Minister for Sustainability, Environment, Water, Population and Communities
Address to the Sydney Institute
E&OE Speech transcript
Sydney Institute, Sydney Australia
20 July 2011
Tony Burke: There are three iconic environmental issues currently before us: climate change, the Murray Darling Basin, and protection of National Parks.
They have a lot in common. Not long ago all three brought bipartisan support.
All three were the product of shared values. All three are now in the thick of partisan politics. How much has changed in two years?
In 2007 John Howard seemed to tell the Parliament he believed the jury was still out on the connection between human activity and climate change. He was back in the House of Representatives within hours explaining he had misheard the question and stated he believed the science was clear. He then went to the 2007 election backing the Shergold Report and committing to an emissions trading scheme.
That same year Malcolm Turnbull as Water minister brought forward the Water Act which committed the Australian Government to restoring the balance in the Murray Darling Basin.
And throughout the last century there has often been controversy about the establishment of National Parks but there has been a continuing consensus that once a National Park was established, the level of protection would not be reversed. In short, there would be no backward steps.
In 2011, the Liberal Party under Tony Abbott attends rallies to ridicule science, and opposes pricing carbon. He has committed to rip $600 million out of water recovery on the basis that it has now rained, and the Victorian Government wants to use the Alpine National Park as though it were a farm.
These three iconic issues – climate change, the Murray Darling Basin, and National Parks - are not a bad overview of Australia's environmental needs. They cover the atmosphere, our water, and our land. In each case the approach of the Gillard Labor Government, is to back the science, act to protect these assets for future generations, and use market mechanisms to reach the outcomes.
Some commentators have suggested there is an irony in Labor being the party which is backing the market system while the Liberals rail against it. I think this is wrong. Dead wrong.
For more than thirty years, the major market reforms have all belonged to Labor. Banking deregulation, floating the dollar, and competition policy were not reforms when the treasurer was John Howard, but implemented when the treasurer was Paul Keating.
This approach has reached every area of policy. If I look at my own responsibilities last term as Minister for Agriculture, Fisheries and Forestry the abolition of the AWB monopoly and the reform of drought policy stand out. Both of these were squarely aimed at giving farmers the autonomy to act within the market.
A market approach is good environmental policy for the same reason it is good economic policy: it allows a policy goal to be achieved by the most efficient means. In the examples I want to talk about tonight the policy goals are straightforward: reducing CO2 equivalent emissions, increasing the amount of environmental water, and protecting and preserving our biodiversity.
Some of the most straightforward scientific evidence on the causes of climate change is contained within my own portfolio. In Hobart the Australian Antarctic Division of my department includes a team of extraordinary scientists dedicated to a range of disciplines.
One section collects and studies ice cores. The principles of these shafts of ice are simple.
They are collected from areas which receive regular compounding snowfall each year. As the snow flakes fall they seal bubbles of air which then remain unchanged until one day the ice melts.
The deeper you go to collect the ice core the older it is. The air bubbles tell the story of the atmosphere, the qualities of the ice itself are a guide to temperatures. This simple combination allows scientists to track over the decades and centuries gone, how CO2 levels changed and how temperatures changed with them.
It is true that over time these levels have always varied to some degree. But there is one point where there is a spike in emissions and temperature like nothing before, and from which we never return.
The spike precisely coincides with the growth in the use of fossil fuels during the industrial revolution.
This is only one of the many indicators which has been used in the development of the science.
It is the same science which has caused action around the world to reduce CO2 equivalent emissions.
It is why around 85 countries have renewable energy targets either legislated or planned. It is why 32 countries have national carbon trading schemes and 10 have introduced a carbon tax. The majority of developed and developing countries have energy efficiency initiatives which are reducing carbon pollution.
That's why the Gillard Government is committed to taking action on climate change. We have committed to cutting our carbon pollution by at least 5% by 2020.This is intermittently a bipartisan target.
Where there has been no bipartisanship for more than eighteen months is on the method to achieve this reduction. Our approach is to price carbon and allow the market to drive the most efficient pathway to achieve the reduction in carbon pollution.
The Opposition's approach is for government to directly intervene in ways that either reduce emissions or sequester carbon. Instead of a price driving market behaviour and allowing business to use its own ingenuity to move to a clean energy future, the Opposition approach relies on decisions being taken by Government officials.
