Thursday, 3 December 2015
Water Amendment (Review Implementation and Other Measures) Bill 2015; Second Reading
That this bill be now read a second time.
The Australian government is committed to implementing the Basin Plan in ways that deliver the best social, economic and environmental outcomes for the Basin and its many industries and communities. Water lies at the core of agricultural production, and the associated wealth supports regional communities and the nation.
The Water Amendment (Review Implementation and Other Measures) Bill 2015 further delivers on the government's commitment to support communities, businesses and the environment in the Murray-Darling Basin. It also shows that the government takes the opportunities that arise from ongoing statutory reviews to consult the community and respond to their concerns.
The main purpose of this bill is to implement the recommendations of the Report of the independent review of the Water Act 2007, following an extensive consultation with state and territory governments and stakeholders across the irrigation, community, Indigenous and environment sectors. Of the 23 recommendations made by the panel, 21 have been accepted in full and two have been accepted in part.
The government thanks the review panel members—Mr Eamonn Moran, PSM QC; Mr Peter Anderson; Dr Steve Morton; and Mr Gavin McMahon—for their efforts in reviewing the Water Act, for their consultative approach and for identifying a package of balanced and sensible amendments.
The amendments proposed by the panel support this government's approach to delivering the Water Act's objectives, including:
This Bill supports each of these objectives, and in doing so underpins the government's aim of delivering water reform in ways that support communities, businesses and the environment.
Water recovery— background
The government's approach to achieving the sustainable diversion limits outlined in the Basin Plan is to prioritise investment in productivity-enhancing water infrastructure and cap surface water buybacks at 1,500 gigalitres. The government recently enshrined the 1,500-gigalitre cap in the Water Act. This provides vital reassurance to communities by limiting any potential economic impacts associated with water purchases.
Capping water buybacks provides greater certainty to basin communities that the government is focused on water recovery through investment in infrastructure as a priority to bridge the gap to the sustainable diversion limits. Indeed, the government is undertaking the most significant water infrastructure program in Australian history, investing over $2.5 million per day in the future sustainability of irrigated agriculture out to 2019. A total of almost $13 billion has been committed to basin initiatives out to 2024, with the majority of funds assisting irrigators and communities to make more efficient use of the basin's water resources in the production of food and fibre. To put that into perspective, this expenditure represents a bigger investment in real terms than that made by the Commonwealth to build the Snowy Hydro scheme. These investments are already delivering very good results from both off-farm and on-farm infrastructure projects, with more than 10,000 individual irrigators benefiting from infrastructure renewal and upgrades.
The government, through the Commonwealth Environmental Water Holder, is now the largest license holder in the basin, for the purpose of sustaining environmental assets.
The government is committed to delivering the maximum outcome from the sustainable diversion limit adjustment mechanism. Delivering the same environmental outcomes with less water is common sense and will reduce the impact on basin communities. We have already seen projects—such as pumps at Hattah lakes and regulators at Perricoota forest—markedly improving our environmental water use efficiency.
There are significant opportunities in the Gunbower forest, Chowilla flood plain, Burra Creek flood plain and Lindsay Island for works and measures to deliver environmental benefits with less water. And then there is the Menindee Lakes. This is a great opportunity to undertake environmental works that actually provide more water to the basin without removing water from productive use.
Basin water ministers continue to strive towards a supply contribution of up to 650 gigalitres. In other words, and noting that 70 per cent of the Basin Plan water recovery target has already been achieved, the adjustment mechanism will see the 2,750-gigalitre water recovery target fall to as low as 2,100 gigalitres, reducing the socioeconomic impacts of implementing the Basin Plan.
Separately, the Northern Basin Review, which is supported by all basin water ministers, is re-examining sustainable diversion limits set for the northern basin in light of new and additional scientific and socioeconomic information. The government is looking forward to considering the outcomes of the Northern Basin Review when its findings are released next year. We must identify detrimental economic impacts as a result of the reduction of water available for agricultural production and determine whether substantial environmental outcomes have been achieved as a result of that reduction.
Efficient and effective management of environmental water
We know that farmers and irrigators are working hard to ensure that their use of water is as efficient and effective as possible, and so too is the Commonwealth Environmental Water Holder—and so it should.
