Inquiry into the positive and negative effects of the Murray Darling Basin Plan and associated Commonwealth programs on regional communities

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1 PO Box 3572, Phone (02) Level 3, 553 Kiewa Street, Fax (02) ALBURY NSW September 2015 Committee Secretary, Senate Select Committee on the Murray Darling Basin Plan, PO Box 6100, Parliament House, CANBERRA ACT 2601 Dear Committee Chairman and Members, Inquiry into the positive and negative effects of the Murray Darling Basin Plan and associated Commonwealth programs on regional communities The Riverina and Murray Regional Organisation of Councils (RAMROC) welcomes this opportunity to present a formal submission in response to the Terms of Reference for the Senate Select Committee Inquiry. RAMROC is a voluntary network of eighteen (18) Member Councils, which represents the interests of councils and communities in the south western region of New South Wales, being located along the Murray River region from Albury City in the east through to Wentworth Shire at the South Australian border and into the western parts of the Murrumbidgee River regions west of Narrandera through to Balranald Shire, and also further north into the Lower Lachlan River region within the Carrathool Shire. The RAMROC region covers an area of 126,595 square kilometres and has a 2014 ABS population of 165,265 persons. Attached is a location map of the RAMROC region relative to the capital cities of Sydney, Canberra, Melbourne and Adelaide and identifying the 18 Local Government member areas. The region has a mix of large regional centres such as Albury and Griffith, medium sized irrigation based towns and urban shires, through to a number of predominantly dryland farming shire areas, large in size but with a low population base. There are three principal irrigation areas, these being Murray Irrigation, Coleambally Irrigation and Murrumbidgee Irrigation and the region is a very significant producer of both irrigated and dryland agriculture servicing national and global markets. Not only is water availability the fundamental key driver of the region s economies, all three major irrigation schemes, the Murrumbidgee, Coleambally and Murray irrigation areas were developed and founded on water availability through various Government Schemes. In terms of agriculture, manufacturing, tourism, recreation and community wellbeing generally, water is the vital ingredient to the region s future. Unfortunately, the RAMROC region and its food production and processing industries and communities in general have been very detrimentally impacted by the 2007 Water Act and the Murray Darling Basin Plan, principally as a result of ad hoc / swiss cheese style environmental water entitlement purchases implemented even before finalisation of the Basin Plan in late At this point of time, water entitlement buybacks across the Murray Darling Basin amount to some 1165 GL, but it is important to realise that the vast majority of those purchases have already come from the Southern Basin.

2 -2- Against this background, RAMROC Councils have advocated for, and fully supported, the Commonwealth Government s legislation to cap water buybacks at a ceiling of 1500GL. This legislation is a most important step to restoring confidence in our agricultural food producing, processing, storage and transport industries and in so doing will go a long way to ensuring the viability and longevity of the regions businesses and the long term sustainability and social wellbeing of regional and rural towns and their communities. A further positive is that a significant amount of water savings required to comply with the Basin Plan s environmental water target of 2,750 GL are now being achieved by way of onfarm and off-farm infrastructure efficiency projects, for which savings are shared between the landholders and the Commonwealth Environmental Water Holder. Also significant to achieving best possible outcomes are the special infrastructure programs being developed by the State Governments as part of the SDL adjustment process, which have potential to further reduce the 2,750 target. In response to the issues set out in the Terms of Reference, RAMROC is pleased to provide the following additional comments:- Term of Reference (a) - the implementation of the Plan, including:- i. Its progress 1. Importance of the Triple Bottom Line Environmental, social and economic considerations RAMROC Councils and communities have consistently argued that the 2007 / 2008 Commonwealth Water Act does not provide for fair and equitable triple bottom line environmental, social and economic considerations. In July 2014 RAMROC made a submission to the Independent Expert Panel reviewing the Water Act in relation to social and economic considerations and made a presentation to an Expert Panel roundtable held in Melbourne on 21st August 2014, at which the following specific request was made:- RAMROC REQUEST TO THE EXPERT PANEL That the Expert Panel recommend to the Commonwealth Government that the Water Act 2007 be amended, so as to ensure that any existing ambiguities in relation to achieving an appropriate fair and equitable balance of environmental, economic and social objectives, are removed. FURTHER that the Water Act be amended, so as to provide the basis for the preparation of an amended and flexible Murray Darling Basin Plan, which will continue to give effect to international environmental agreements, but which will also provide for social and economic considerations to be given equal weighting, in order to achieve a balanced triple bottom line Basin Plan which clearly reflects the national interest of all Australians. A copy of the notes presented at the Expert Panel Roundtable is attached (Appendix A) In brief, those notes make reference to the background history relating to the final development of the Water Act legislation, including a reference to the circumstances that influenced the overriding priority being given to environmental outcomes, with very much secondary importance given to social and economic considerations

3 -3- Unfortunately, the Expert Panel concluded that the current Water Act already provides for the achievement of economic, social and environmental considerations, but the Panel made a recommendation that calls upon all decision makers to more transparently demonstrate how these triple bottom line outcomes are taken into account, under both the Water Act and the Basin Plan. With due respect to the obviously good intentions of the Expert Panel, it is apparent that MDBA has in the past given little or no credence to the importance of economic and social considerations under the existing Act provisions, nor is MDBA likely to change its policy position and day to day modus operandi as a result of the Panel s recommendations. Certainly there is no evidence to suggest that MDBA has changed its approach since the Expert Panel s recommendations were submitted to Government. Notwithstanding the Expert Panel s recommendation, RAMROC s view is that the Federal Coalition Government certainly has the power to pass the appropriate legislation to make it 100% clear that the triple bottom line principle is to be strictly applied, so as to enshrine the triple bottom line principle of balancing the environmental, economic and social outcomes for the benefit of ALL Australians, not just the environment above all else. 2. Assessment of Basin Plan social and economic outcomes RAMROC makes the following key points, these being:- 1. The most notable lack of progress in implementation of the Basin Plan to date relates to the analysis of social and economic impacts on communities within the Basin. Little has been achieved since this issue became critically important, as far back as the Guide to the Basin Plan in No meaningful endeavour has been made by either the Commonwealth Government or MDBA to assess the adverse social and economic impacts on communities, industries and businesses arising from the swiss cheese style purchase of water entitlements referred to previously, for example in terms of agricultural production and employment, farm sustainability and rural family wellbeing, population and jobs, business turnover and viability, school enrolments, real estate values, tourism etc. 3. The reasons for these adverse community outcomes are in most instances clouded by MDBA, by its reference to a range of other factors that can influence change, for example:- The millennium drought conditions Farm debt levels and consolidations Agricultural innovation and technology The Global Financial Crisis Commodity prices Exchange rates Bank lending policies and practices Annual water availability and allocations for irrigated food and fibre production Other factors such as the loss of the redgum timber industry in the Murray and Murrumbidgee redgum forest regions These factors have some relevance and therefore it will always be difficult, if not impossible, to accurately pinpoint and quantify the Basin Plan s extent of impact.