The simplicity of the Opposition's interventionist approach makes it easier to turn into slogans. The price doesn't fall to the politician explaining it. The price falls to the taxpayer who ends up footing the bill for bad policy. The $720 a year taxpayer bill imposed by Mr Abbott's approach is not a one off. It becomes a permanent impost which can only go up over time.
When you price carbon, the market finds the lowest cost for that abatement. When you adopt the Direct Action or government intervention model, the cost of abatement multiplies.
Australia's approach prices carbon from 1 July next year and moves to a full emissions trading scheme in 2015.
While most of the public discussion has been about the impacts of around 500 high polluting businesses paying the carbon price, the great strength is what happens when they avoid paying it by changing behaviour. When pollution is no longer free, businesses will innovate, they will invest, they will change to improve their bottom line and in doing so they will reduce their carbon pollution.
The targets will be met, and the market will drive the most efficient pathway.
Murray Darling Basin
There is a tendency in policy debate these days to want to run every issue as though it is a sporting event. Sport demands a score board and the score board which has developed in reform of the Murray Darling Basin is the total volume for the environment across the basin.
But the total volume doesn't tell the story of the individual catchment, nor does it provide definitive information about end of system flow.
This is in part because the hydrology of the southern connected Murrumbidgee and Murray systems and the northern Darling system, and are entirely different. The southern connected system is one of deeper rivers. If I buy a megalitre at the start of this system in Victoria or New South Wales, then most of it will reach the mouth of the Murray in South Australia. But the northern system spills out into wide open lakes and marshes where the losses to evaporation and seepage are massive. If I buy a megalitre of environmental water in the Darling in Queensland then very little of it, and in many years none of it will ever reach the mouth.
It's the backyard garden you want to water when the tap is a distance away. For the southern system you have a soaker hose connected and while some of the water leaks most reaches the garden. For the northern system there's no hose. You turn on the tap and the water flows across the lawn and eventually, if you are lucky, some of it reaches the garden.
The environmental test of the Murray Darling Basin plan therefore, isn't simply the total volume preserved for environmental flows, it's the environmental outcome achieved. There are minimum environmental standards which need to be achieved in the interests of the total health of the system.
These minimum standards are as essential for the environment as they are for the communities which rely on healthy rivers.
The mouth of the Murray should be open nine years out of ten. Icon sites such as Narran Lakes, Macquarie Marshes, Barmah-Millewa Forest, and Hattah Lakes need to be restored to long-term health. Good health doesn't simply mean a mass of water, it involves trying to use environmental water to more closely resemble natural flows.
The use of weirs and levees means that the system which once had undulating flows, now virtually flat-lines until flood years. Smart and efficient use of environmental water including through environmental works and measures needs to allow these icon sites to go through a more normal wet and dry cycle.
The completely dry years after years of drought and the flood years won't look all that different if you only look at the water. But if environmental water is used smartly during the in between years, then these magnificent sites will approach the extremes of drought and flood in much better health with real resilience. Building this resilience in the in between years is perhaps the greatest strength of water reform.
Achieving these environmental outcomes needs to be underpinned by the best available science, because we don't have a lot of water to get the balance right. Less water will flow through the Murray in one year, than will flow through the Amazon in a day. If we extract too much for consumption the health of the system is wrecked, and communities understandably want to ensure the impact on social and economic outcomes is properly taken into account.
But if we get it right the outcomes are extraordinary. For the environment we restore the health of waterbirds, fish, the mighty river red gums and coolabahs, the water purifying reeds and marshes, the migratory species like the White-faced Heron and the Yellow billed Spoonbill, the curiously titled "Latham's Snipe", or the turtles of the lower lakes which were suffering from shell rot while salinity levels went through the roof.
It would be a mistake to ignore the social and economic benefits of healthy rivers including:
- Groundwater replenishment;
- Increased carbon and nutrient recycling leading to improved soil and water quality;
- Stabilisation of riverbanks through healthy riparian vegetation;
- Improved pollination and pest management through biodiversity; and
- When the mouth of the Murray is open the salt throughout the system is flushed out.