One way in which Commonwealth environmental water can be used more efficiently is through trade. Trade opportunities for the Commonwealth Environmental Water Holder can arise when, for example, the annual allocations associated with permanently-held entitlements are not needed in one part of the system, and water could be used more effectively elsewhere or at another time. To date, the Commonwealth Environmental Water Holder has traded water for this purpose in a number of catchments, such as the Gwydir in New South Wales. This has assisted communities to finish off crops, with the associated social and economic gains to the local towns.
Recently, the sale of 20 gigalitres of environmental water allocations in the Goulburn catchment—the first in the southern Murray-Darling Basin—represented a good outcome for irrigators, who purchased over 20 billion litres of water for agricultural use at a time when prevailing seasonal conditions are dry.
This bill amends the act to provide greater flexibility for trade while ensuring that the environmental outcomes sought by the Basin Plan are maintained or improved. The bill enables the Commonwealth Environmental Water Holder to use proceeds from the sale of water allocations to invest in activities that improve the effectiveness of Commonwealth environmental water use and help to achieve Basin Plan environmental outcomes. The flexibility will enable the Commonwealth Environmental Water Holder to get the best environmental outcomes possible, as efficiently as possible, whilst also assisting in the socioeconomic requirements of Basin communities.
This recognises that achieving environmental outcomes in the Basin will often require both water and complementary environmental activities. We know it is not just about adding water, because the lack of environmental works and measures, such as fish ladders and carp screens, can be a real barrier to maximising environmental outcomes.
The bill also implements important safeguards recommended by the review panel including:
The scope of potential environmental activities that can be funded through the water sales is broad, but must be tied to improved outcomes from the use of Commonwealth environmental water. This enables targeted investments that complement, rather than duplicate, existing environmental programs. The government wishes to make it clear that the Commonwealth Environmental Water Holder will not use this new flexibility to invest in natural resource management activities that are already being funded by other programs, whether at a local, state or federal level.
A further change in this bill is to bring the conditions of the sale of water allocations in systems with continuous accounting into line with systems which have an annual accounting framework. This means that if the water is not required to meet environmental objectives in a water period, the Commonwealth Environmental Water Holder will have the option to sell the water rather than forego allocations due to account limits.
Flexibility and practicality are central to these amendments and key to achieving positive environmental outcomes in the Basin in ways that also deliver social and economic benefits to Basin communities.
The government also recognises that there are many other stakeholders besides the Commonwealth Environmental Water Holder that are working to improve environmental outcomes in the Basin. For example, the development of a biological control for European carp, which comprise over 70 per cent of all fish in the Basin, could deliver transformative change to this most iconic river system. This collaborative work between the federal and state governments, research and development corporations and universities has the potential to massively reduce carp populations and significantly improve the health of rivers and wetlands—and there are many recreational fishers who would just love the opportunity to get rid of carp!
Transparent and effective water markets
In a drought-prone country with a highly variable climate, it is particularly important that water has a market price that reflects its changing value, and that farmers can realise that value through a transparent and effective water market. It is clear that the development of a water market has made a significant difference in helping Basin industries to get the most out of their water assets, and to navigate their way through the worst of our dry times. However, while trade is vital to many agricultural industries, it is apparent there are some concerns within the Basin community in regard to how water markets operate.
In line with the recommendations of the review panel, the government will encourage water market industry representative bodies to establish industry-led self-regulation of water market intermediaries. Commonwealth regulation will be considered if evidence emerges that this would alleviate or remove risks in the water market and provide an overall net benefit to business, individuals and community organisations.
The review panel made a number of recommendations which aim to improve water market transparency. Two recommendations were accepted immediately on release of the panel's report—a review of the water charge rules and a review of the water information reporting requirements.
The ACCC is undertaking extensive consultation across the Basin as part of its review of water charge rules and released draft advice on 24 November 2015 for comment. Among other things, the review is considering how best to ensure consistency in the application of national water charging objectives and principles across the Basin. The review of water information reporting requirements was completed in June this year and is due for release in coming months.
The bill also ensures transparency and accountability in the trade of Commonwealth environmental water, requiring it to publish details of all water it sells and the purpose for which the proceeds are used.
