Minister for Sustainability, Environment, Water, Population and Communities
Presentation to the Murray Darling Association Forum
18 February 2011
COMPERE: Minister Tony Burke, Minister for Sustainability, Environment, Water, Population and Communities and the Federal Member for Watson. Tony was appointed the Minister for Agriculture and Fisheries back in 2007 and then Minister for Sustainable Population in 2010. As Minister for Agriculture, Fisheries and Forestry he said he would not simply take advice from the Department, being Fisheries and Forestry, and peak industry groups, but also through meetings with people who work the land and own the land. So I think that augers well. So with that I'd like to welcome our Minister for Water, Tony Burke.
TONY BURKE: Thank you very much Ken. To the Mayor, Allan Smith, and my parliamentary colleagues, Tony Windsor, Mark Coulton, and while not a federal parliamentary colleague, in terms of the amount of correspondence I get, Dawn Fardell. She's always writing to me representing the interests of this area. Distinguished guests.
We've got an extraordinary amount of work to do against the backdrop where people felt quite deeply disillusioned as to the process that was ahead of them. We saw that at the meetings towards the end of last year.
From the introduction you were given a little bit of an indication as to my style. My style has always been very consultative, but my style is also one where when there is reform to be engaged in, I do intend to deliver it. I will deliver it in a consultative way, in a way that works for communities, in a way that is sensible, in a way that's methodical and in a way that people know that their voice has been part of the process. But I don't want to pretend that that also means I'm open to being yet another minister who decides the easiest decision is just to put the reform off.
If there's one thing I want to deliver for communities it's certainty, and there was a whole lot of uncertainty that played to meetings that were held around the Basin at the end of last year, and I want them to get to around this time next year for communities to know that their rivers have a future, that the community has a future, and the food production has a strong future too. I want them to know that. I want their bank managers to know that. I want people when they're planning the future of their towns and cities to know that as well.
There are a few things in delivering that certainty that can be ruled out straight away. The first (and these are all things you've heard me say before), that document that came out at the end of last year, the Guide, that document is not the policy of the Australian Government. It was put out by an independent authority. It was put out with them having prepared it entirely themselves. I was briefed on what was in it two days before they released it. It was their document, not mine, and there will end up being a document that I do have to own. There will end up being a document that I have to sign off on, that then needs to survive the parliament. The Guide was not that document.
Second thing that I want to clear up straight away - the Federal Government does not engage in compulsory acquisition of water. We haven't done it. We don't do it. We don't plan on doing it. There are a whole lot of circumstances where people choose to put their water on the market. Sometimes people put their water on the market where they are in financial trouble and its part of selling and getting out of irrigation altogether. In about two-thirds of the occasions where the government buys water on the market it's from people who are only selling part of their allocation. In large part because either their farming practices or through changed methods or improved infrastructure they actually have part of their allocation that they no longer need to run their business so they want to put it on the water market. The government is one of the many buyers on that market. When the government's not buying there is still a water market there. When we are buying we buy around half of what's available, made available directly to us and two-thirds of what we buy is people only selling part of their allocation. So I want to clear some of those issues up right from the word go.
In terms of consultative style I'll flag as well there are some things I won't tolerate. I've already said I have no intention of tolerating further delay. It is the easiest ‘out’ for a politician. You get cheered for it and then two years later, or twelve months later, or whatever the delay timeframe is, people land with the exact same problem and in the interim they've been left the same uncertainty. It's not my style to dodge a difficult issue. It is my style to make sure people are involved in working through it. One of the things I kicked off when I first got this job, which I've now held for about six months, was to establish a roundtable of the major irrigation interests throughout the Basin. There are a number of members of that roundtable who are here this morning.
Another thing that the Government did was ask the Windsor Committee of the Parliament to conduct an independent inquiry into the social and economic impacts of this reform so we could work out where are the areas where through better use of water efficiency programs we can actually help ameliorate the transition of communities, and also look at where there might be other ways through programs available in Simon Crean's portfolio, that we might be able to provide ways of assistance for communities in diversifying their economies. And the Windsor Committee brought down some earlier requests to me which I received, I think it was last week, which matched some of the issues which have been put to me in the Irrigation Roundtable and in the meetings that I've been having throughout communities.
