Wednesday, 19 August 2009
Matters of Public Interest
Today I want to talk about why any proposition for the Commonwealth to buy the land and water resources of Cubbie Station will be a fraud on the public purse. Section 99 of chapter IV, Finance and Trade, of the Constitution states:
The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof.
Section 100 states:
The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable—
I emphasise ‘reasonable’—
use of the waters of rivers for conservation or irrigation.
That really tells us what the word ‘reasonable’ means. I want to put a few things on the record. There has been some confusion in recent days about the capacity of and what is for sale at Cubbie Station. The article in the Australian is accurate when it says that there are 538,000 megalitres of storage capacity in the combination of what was the Stevenson family’s farm and the Brimblecombe farm in recent years. Actually there are only 70,000 megalitres in licences. Sure, there is 538,000 megalitres of storage. Sure, at Ballandool, downriver on the Culgoa, which does not get the water, they have 100,000 gigalitres of storage, which they cannot fill. Sure, at Clyde, on the Narran, they have 110,000 gigalitres of storage. But if you have the storage it is meaningless if the system does not allow you to get the water.
The storage at Cubbie, which is 400,000-odd megalitres, was built for a minimum one-in-10-year event. I would like to put some figures on the record about what happens in the Condamine-Balonne river system below St George. Since 1920, 24.72 per cent of the total flow occurred in just four years; 52.71 per cent of the total flow, which is 103,000 gigalitres, occurred in 15 years; and 47.29 per cent of the total flow occurred in 71 years. This is a highly variable river which has an 806 per cent variability to the mean. That is all technical stuff that a lot of people listening to this will not understand. But what it says is that this river system, much the same as the Warrego and Paroo rivers, are highly variable rivers. To give you an instance, some of the rivers in the Lower Murray-Darling Basin have a variability of 200 to 250 per cent.
Because the law was silent some years ago, some people with great vision—it is regrettable that Cubbie Station have got themselves into financial trouble and I wish them well in the sale, but a failed business plan got them into trouble. It is much the same situation as the people at Bourke, on the Darling River. They had a business plan to grow high-security crops with low-security water, and guess what? They have gone broke. So we had great vision in the Stevenson family. He as a young surveyor’s assistant had great vision, but the great vision was converted to the wrong scale. They became far too big for the reliability of the water and, of course, they are using old-fashioned technology. With the 70,000 megalitres of water that would be available with the property, using Israeli-Spanish technology you could multiply by a factor of 10 the income of the farm.
Under the present arrangement the resource operating plan, which is held up in the courts, proposes a licence that would add a couple of hundred million dollars to the value of Cubbie Station, which is probably how they have raised the value to $450-odd million. That licence has not been issued. One of the myths that I would like to explode today is that they have that as a water licence. They do not. The law is silent on what they have done in recent times and no-one has broken the law. In recent times they have been allowed to develop overland flow without environmental planning. They passed legislation to ensure that if you kept the banks under five metres in these projects you did not need environmental planning; all you needed was a big bulldozer. That is precisely what they did, with great aggression, and good luck to them, but it is a failed business plan.
In recent times the bulk of the water used to grow crops on this station—and bear in mind they have run out of water because that is Mother Nature’s variability tap—is from overland flow which is unlicensed, unregulated, unmetered and virtually free. The state government in Queensland collected $2 million from the flow in 2008. And, because the overland flow extraction was in excess of what was a reasonable thing, people on the Narran Lakes, down below on the Narran River, had to buy 11 gigalitres of water for $2 million to allow the bird-breeding event down there to continue. So this proposition is a silly plan. It is a case of first in, best dressed. That is why properties like Ballandool, below Cubbie, do not get the water: it is first in, best dressed.
If this proposal under the resource operating plan proceeds—I think the ROP should be cancelled and redone at a sustainable level. There is a solution to Cubbie’s problems. Sure they are in financial trouble, as indicated in the press, but there is a solution. Under the present arrangements, in my view, if they continue with the same business plan, whoever takes it on will run into the same trouble because there is too much variability in the water and the water technology they are using is too old.
Going back in history, the vision of the Stevenson family started in 1986, I think. As I recall, the first weir was put in on the Culgoa, what they call the Cubbie Weir, and in the mid-1990s they raised the height of that weir. That allowed them to harvest gravitate water out of these overland flow systems, and it was very good. Under the Queensland Water Act, they had access to water which was unlicensed and they had what is called an authorisation to take the water, which is not a financial instrument, is not tradeable and is not something, as a certificate of trade, you can get money for. It is attached to the land and, as we all know, and as Premier Bligh said the other day, you cannot buy the water on Cubbie unless you buy the farm. I think the farm ought to be left there. It is a couple of hundred thousand acres of beautiful, productive land. They ought to go to better technology and make use of the land with a much reduced supply of water.