The system approached the last drought with so little resilience we saw too many algal blooms, acid sulphate soils, high salinity and nearly witnessed an acidification crisis in the Lower Lakes.
So those standards provide me with the lens to interrogate any set of numbers. The question then becomes: How do we implement the reform once the plan is in place.
The answer for me is straightforward. We need to use the water market and improve efficiency.
People sometimes suggest there should be direct government intervention that prohibits Australia from growing crops such as rice. This approach is wrong. Our way of securing water for the environment needs to be to purchase water from those who make the market decision to voluntary sell all or part of their entitlement.
I'm not in the business of telling farmers what to do with their land. Our farmers are innovative and understand their markets. If the most profitable use of water in a particular year is to grow rice rather than a different crop then that is the decision for the grower.
What matters for the reform is that we are regularly in the market purchasing water from those who wish to sell. If someone does not want to sell water, then we don't want to buy. There is no forced acquisition. We need to strategically align these purchases with the numbers that are in the Basin Plan and we will be able to start doing this after the Authority releases the Draft.
By 2019 we need to have recovered enough water in each catchment to hold the entitlements contained in the Basin Plan. This commitment to steadily bridge the gap year after year is the reason communities are able to adjust slowly to basin reform. The use of the market is the protection for irrigators to ensure no property rights are infringed. This market approach also ensures the vast majority of water which irrigators choose to keep is directed to the most efficient and commercial use.
Unsurprisingly, this market based approach is the key part of water reform which has been opposed by Tony Abbott's opposition. Earlier this year he pledged to defer $600 million in money for water recovery. He claimed this was possible because it had rained.
The deadline for reaching the targets in the Basin Plan doesn't move beyond 2019. That means deferring the next few years of buyback doesn't change the final deadline. When challenged the Opposition stated it agreed with our approach of only buying from those who chose to put their water on the market – so how do you still meet the 2019 date?
If you simply decide to go on a massive spending spree for water in the last few years you end up in the worst of all worlds. The community adjustment would be abrupt rather than gradual which could create serious challenges in many areas. And wanting to buy large volumes of water in a short period of time can only end one way in a competitive market. The price of water would spike at precisely the time Mr Abbott would be back in the market wanting to buy. This would leave the taxpayer with a bill much larger than the $600 million dollars that had earlier been deferred.
Reaching the requirements of the Basin Plan doesn't only rely on direct rounds of water purchase. There has been a great frustration that infrastructure money has been too slow in getting out the door. I am currently in negotiations with my state colleagues to provide them with an additional option in the expenditure of infrastructure funds. Instead of always embarking on infrastructure projects as a partnership, we are developing an outcomes based approach. This would see the states having much more autonomy over water infrastructure projects in the basin in return for a guaranteed ratio of water to be returned to the Commonwealth Environmental Water Holder.
While these discussions are not yet concluded I am optimistic about the goodwill and constructive approach around the table. I agree with the statements today from the Victorian Minister for Water Peter Walsh, that it is in everyone's interests for these negotiations to have concluded before the Draft Plan is released.
Through these approaches we focus on outcomes. We don't follow a path of direct intervention but instead allow maximum flexibility for all parties, so long as the outcomes of water reform are achieved. We let the market deliver the outcomes we need.
Protecting our natural environment
This is the one where the collapse of political consensus surprises me most. It isn't new to have controversy over whether or not new lands are put into National Parks. That's actually pretty standard.
But an area, once protected, usually has the principle apply that there shall be "no backward steps". New areas for National Parks frequently have existing commercial uses that are phased out or scaled back over time. But once those commercial uses end we don't talk about going back on it.
For all the controversy in the 1990s when Bob Hawke protected Coronation Hill, no one would now suggest that we open new mines in Kakadu National Park. No one would now propose the damming of the Franklin, drilling of the Great Barrier Reef or the clear felling of parts of the Daintree.
So it beggars belief that last summer the Victorian Government sought to reintroduce grazing to the Alpine National Park.
This ran against the grain in so many ways:
- The mountain cattlemen had previously been paid compensation when cattle grazing was discontinued;
- The environment of the Alpine National Park is already under serious distress from invasive species such as deer;
- The so-called scientific study which was used as an attempted justification by the Victorian Government was commenced without conducting any baseline survey of the sites before the cattle arrived; and
- The crass claim that this was the solution to future bushfires ignored the fact that none of the recommendations in the Royal Commission into the Victorian Bushfires called for such an action.