Another thing that I'm not interested in over the next twelve months is the game of playing lawyers at twenty paces. Someone's got their lawyers. Someone else has got their lawyer. Let's have a legal argument rather than get on with reform. We've got legislation that passed the parliament with the support of both sides of the parliament. All the people that are now calling for the Act to be substantially revised are the people who helped to write it or people who at the very least voted for it. It's a political game which is aimed at further delays and again I'm not interested in playing it. Interestingly, the one person who did vote against it at the time was actually Tony Windsor himself and I think he does see, in the comments I've seen publicly, that the determination of the government is to get the balance right, is to have a sensible reform and is to provide certainty for communities. The legal games of lawyers at twenty paces deliver a whole lot of sound bites for the radio, can deliver some great media coverage, and at the end of it leave communities with no more certainty than they have right now. I'm not interested in that. Not interested one bit.
We will have certainty for communities in a Plan around this time next year, and the issue between now and then is simple- how do we get it right? There's four different criticisms coming to us very strongly from both the Irrigators Roundtable and from the correspondence I've received from the Windsor Inquiry. Those four issues- the first is the way in which the government participates in buyback has been very much we enter the market in a big hit with hundreds of millions of dollars all at once. That puts people in a situation where they don't know where to pitch their price. We end up buying about half of what's offered to us. You've got an immediate, major transition that then happens throughout communities. People who wanted to sell but didn't pitch at the right price miss out, they don't know when we'll be back in the market and you lack a whole lot of market certainty by buying in that way.
We start to fix that issue tomorrow. Tomorrow we will start to change the way in which we participate through the direct tendering process in buybacks.
The last tender that I had announced in the Lower Murray System, so not up here but in the Southern Connected System, the last round of tenders was for $200 million. The round that kicks off tomorrow, with ads in the papers tomorrow, is a round of $40 million. The difference though isn't just in being a smaller amount of money; my intention now is that we go on rolling tenders. That each month we are in the market in a modest way rather than coming in boots and all and then disappearing from the market and having whatever market distortionary impacts that might have. We'll then, over time, start to do that in each catchment. They'll be different amounts of money, but the intention is about more modest tenders, but tenders that run on a rolling basis. That way we are able to be in the market at times when people might want to sell and if people have tried to sell but pitched at the wrong price and they want to have a go, they know we're still there the following month. I think that's a much more sensible and measured way for us to be participating in the water market.
The second issue - and the second and third issues are connected - it's been a key theme of the Irrigation Roundtable and it's an issue that's was put very heavily in the written correspondence that came to me from the Windsor Inquiry. And it goes to what's referred to as the Swiss Cheese Effect and is linked then to some taxation issues. Swiss Cheese can be overstated. This is the concept of when you simply buy water through a tender process you don't create opportunities for irrigation authorities to be prioritising the purchase in the outer channels and then closing those channels down and in doing so making conveyance water available and actually saving them in a more strategic way. There are some limitations to this argument, the first of course is that there's a water market whether the Commonwealth is there or not, so people who always make decisions within the water market to sell in different way, with one of the ways being the outer channels and they'll be business decisions that people take as they make a call on the price of water and what they want to do on their property in any particular year.
The other limitation of the arguments about the Swiss Cheese Effect goes to that impact of there being only partial sales in the majority of instances and therefore we’re not creating a stranded assets, we’re simply creating a situation where assets that used to require a large amount of water to be able to cope with productive business are now getting by through efficiency measures on a smaller amount of water.