Separate to the review of the Water Act, but complementary to its aims, the government is also improving transparency in the water market by agreeing to introduce legislation to parliament by December 2016 to establish a register of foreign ownership of water entitlements. Foreign investment plays an important role in funding the development of many industries in Australia, including the agricultural sector. A register of foreign ownership of both land and water will provide more reliable and transparent information to the public, participants in the water market and the agricultural sector about the value and extent of foreign investment in the sector, as well as trends. Improved oversight of foreign ownership is in response to a wide public call across all sectors.
The government is aware there is some anxiety in the Basin about speculators in the water market and will be looking at further options that improve transparency in the water market.
Monitoring and evaluating Basin Plan impacts
Aside from monitoring and evaluating the environmental outcomes of the Plan, this bill amends the act to improve monitoring of the social and economic impacts of the Basin Plan, which is incredibly important. This is an important amendment that responds to many stakeholders' concerns that insufficient attention is being paid to the social and economic impacts of the Basin Plan. This recognises that community confidence and support is integral to the attainment of triple bottom line outcomes in the basin.
This bill will also provide further certainty to stakeholders about the direction and pace of water reform. In line with the review panel's recommendations, a further review of the Water Act will be conducted in 2024. Furthermore, the first legislated review of the Basin Plan, previously set for 2022, will now take place in 2026, with 10-yearly reviews thereafter. This strikes the appropriate balance between regulatory certainty and allowing the Basin Plan to be reviewed when its outcomes can be better assessed.
Reducing the regulatory burden
A key focus of the review panel's terms of reference was to identify opportunities to reduce or simplify the regulatory and reporting burdens imposed by the Water Act. Even small changes in regulatory burden can have a large productivity effect on the many small- and medium-sized businesses that operate in the basin, leading to improved farm gate returns.
In this respect, the bill makes several important amendments that will streamline the Water Act by improving regulatory clarity, simplifying the process of water resource plan accreditation and repealing redundant provisions.
The Water Act empowers a number of water agencies to provide and collect information on Australia's water resources and to monitor Australia's water markets. The review panel recommended that the government consider the regulatory burden on industry and water managers in respect of water information requirements, while ensuring that critical information on Australia's water resources continued to be collected. As mentioned earlier, this multi-agency review has now been completed and will be released in coming months. Some of the measures proposed by this review will streamline data collection and reporting requirements, further reducing the regulatory burden on stakeholders and cutting red tape.
Indigenous Australians have a long, rich and close association with the rivers and wetlands of the Murray-Darling Basin. As the submission to the review from the Northern Basin Aboriginal Nations noted, 'water is our lifeblood, and all of us depend on healthy rivers and wetlands.'
Accordingly, this bill includes in the Water Act the existing Basin Plan requirement to have regard to social, spiritual and cultural matters relevant to Indigenous people in the preparation of water resource plans.
The bill also clarifies that one of the functions of the Murray-Darling Basin Authority is to engage with the Indigenous community on the use and management of basin water resources.
The bill adds an additional field of expertise that can be considered for potential appointment to the Murray-Darling Basin Authority's six-person board.
For the first time, 'Indigenous matters relevant to basin water resources' will be a recognised field of expertise that can qualify a person for appointment to the authority.
Further, the bill amends the act to specify that the Basin Community Committee must be comprised of at least two Indigenous persons with expertise in Indigenous matters relevant to basin water resources.
The coalition has a strong track record of delivering water reform for the benefit of the nation. Under the Howard government, the Council of Australian Governments agreed in 2004 to the National Water Initiative, laying the foundation for nationally consistent water planning and management for rural and urban use, and delivered balanced economic, social and environmental outcomes.
The coalition also introduced the $10 billion National Plan for Water Security in 2007 and enacted the Water Act, establishing a framework for water reform that included infrastructure modernisation, increased agricultural production and significant environmental improvements.
And earlier this year, the government announced the establishment of the National Water Infrastructure Development Fund to start the detailed planning needed to build or upgrade dams and pipelines and undertake managed aquifer recharge. This will help secure the nation's water supplies and deliver strong economic benefits for Australia, while also protecting the environment.
This bill continues the coalition's longstanding commitment to sensible and balanced water reform that boosts agricultural production, strengthens communities in our food and fibre production regions, and delivers environmental outcomes.
I also table the response by the government to the Report of the Independent Review of the Water Act 2007.