions to this inquiry. In fact, it will remain open, and people can make lodgements of submissions, up until Friday, 21 August. I really implore people, particularly in the Murray-Darling Basin, to put a submission in.

What is this about? The bill proposes to amend the Water Act 2007 to impose a duty on the Commonwealth not to exceed the 1,500 gigalitre limits on surface water purchases in the Murray-Darling Basin, which in effect, or in common parlance, means that the Commonwealth is not to buy back any more water off irrigators beyond 1,500 gigalitres. Most of that water has already been found—in fact, there are only several hundred gigalitres still to be purchased under the original agreements. Indeed, in the case of some states like Victoria, there has already been an extraordinary buyback of irrigators' water, well beyond what was anticipated, with very difficult consequences for people's viability on their properties.

The problem is that the Murray-Darling Basin strategy—which, of course, is derived from the plan—is now seriously unbalanced. We no longer have a triple bottom line, if in fact it ever existed from the time the plan was put into play. It was meant to be a balance of the environment, the community and the economy. In fact, the business of more and more water flowing to the Commonwealth Environmental Water Holder is now very much to the detriment of irrigators' or water users' stock and domestic purposes in the basin. The CEWH, as it is commonly called, now owns 4½ times the volume of Sydney Harbour. It is impossible for it to use that volume. It has only used half of it since its inception.

We put into play certain mechanisms, at the beginning of the plan, when it was not understood what the impacts of the millennium drought would be. These mechanisms were, for example, that, if the Commonwealth Environmental Water Holder traded any of its huge holdings of water, every dollar earned through those trades would be spent on further water buyback. So when this bill comes into the house to be debated, about the 1,500 gigalitre cap on further buyback from irrigators, we will have the nonsense situation where there is still another element of an act which says that the Commonwealth Environmental Water Holder can continue to buy back water if it in fact chooses to trade. That is a nonsense. It is completely contradictory to the 1,500 gigalitre cap, which, of course, I and pretty much every water user in the basin overwhelmingly supports.

So we have got to fix the Commonwealth Environmental Water Holder's current restraints on being able to spend any traded moneys earned instead on environmental works and measures, which would be a much better use of its finances. And it could also help to pay its own way with moneys earned through trading. The trading of its huge water pool is essential for many parts of the basin to survive in terms of its productive capacity. At the same time, the water can have multiple uses; it is not to the detriment of the environment, given the way the water trading rules have been constructed, if it trades at the right time and with the right environmental measures considered carefully.

The problem for us is that there is also the on-farm water use efficiency grant system in both New South Wales and Victoria. There, again, as the Commonwealth offers these grants to irrigators they must, in the case of Victoria, give back 59 per cent of any savings to—guess who—the Commonwealth Environmental Water Holder. So, again, while we are putting a cap on further buybacks—a 1,500 gigalitre limit—we are allowing the on-farm water use efficiency grants to siphon off more of the irrigators' pool to the bucket of the Commonwealth Environmental Water Holder. Again, that is a contradiction—and we must sort this out urgently.

The problem is that no-one imagined the impact of the millennium drought, the worst drought on record, and the pressure that banks would put on irrigators to sell their water in the tenders that were offered by the then Minister for the Environment, Penny Wong. She saw an opportunity; it was a clever ruse at the time. Irrigators were told they could put in a tender, a bid, to sell their water to the Commonwealth Environmental Water Holder. The banks seized the opportunity because, in the case of Victoria, the water had recently been unbundled, meaning it could be separated from the land's title. So the banks said to my irrigators in particular in the Goulburn-Murray water system: 'If you sell your water, we won't foreclose. You owe us a million dollars. You know you are now really up against it in terms of surviving this drought. So sell your water, pay down all or most of your debt and we will take the foot of your throat for a little while longer.' And half of my dairy farmers did that; over 1,000 irrigators sold all or most of their water.

The problem moving forward, of course, is that the irrigators imagined they could then depend on the temporary water market. That temporary water market, unfortunately, is now a fraction of the volume it once was—given that so much water has been moved out of the irrigators' pool and to the Commonwealth Environmental Water Holder—and it is now a speculator's dream. Again, Victoria, on the advice of the ACCC, removed any cap on non-irrigator participation in the temporary water market. So today we have governments—such as the Victorian government and the South Australian government—speculating in the irrigators' water market. The South Australian government the other day bought up eight gigalitres; it thought it was doing it secretly—until the outrage and hostility of my irrigators became so loud as they made it quite clear that buying irrigators' water to take to the consumers of Adelaide as a cheaper option than turning on their desalination plant was not an ethical or acceptable thing to do. The Victorian government has 74 gigalitres that Melbourne Water—the authority it owns—plays with in the speculatory market each year. That 74 gigalitres has made Melbourne Water the richest water authority in Victoria. No doubt, it is paying very nice dividends back to the Victorian government for that speculation.

We have overseas and domestic superannuation companies playing in that market. The price is now $220 a megalitre. A dairy farmer is out of that market at about $80. So we now have the destruction of the dairy industry of northern Victoria because that temporary water market is what they now depend on—more than half of my dairy farmers. It is not looking like coming down in price at any time soon. It has gone from $30 to $210 in three years. The market is corrupted. It is not transparent. Anyone can be a water trader. You just put your A-frame up outside your shopfront. There are no mandated qualifications to trade in this water. There are no probity standards required. It is impossible to find out who is buying the water or who is selling it. You have to believe the real estate agent as to the price of water on the day.

I have taken this to the ACCC who are mightily interested in such a corrupted and non-transparent and non-competitive market. I am hoping they are going to do something about it, but they will not be completing their report until the end of the year. That means another irrigation season will face not enough water available to irrigators who produce dairy product from what was the food bowl of Australia for our export earnings and for our jobs in order to keep our dairy manufacturers going. This is a completely unintended appalling situation; a series of hopeless mistakes and unintended consequences, for sure, but it does not mean we should not be fixing it urgently.

I want to make sure that people also understand that the constraints strategy will also be dealt with in this new bill, the Water Act 2007 amendments. This is an additional 450 gigalitres to keep the mouth of the Murray open and flowing 95 per cent of the time without the aid of bulldozers, which is a nonsense environmental proposition. Unfortunately, it is l-a-w law. It was a South Australian demand in return for them signing up to the Murray-Darling Basin Plan in the act with which was passed in February 2013. This constraints strategy is going to flood out the middle and upper Murray every two or three years and cause environmental problems like salinity, the blackwater events and the waterlogging that we have not seen since the 1970s—another tragedy for the Murray-Darling Basin.

I say: for heaven's sake, people, get your submissions in to this inquiry's extension. You can get your submissions in by 21 August, this Friday. It is essential that all voices are heard.