There are new ways the Government is expanding the parts of our continent preserved for biodiversity. As you would expect from this Government we are using new market mechanisms to do this.
Since we came to office we have established the Environmental Stewardship program where private land-holders are paid for continued management of high quality and precious native vegetation and wildlife. In choosing to voluntarily covenant parts of their land for 20 years and enter into 20-year contracts with the Australian Government, many farmers are making decisions that combine conservation with the commercial.
Environmental protection and market driven improvements also intersect in some of the mechanisms available under the Carbon Farming Initiative. Through voluntary offset markets farmers can be paid for a number of actions which sequester carbon in the soil, including when they improve biodiversity and revegetate parts of their land. Once again this method does not work because of direct government intervention and control. It works because we are working with the market to deliver an outcome.
And it follows the consistent theme, it is a market driven reform promoted by the Gillard Labor Government and opposed by Tony Abbott's Opposition.
There are further market driven gains in our approach to the National Reserve System which I hope to announce in coming weeks.
As part of the Clean Energy Future package the Government announced a Biodiversity Fund worth nearly $1 billion. This is to improve biodiversity, not compensate for backward steps taken at a state level.
But all of these policies: Environmental stewardship, Carbon Farming, National Reserve System, Biodiversity Fund, only help if we are genuinely building on solid foundations of areas that have already been designated for environmental protection. It only works if we keep to the principle of "no backward steps".
That's why I was so alarmed by the approach of the Victorian Government last summer. Industrial development, climate change and invasive species put enough pressure on our biodiversity without governments consciously taking backward steps.
Treating a National Park like a farm is a clear backward step. The precise nature of the so-called trial and the failure of the Victorian Government to refer the issue for Federal approval meant I was able to insist the cattle be removed from the park.
But National powers in National Parks are not clear. The international conventions which form the basis of national environmental law do not apply to all National Parks but they do apply to most. This week I am writing to my state colleagues to seek their views on extending National Environmental Law to better protect those areas with high biodiversity and which State Governments have chosen to designate for land based protection such as National Parks as matters of National Environmental Significance under National Environmental Law.
It would only apply where States choose to designate the land as National Park. It would not affect any existing activities. It would only be triggered when there was an attempt to introduce new mining, logging, grazing or significant and inappropriate land clearing. States would still have full control over the boundaries of National Parks.
But where National Parks exist and have high biodiversity, National Parks would be considered of National Environmental Significance and protected under National Law. I can think of no occasion where this would be triggered in recent memory other than the bizarre example we saw last summer. But the principle of no backward steps within our National Parks is worth defending. It underpins the many market driven approaches that the Government is putting in place.
Market driven approaches have choice at their core. They accept the principle of subsidiarity, that decisions are best made at the most local level possible. Market mechanisms allow Government objectives in the National Interest to be made plain and for businesses to help drive the most efficient pathway to reach the destination.
Direct Government intervention is easier to turn into slogans but far less efficient. In carbon policy under direct action only a quarter of the required abatement is delivered by 2020. In water policy under an interventionist model the cost of recovery for the environment can be up to 10 times more expensive.
The outcome of the less efficient model is simple. Either the policy outcome is never achieved, or the taxpayer receives a massive ongoing bill. It's a high price to pay for the sake of a slogan.
The market reforms of the 1980s and 1990s were controversial at the time and by definition more complex to explain than the simplicity of direct government intervention. Yet these days the controversy has gone.
It has gone for a very simple reason. The incontrovertible proof of market mechanisms is lived experience. When people see for themselves the fear campaign was wrong then the fear campaign is gone.
In the interim there is an opportunity for cheap slogans to back in hopeless policy. It is an opportunity the opposition finds strangely appealing.
Well we don't. In dealing with climate change, water reform, and biodiversity we use the best available science as the reference point to design the targets we need to reach. Then we seek to optimise the outcomes for our economy and our communities. And we drive the reform using the same consistent approach which Labor Governments have adopted for nearly thirty years: market reform.