I will put a couple more things on the record. Under the Queensland Water Act, compensation is only payable for the life of the plan. This plan has one review now, which I think is the desktop review, and it will be finalised in 2014. To go back to where they got into trouble, back in the nineties the greatest critic of the excesses of Building the Vision was a woman called Leith Boully, who was an immediate downstream neighbour. She was a great critic. I have to say that the Stevensons were good operators. They got the manager out of the department of water. He was one of the licensing guys. They got the former Treasurer of the state government as the chairman of the board, which was a pretty wise move. They cut the fence to their downstream neighbour, who was their greatest critic, and offered to put 600 acres of cotton in and put the cheque in the bank every year. That is what has happened. When the water is available, that is how they go about it. In the fullness of time they appointed, to give advice to the government in Queensland, an advisory committee on the Lower Balonne Resource Operations Plan. They appointed an independent chair who happened to be the downstream neighbour where Cubbie Station had cut the fence, grown cotton for that person and put the money in the bank.
I did say at the time that that person would not qualify for a water licence because there was no storage capacity. Under the Resource Operations Plan there is no environmental planning. We are talking about 469,000 megalitres of water for this particular licence. The proposition at the present time from the Queensland government is that they are going to issue the licence and then offer the Commonwealth government the opportunity to buy the licence back by acquiring the property. I think that would be a fraud on the public purse to the extent of $200 million. Anyhow, they proceeded with the Resource Operations Plan. The advisory committee gave the Queensland government advice in draft form, which is now out there and being challenged in the courts. There was a proposal to issue a licence for 469,000 megalitres for Cubbie Station. Funnily enough, on the licence, as part of the title in a financial commercial-in-confidence arrangement, is the downstream neighbour who is the independent chair of the process. So go figure that out. Whether or not that is a success fee, I do not know.
There is a solution. Why not provide a solution to the problems of the downstream users of water caused by the excesses of a system that has no environmental plan? The licences under the Resource Operations Plan are not sustainable. Peter Cullen pointed that out and his advice was misused and misquoted. He said the system has a mean annual flow of 1,200 gigalitres. They have allowed 1,500 gigalitres of on-farm storage, which, in a one-in-25-year event, could be fully serviced. But in recent times, in the last flood event there in 2008, 1,056 gigalitres flowed below Beardmore dam and 768 gigalitres flowed past St George. The biggest daily flow was 50,000 megalitres. It took 64 days, and 186 gigalitres crossed the border. One hundred miles down the river, 18 per cent of what went over the Beardmore weir made it to the border, and even then a lot of the downstream users who have harvesting capacity did not get the water they thought they were going to get. There was anger about this in the local district, even though they do not like to talk about it. Some of the confined irrigation area people in St George are very angry about what has been allowed to happen to the Culgoa River and the Lower Balonne.
What is the solution, given the dilemma that the Constitution sets out, given the shoddy process of the Resource Operations Plan, given the proposed fraud on the Commonwealth with the idea that suddenly you can issue a licence in the full knowledge that while you are issuing the licence there is a proposal for the Commonwealth to buy the licence back? What should happen is that we should learn from places like Carnarvon, in Western Australia. Carnarvon uses 8,500 megalitres. That is 8½ gigalitres. Here we are talking about 469 gigalitres. Carnarvon uses 8½ gigalitres to produce $70 million worth of income, with the very latest of Israeli technology.
This morning on Radio National, Fran Kelly had a Colin Chartres on, an Australian who is Director-General of the International Water Management Institute. He was flagging what I have been flagging in this place for many years: that the greatest challenge facing the world is food production and that if Asian countries do not go to smarter water use they will not be able to feed themselves. In fact, as we all know, the scientific prediction is that if we grow the global population to nine billion by 2050 there will be a billion people on the planet unable to feed themselves, 50 per cent of the world’s population will be poor for water, 30 per cent of the productive land of Asia is going to go out of production, the food task is going to double and possibly 1.6 billion people on the planet will be displaced.
That says to me that here in Australia we should not be taking the lazy option; we should be putting as much money into the replumbing of irrigation as we are into the purchasing of water, to make that water use more efficient, such as is done at Carnarvon. Carnarvon is 40 times more efficient than the Ord with its water use. It is 20 times more efficient than the Murray-Darling Basin. If the water that produces $70 million worth of income in Carnarvon were used on a cotton crop here in New South Wales you would get yourself $3 million. That is the level of inefficiency. The world cannot afford to continue with technology from about 150 years ago.
So what is the solution for Cubbie? The solution for Cubbie is: rather than buy the place, keep the place. Sure, someone might have to be involved in a fire sale and someone else is going to have to buy it. They have 70,000 megalitres of water. Let us reallocate the Resource Operations Plan for the overflow at a sustainable level. It might be another 70,000 megalitres. I do not know what it will be. But let us put money into places like Cubbie to give them efficiency of the kind that Carnarvon has. Instead of spending a ridiculous sum of money, $450 million, because the Queensland government is also off the pace—and, by the way, there are a whole range of issues in that regard which I will not have time to address today—why not put some millions of dollars into letting these places be replumbed with better technology and continue with food production?
Chia is the crop that is taking the place of sugar in the Ord. In the Ord they thought they had plenty of water. They gave 17½ megalitres per hectare to produce sugar. Chia is a wonderful new crop which is now finding its way into the shops. The young bloke who won the Nuffield scholarship who is producing that crop— (Time expired)