4 -4-4. Under these circumstances, the horse has already bolted. Productive water has been re-directed for environmental purposes and the adverse impacts have been demonstrated by councils, communities and landholders for some time now. 5. As such, future analyses may be interesting, but unfortunately may be of limited consequence to future water policy. Regrettably, both the Water Act and the Basin Plan made no advance attempt to undertake the essential economic and social analyses of what the impacts would be of purchasing water entitlements in such an ad hoc manner, nor of delivering vastly increased amounts of environmental water through the system, nor the resulting impacts of environmental flows on landholders, urban infrastructure, tourism and local businesses. The real concern is that the current Constraints Management Strategy is shaping up to make the same mistakes. In November 2014, MDBA published a Paper titled Murray Darling Basin water reforms: framework for evaluating progress This MDBA Paper indicates that the Basin Plan aims to achieve a healthy working Basin and identifies desired outcomes under 3 key themes (page 4) as follows:- healthy and resilient rivers, wetlands and floodplains (environmental) productive and resilient industries, and confident communities (social and economic) better decisions made at the right level (governance) In relation to the social and economic theme, page 7 of the Paper identifies eight (8) sample evaluation questions to be addressed over time, viz:- 1. What have been the social and economic benefits and costs to water-dependent industries, from the implementation of the Basin Plan? 2. What have been the social and economic benefits and costs to Basin communities, and the nation more broadly, from the implementation of the Basin Plan? 3. Were there any unexpected or unintended social or economic consequences arising from the basin Plan? 4. To what extent have infrastructure investments and buybacks assisted communities and industry to transition to the Sustainable Diversion Limits? 5. Has the Basin Plan provided greater certainty for industries and communities? 6. What are the major factors that have enabled or constrained the capacity of industries and communities to respond to the Basin Plan and to achieve intended Basin Plan outcomes? 7. What have the social and economic benefits (including ecosystem service benefits) associated with improved environmental outcomes? 8. How have the different components of the Basin Plan interacted as a package to help water dependent industries and communities to adapt to adapt to reduced water for consumption? To answer the above evaluation questions, Pages 17 and 18 of the Paper has identifies a range of social and economic indicators, the headings being as follows:- 1. Area irrigated and output by crop type 2. Patterns of water trading 3. Water used by irrigated agriculture 4. Measures of productivity 5. Rate of return per unit of water used 6. Value of production of floodplain agriculture 7. Benefits from improved environmental outcomes 8. Certainty and confidence 9. Indigenous values

5 -5- RAMROC s impression here is that these indicators are principally directed towards the anticipated benefits in terms of water and production efficiencies, but they pay far less attention to the social and economic impacts on towns, communities, infrastructure, tourism and other factors. The MDBA website recently published a background information report titled Understanding the effects of water reform on Basin communities and industries. This indicates that MDBA will further develop its evaluation processes as referred to above and will apply them specifically to 10 selected regions throughout the Basin, including the Murray and Murrumbidgee regions, as well as five nominated sectors for industry analyses, these being cotton, dairy, viticulture, rice, horticulture and vegetables. ii. its costs, especially those related to further implementation RAMROC has been unable to determine the overall monetary costs to date of the environmental water entitlements buyback program, nor the costs of on-farm and off-farm water saving infrastructure programs, nor the annual operating costs of the Murray Darling Basin Authority itself. Initially, in the 2007 announcement by former Prime Minister John Howard and carried forward by the Rudd and Gillard Labor Governments, the estimated total cost of the program was determined as being in the order of $13 billion. This estimate may have been increased since that time as a result of costs incurred to date and as committed for full implementation. It is suggested that the Senate Select Committee should request the Commonwealth Department of Environment to provide detailed information on total costs of all expenditures to date, as well as estimates of further costs through to full implementation of the Basin Plan s environmental water target of 2,750 GL, with separate estimates of the cost of implementing the current works and measures envisaged under the Constraints Management Strategy. iii. its direct and indirect effects on agricultural industries, local businesses and community wellbeing There appears to be no integrated economic study carried out by the Commonwealth Government and/or MDBA on the value of lost agricultural production as a result of reduced water availability, let alone an analysis of the flow-on effects on the associated processing and transport industries and local businesses. As mentioned above, the task of attributing those