There are some programs that have been designed by the Commonwealth. The first time I was briefed on one of these was actually when I was out at Trangie and I was briefed by Trangie Nevertire on a program they wanted to get up and running under the Private Irrigators Infrastructure Operators Program. Now, the difficulty here is simple. If it's going to be a strategic water recovery, if it's going to prioritise the outer channels it can't be led by the Commonwealth, it needs to be lead by the irrigation authority. The reason for that is simple, whenever you prioritise you end up purchasing at a premium. If the Commonwealth does it, it's completely open for anyone on the outer channels to say 'okay, we'll buy the water from you at a premium'. And then the moment we're gone, buyback at a cheap price. No channels get closed. It's a very simple way for people to be purchasing and if the Commonwealth's silly enough to engage in the market that way then you can understand why people are taking advantage of that opportunity. So it needs to be led. For it to happen in a strategic way, it needs to be led by the irrigations authorities.
The government put together programs designed to allow this happen, but there has been a taxation problem which has caused some of them to not get off the ground at all so far, or for some to be kicking off months and months later than they should have because they've had to wait one at a time for private taxation rulings. The problem is this- the taxation liability arrives immediately in the year the money's received. But the tax deduction, we're talking about a farm business or an irrigation authority- only gets claimed over the subsequent three years. That has prevented a whole lot of these schemes from actually being able to make the numbers add up.
It's been raised in the written correspondence from the Windsor Inquiry and raised at the discussions at the Irrigation Roundtable with myself and Minister Crean and Minister Ludwig that this needs to be fixed. This morning I received a call from the Prime Minister's Office. The Prime Minister has now signed off on approval for legislation to fix the anomaly, so that the tax deduction will be able to be claimed in the first year as well. This means, across the board now in each catchment, when the catchment authority wants to work through the Private Irrigators Infrastructure Operators Programs to be able to engage in strategic water recovery, now they can.
The legislation will now be drafted. Once drafted the legislation will take effect, backdated to April 2010. This should provide the exact sort of certainty that the consultation has been begging us to provide. I'm offering to the Opposition a briefing on the principles of this legislation as immediately as they want it. And I would urge the Federal Opposition while for all the arguments about wanting to oppose us at every turn, and all the normal political games that get played and can be part of the process. On this one, please provide bi-partisan support as soon as you can. I respect that you want to be briefed on it first, but the sooner bi-partisan support on this can be guaranteed, the sooner irrigators can be given certainty that the legislation once drafted and complete will be passed and they know exactly where they stand in taxation terms.
In being able to do that, that also opens up what I can also announce today, which is Stage Two of the Private Irrigation Infrastructure Operators Program will now be opened again. Round two will be open, applications will now be able to be received and we've put aside $373 million for that next round here in New South Wales to be able to make sure that strategic buy-back can now occur, led by local irrigation authorities. When that happens, it doesn't change the principles of water when we purchase only from willing sellers. But it does allow the prioritisation to occur in the outer channels and it does mean that as well as the allocation being able to be returned to the rivers, some of the conveyance water is able to be reclaimed in a process as well.
I know this is an issue that has been around for many years. I know there has even been frustrations since it was first raised in the irrigation round-table that it had not yet been fixed. I know there's been complaints that have been put very loudly and very clearly during the inquiry. As of today, you can regard them as resolved.
The next issue that has come very loudly from the irrigation round-table and from the Windsor Inquiry is the concept of environmental works and measures. I do have great sympathy for the frustration that many people feel. Whether they be farming generally or specifically in irrigation, for the lack of credit that they get for the good environmental work they have already engaged in. It is true that there has been an extraordinary amount of work that has been going on for many years now; of our irrigation operators trying to become more efficient and trying to make sure that they have been doing their bit too, to be keeping the rivers in better health.
It's also the case that an understandable icon has been put back and has said, "surely we can also find ways of managing our environmental assets more efficiently too". I think that argument is right. Our environment assets do need to be looked after, but if we can find a more efficient way of preserving our environmental assets without requiring the same volumes of water, that gives everybody a much softer landing when we got to the point of the final Murray-Darling Basin Plan.
