Water Amendment (Restoring Our Rivers) Bill 2023

I rise to speak on the Water Amendment (Restoring Our Rivers) Bill 2023. As an irrigation dairy farmer I understand the importance of the irrigation sector, not just to farmers but also to food processors, our food security and affordable food for Australians—quality food. More importantly, I know exactly what happens to communities and food production when water—water which is the lifeblood of the region—is removed.

At the heart of the Murray-Darling Basin Plan has been the need to balance the needs of the various water users, including the environment, in the basin, as well as the water quality, and to balance the critical social and economic factors. It’s this very balance that the government is directly legislating against. The social and economic testing must be retained, and the 1,500-gigalitre cap on water buybacks should not be removed. If the Labor government progresses these amendments regional communities will be devastated, with direct impacts on the communities, on local workers and on jobs, as well as on small and larger businesses and food processors. We will also see people leaving smaller communities, and the whole community will be affected.

What really concerns me is that these smaller communities, the farmers, the processors and the local businesses will simply become collateral damage of this Labor government decision, which is clearly described by the government, in the explanatory memorandum, as ‘removing necessary impediments’. As someone who has farmed and lived in a small community dependent on irrigation, I’m appalled that the government would describe the impacts and cost to communities this way. It also demonstrates a complete ignorance of the importance of water and the potential increased costs of living and shortages of food for Australian consumers, as we see in WA with the superficial approach to shutting down live sheep exports. This process is the same. It’s simply the Labor government’s contemptuous tick-and-flick approach to achieve what they have already decided to do, along the way just paying lip-service to the affected local communities, businesses and local people. If the government is in any doubt about the impacts of water buybacks, the minister needs to have a look at the devastating effects on the Owens Valley in California for an example of what happens when governments destroy irrigated agriculture
in a region.

A rough estimate puts the potential losses from the proposed 450-gigalitre buybacks at around $2 billion per annum as an initial cost. That’s an ongoing annual cost, as food production is severely reduced or lost entirely. And why? Because an enormous amount of water will be taken away from those communities. Four hundred and fifty gigalitres is around the equivalent of the water in Sydney Harbour, which is around 500 gigs. It’s an enormous amount of water to take away from the community. However, there will be an additional ongoing cost at the check-out for consumers of fruit, vegetables, milk and dairy products, and beef.

The Water Act of 2007, as originally legislated, aimed to balance social, economic and environmental factors for water management in the Murray-Darling Basin, and to act in the national interest of Australia. There has been no feasibility assessment of the consequences of that, or the Basin Plan impacts of removing the impediments to trade or enacting the constraints management strategy to achieve higher Basin Plan flow volume targets for the Murray River measured at the Coorong, Lower Lakes and Murray Mouth in South Australia. There’s been concentration on physical water recovery for the environment in the southern basin, primarily in the Murray system, the Goulburn River and the Lower Darling.

Social and economic impacts of buybacks are not just confined to a reduction in irrigation entitlements used for regional agriculture. Buybacks impact pricing and supply of water entitlements, reducing supply and forcing prices higher by creating shortages and stranding critical irrigation assets, and encouraging third-party profiteering at the expense of the productive use of water. The Murray-Darling Basin Authority regulatory impact statement severely underestimated the social and economic consequence of the Basin Plan. Buybacks produce economic inequities in geographical areas and, as I said, aggravate the social and economic impacts for affected regions. The advice to Minister Plibersek on the Basin Plan’s implementation briefly acknowledges these impacts when it stated: Through water recovery under Bridging the Gap, 98% of the surface water target has been transferred to entitlements with the Commonwealth Environmental Water Holder (CEWH). We acknowledge that this water recovery has predominantly occurred in irrigation dependent communities, and these communities have been impacted by water reform.

Concerns about the Commonwealth buyback include the lack of a strategic approach, causing what we term the ‘Swiss cheese’ effect; that sellers are not necessarily willing sellers but under pressure due to drought or financial situations; that there will potentially be insufficient sellers, creating shortages and forcing up prices; and the tender process, which historically has been too slow and not transparent. For those who don’t understand irrigated agriculture, perhaps the Swiss cheese effect can be a challenge to understand. Ill-considered buybacks create a Swiss cheese effect in irrigation districts where the Commonwealth purchases water entitlements, when buybacks once again focus on the southern Murray-Darling Basin. The term refers to what happens when some entitlement holders along an irrigation channel sell their water entitlements, cease irrigating and dry off their land. That creates ‘holes’ in an irrigation area, increasing losses, reducing the efficiency of delivering water down that channel, stranding assets and increasing the maintenance costs and delivery fees for the entitlement holders who remain.