cost impacts to the Murray Darling Basin Plan will be a most difficult one to assess, because of the other factors that have been identified above (including drought, commodity prices, exchange rates, water allocations, loss or redgum timber industry etc). iv. any evidence of environmental changes to date These are matters best posed to MDBA, the CEWH and State Government Environmental agencies responsible for delivering environmental water and monitoring the environmental outcomes over specific periods of time. As with the difficulties of measuring the economic and social impacts of the Murray Darling Basin Plan, it will be equally difficult to attribute environmental improvements directly to the additional availability of environmental water. For example, following the break of the millennium drought and the flooding conditions experienced in 2010, 2011 and 2012, the environment bounced back tremendously. Annual rainfall totals also impact on the success of environmental outcomes, which should in future be measured in terms of cost benefit

6 -6- analysis. Currently, the benefits to water quality and environmental assets are measured only in qualitative terms, with no attention given to a monetary value assessment process. Term of Reference b. the effectiveness and appropriateness of the plan s Constraints Management Strategy i. the progress of identifying constraints and options to mitigate the identified risks MDBA was commissioned in 2013 by the State Water Ministers to prepare a Constraints Management Strategy, the purpose being to identify and describe the physical, operational and management constraints that are affecting environmental water delivery. The draft CMS was produced on 9 th October 2013 and stakeholders and communities were only given a very limited time of 3 weeks to provide input before the MDBA Feedback Report and the Final Report were both released in November At the time, RAMROC was very critical at the lack of engagement processes by MDBA. In fact, RAMROC was initially left out of the community engagement process by MDBA and only after a strong objection was lodged, MDBA agreed to arrange a short meeting session at Narrandera for the RAMROC Councils. Following that meeting RAMROC wrote to the MDBA Chief Executive and posed a number of specific questions regarding the draft CMS strategy, many of which are still relevant and remain uncertain to this day:- What are the specific impacts of constraints removal on downstream landholders, agricultural production, city and town infrastructure, tourism forests and riverside facilities, businesses etc Are flood maps yet documented and available which clearly delineate the flood levels existing and forecast. As a specific example, what are the flood level effects of increasing Lake Hume discharges from a maximum of 25,000 ML/day to 40,000 ML/day on Albury City, Greater Hume Shire, Corowa Shire, the adjacent Local Government areas on the Victorian side of the Murray, as well as other downstream landowners Are the constraints removal proposals really essential to physically deliver the additional 2,750 environmental water flows identified in the Basin Plan, or is the CMS principally tied to the delivery of the additional 450 GL announced by the former Federal Government. Or is the CMS in effect a strategy that will facilitate improved environmental water delivery in the short term, but then in the longer term will provide a delivery capacity and mechanism that will encourage an environmental campaign seeking additional diversions of water away from productive purposes to increased environmental entitlements and allocations Will the additional flows that are proposed to be achieved by removal of constraints reduce the amount of water resources held in storages, that would otherwise be available for urban and agricultural production purposes Will MDBA guarantee to our region that increased environmental flows achieved by constraints removal will be implemented in ways that ensure that they will not prejudice the availability of productive water used for food and fibre production, industry and urban users, or for regional and local businesses generally. In particular, this is critical for system related tourism and ecotourism businesses that create employment and are essential for the social and economic fabric and sustainability of the region s communities Are the wetlands and environmental assets, which are proposed to be watered more regularly by over-bank flooding, of such critical importance so as to justify the expense and the anticipated adverse impacts of constraints removal,

7 -7- What other alternative works and measures or options are being investigated by MDBA to more effectively and efficiently deliver environmental flows to the identified environmental assets, rather than simply resort to more regular over-bank flooding Will MDBA be carrying out social and economic analyses of the impacts of constraints removal, and will there be comprehensive cost-benefit studies undertaken of the specific impacts of increased environmental flow regimes What is the current status of the Basin Plan Environmental Watering Plans and the States Water Sharing Plans. How and to what extent will the proposed constraints removal strategies impact on those Plans What is the status of trading of water entitlements held by the Commonwealth Water Holder. In particular, when will the non required CEWH allocations be marketed to facilitate agricultural production, in order to offset the food and fibre