For example, if you have an environmental assets where, we're presuming at the moment that the only way to get water to it is through an over-bank flow, is it not smart to at least investigate engineering options where you might be able to, either through engineering means or through pumps, be able to get to the water to the environmental asset without relying on over-bank flows. If you do that, you get the same environmental outcome but on a much more efficient use of the water. There are some environmental assets where they've started to presume, over recent decades, that they, they would demand constant inundation. Whereas historically, environmentally, they didn't receive constant inundation but received it for a few months a year and sometimes, for a long period, not much at all.
Being able to manage those environmental assets in a smart way that increases the efficiency and puts similar demands on the environment that we're putting onto irrigators, of leaving no stone unturned to find further efficiencies, is smart policy. But to be able to do it, we need to involve directly those people who are responsible for the management of these environmental assets. They are often Catchment Management Authorities and often with direct relationships to state governments. There's a formal ministerial council process that exists within the Basin states for Basin water ministers. It can be incredibly bureaucratic. I want the water ministers to be able to get together and to be able to have a 'no non-sense' conversation about the issues where we believe there's low-hanging fruit where we can make smart reforms, in addition to what's happening with the Murray-Darling Basin Plan itself, where there's additional work we can do that delivers a better outcome for communities.
To that end, my office has been contacting water ministers this morning. In April I'm asking the Basin state water ministers to come together in a ministerial forum where we'll sit together in an agenda that is not driven by bureaucrats but driven by ourselves. I'm putting the first issue on the agenda for that meeting. I want us to have a conversation where we are determining what are the environmental works and measure that we can go ahead with which will provide a more efficient use of the environmental water. Everything we can do there creates a situation that reduces the pressure across the Basin on what is otherwise required with volume. That's the first item I'm putting on the agenda. The agenda will be cooperative one. I'll leave it to state ministers to put forward their ideas as to what else they want us to be talking about. This is the year for to be making decisions that have been put off for decades.
Some work has been done and needs to be acknowledged. Every single program, like 'Water for Rivers', a whole lot of work that's been done catchment by catchment. A whole lot of good work that's been done by environmentalists, a whole lot of good work that's been done by irrigators, a whole lot of work that's been done in diversifying the economy in communities; all of that needs to be acknowledged. But over-arching all of that has been the uncertainty of 'what will be plan be when we finally, for the first time, treat the Basin as a single system rather than a series of systems that somehow are meant to take account of state boundaries?'
We have a time-table to do that. I intend to keep it to that timetable. I will do so in a completely consultative way and all good ideas, all constructive ideas, no matter where they come from within the Basin, no matter where they come from within politics, again will be taken into account. But I'm not going to undermine the whole process by having a fresh legal debate and letting lawyers take over an argument that needs to be determined by communities.
Communities know that their future is at its best with healthy rivers, strong communities and strong and sustainable food production. We have an Act that has as one of its objects the capacity to deliver all three. This time next year I want there to be a plan which delivers all three. I believe we have the right person as the chair of the Murray-Darling Basin authority, who has a record of delivering smart solutions that work for your environmental, your community and your economic demands.
I want to make sure that we don't look at a river system that is full of water and pretend that we're not in Australia; pretend that somehow because we've got lots of rain now, somehow we always will. It's when there's water in the system that you've got the breathing space to do the preparations because the final objective of all of this is simple. The final objective of all of this is we know the drought has broken and there will be another drought.
I was Agriculture Minister during that last drought, when the people had been in it year after year after year. I haven't had my memory erased now I've got a different portfolio. I know exactly the pain that those people who work the land felt; I know the pain that communities felt; I know the damage that was done to environmental assets during that time. I have one determination: the next drought is not to look like that one.
If we are smart with the reform and we take the opportunity now, then the next drought will not look like the last one within the Murray-Darling Basin. That's a simple objective I intend to deliver and I will not for a minute countenance a situation where we all relax because there's water in the system and then when the next drought hits, wonder why we didn't act sooner. This time next year, I want your community and all the communities to have certainty and a certainty where you can see a strong and sustainable future. That's my job; I want to work with you to deliver it.