As irrigators know, irrigation pipes and channels operate on a water ordering system. To supply an irrigator at the end of a pipe or standard channel, the pipe or channel must be filled so the water reaches the end of the pipe or channel. The total water entitlements in any irrigation scheme consists of irrigator owned water entitlements and those required to deliver the water to the irrigators. Most, but not all, irrigation schemes separately hold water delivery entitlements to deliver this allocation to their irrigators. Harvey Water, in my part of the world, was the first irrigation scheme in Australia in 1996 to hold separate delivery entitlements independent of irrigator owned water entitlements. Water efficiency is focused on reducing the amount of delivery entitlements required to deliver water. If a number of irrigators, partway down the channel, sell their water entitlements and dry off their land, the losses to supply the irrigator at the very end of the channel may well result in the need to close the end of the channel as it’s no longer sustainable. Even if the irrigation scheme has automated channel control that allows the water to be filled and emptied through a series of gates, the water losses and cost of supplying an irrigator at the end of the channel, if their neighbours dry off their land, may become prohibitive.

There were examples of this given to the Senate standing committee in 2014. The Murray Shire gave an example of the effect in their area:

… within Murray Shire, there is a scheme in Mathoura which formerly had 14 members and now has seven. This reduction in members is already having severe economic impacts on the remaining members of the scheme.

The whole issue is affecting, and will continue to affect, business confidence, which will in turn affect property values.

Coleambally Irrigation referred to the Swiss cheese effect as hindering planning efforts within irrigation districts. It didn’t allow them to plan. It didn’t allow the board to plan. They did not know where the next dry farm was going to come from. They couldn’t plan ahead for bridges or other infrastructure. Irrigation Australia also noted some of the social effects. A fourth-generation farmer who is told that they are at the end of a spur channel that is being abandoned is going to be really upset about that decision because all of their friends and family are in, and their whole lifestyle revolves around, that little community district. They’re being told to pick up and move to somewhere else completely out of the way from where they live. It’s important that social costs and social issues get included in those decisions.

A separate effect is that the Commonwealth and states have spent billions of dollars upgrading irrigation systems and schemes in the Murray-Darling Basin. If the buyback is not strategically managed—and there is no indication that it will be—millions of dollars spent over the last 15 years will have been wasted as newly upgraded channels and pipes are forced to close due to the latest proposed round of ill-considered buybacks. Make no mistake: the government will remove water from between 50,000 and 70,000 hectares of vital food-producing irrigated farming land.

I’m particularly concerned about the dairy industry in the basin, which underpins Australia’s food security. Dairy farmers have been—and are—keen innovators in adapting to climate change. They’ve invested in irrigation technologies. They’ve improved their infrastructure and water use efficiency. They supply, in that area, their milk to 42 milk processing plants. The very viability of those local processing plants is critical to dairy farmers and consumers. Milk is a perishable product. It has to be collected and manufactured seven days a week as soon as you can after the cows are milked. Along with the previous water buybacks in the Murray-Darling Basin, we’ve seen milk volumes in Australia reduce from 11 billion litres a year to eight billion litres a year. These reduced volumes threaten the viability of milk processors and the industry. Both dairy farming businesses and processors are the backbone of their local economies and communities, something that’s frequently underestimated.

There are other options available to the government besides water buybacks, through infrastructure, water use efficiencies and water delivery system efficiencies. There are plenty of examples in the millions of investments already committed to for the Murray-Darling Basin infrastructure to date. Water for the environment needs to be managed so it doesn’t damage food supply or further damage the farmers and their communities. Since 2008, Murray-Darling Basin farming communities have lived with the stress, the heartbreak and the uncertainties of the ever changing demands of government on their livelihoods and the viability of their business and townships. The river system is the lifeblood of these communities, and that very lifeblood feeds Australia and many people in the international community. As my own irrigation co-op, Harvey Water, says, ‘Where water flows, food grows.’

But I see that the bill delivers on the water market reform final roadmap, a process initiated by the former coalition government to restore transparency, integrity and confidence in water markets and water management in the basin, a process that finally addresses the need to regulate the water broker intermediaries. Concerns have been raised since the introduction of water trading that there needed to be monitoring and regulation to prevent
potential insider trading and that proper provisions requiring a trust account to be held and monitored needed to be included. Whilst early reports from the ACCC denied that this regulation of intermediaries was necessary, it’s actually a relief that it’s being done after it was first raised.

Concerning, however, are matters subject to regulation and not actually detailed in the bill itself. The
government’s track record of a lack of consultation means that people are rightly nervous about what the
government will do with these regulations. There is a genuine need for more time to meet the requirements of this plan. Murray-Darling Basin communities should not be the ongoing victims of arbitrary deadlines. Meeting planned goals is important, but so is the wellbeing of local communities, the wider Australian public and the people—the farmers themselves. They actually matter. The reintroduction of buybacks from willing sellers is a cause of deep concern. Unmanaged buybacks create the risk, as I said, of stranded irrigation assets, assets in some cases that may have recently been maintained or built with millions of dollars of Commonwealth and state funding support. It needs to be seriously considered. Most of the use occurs in the three large southern valleys of the Murray, Murrumbidgee and Goulburn-Broken rivers, made possible by the many wonderful large dams that facilitate the regulated releases of water downstream and divert them into those irrigation canal systems. So I am very concerned about what the government is proposing here. Anyone who doesn’t understand the value of irrigated agriculture, where the food is produced in Australia and the impacts on the people who actually matter
is of great concern to me.