production impacts of the Basin Plan. For example, the current water market prices are being distorted by the EWH holding some 1200 GL outside of the water market What proposals are being contemplated and/or investigated by MDBA in the CMS, or elsewhere in Government, in order to improve the infrastructure and management of the South Australian barrages, which must surely constitute the largest constraint to the overall efficiency of the Murray Darling Basin system Subsequently, the CMS Feasibility and Cost Estimates Report was released by MDBA in December 2014 and more recently MDBA commissioned a number of external Consultants to undertake further feasibility and cost studies relating to urban infrastructure, downstream flooding and third party impacts on councils, rural landholders and local businesses. This work is in progress and at the Murray Darling Association Conference in Barooga on 9 th September 2015, the RAMROC Executive met with the MDBA Chair and Chief Executive to seek information as to the current status and to request that there be an opportunity for community and stakeholder feedback to the DRAFT Consultants Reports prior to their finalisation. ii. environmental water flows and river channel capacity RAMROC is of the belief that the additional 2,750 GL of Basin Plan environmental water flows now diverted away from productive purposes to the environment are able to be delivered within the existing river channel capacity. This understanding has been confirmed in discussions with MDBA and State Water Agencies from time to time. However, there still remains some uncertainty as to the ability of effectively delivering the environmental flow targets within the existing channel capacity. This fundamental issue must be resolved beyond doubt without any further procrastination, because it goes to the very heart as to whether there is a need at all for this Constraints Management Strategy (CMS). If in fact the removal of physical constraints or changes in operational rules is necessary to deliver the environmental flows (at either the 2,750 or 3,200 GL targets), it follows that the increased releases of water and higher river flows are purposely designed to implement a practice of regular over-bank flooding to off-river environmental assets, which in turn will surely be the cause of unwanted third party impacts. In fact, over-bank flooding levels have been the basis of MDBA discussions with landholders and councils during the CMS processes, particularly in relation to how those third party impacts can be mitigated, or to what extent affected parties would need to be compensated.

8 -8- Another area of real concern is the question of unexpected high rainfall events and consequent natural flooding coming over the top of high environmental water releases. RAMROC suggests that rather than deliberately implementing over-bank flooding by way of constraints removal, that MDBA and CEWH must focus on alternate strategies for the delivery of environmental water to identified off-river assets, for example by pipeline directly into those assets. This would more effectively and efficiently deliver the environmental water needs, but at the same time would avoid the problems of unnecessarily flooding prime agricultural land, as well as circumventing the associated issues of acquiring easements and / or the capital costs of access and other infrastructure requirements. Term of Reference c. the management of the Coorong, Lower Lakes and Murray Mouth, including the environmental impact of the locks, weirs and barrages of the Murray River RAMROC and its Member Councils have been very concerned that this critical issue has been off the table by Governments and MDBA during development of the Basin Plan. The cost of water evaporation in the Lower Lakes (generally in the order of 1,000 GL per year) is a multi billion dollar problem that simply must be addressed as an essential component of overall best management strategies for the Basin s water resources. For some years, these concerns have been raised in many quarters and various improvement proposals have been brought forward that appear to have the potential to both improve the environment and reduce evaporation levels, as well as achieving very significant water savings that could be successfully applied for food and fibre production purposes. These water reform suggestions have been canvassed by people with significant expertise, strong practical knowledge and industry credibility. For example, the DVD documentary Muddied Waters A Clear Solution together with scientific reports published by Goolwa based Marine and Aquatic Ecology Investigative Journalist Ken Jury and other experienced people certainly warrant expert independent analysis and advice to Governments. Ken Jury recently has a further Discussion Paper The Murray Darling Basin and the Future and has updated his 2012 Report A Better way for the Murray Darling Basin, which he has formally submitted to MDBA and which is the subject of a submission to this Senate Select Committee. It is suggested that the Commonwealth Government commission an independent and external study (outside of MDBA) into the Coorong, Lower Lakes and Murray Mouth infrastructure, efficiency and management options. Conclusion AMROC appreciates the opportunity to make this submission and would be pleased to discuss the issues raised in more detail with the Select Committee at the proposed Griffith Hearing on Tuesday 27 th October Cr Terry Hogan AM CHAIRMAN Ray Stubbs Executive Officer