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Chapter 4
Emergency Water (Murray-Darling Basin Rescue) Bill 2008
Introduction
4.1
On 28 August 2008, the Senate, on the motion of Senator Nick Xenophon,
referred the Emergency Water (Murray-Darling Basin Rescue) Bill 2008 (the bill)
to the committee for inquiry and report by 30 September 2008, in conjunction with the inquiry into water management in the Coorong and Lower Lakes.
Provisions of the bill
4.2
The purpose of this bill is to ensure the environmental and economic
sustainability of the Murray-Darling Basin by empowering the minister and the
Murray-Darling Basin Authority to establish an Interim Basin Plan as an
emergency measure, until such time that a Basin Plan is adopted under the Water
Act 2007.[1]
Powers of the minister in relation
to management of Basin water resources
4.3
Part 2 of the bill gives the minister the power to direct the Murray-Darling
Basin Authority to prepare an Interim Basin Plan and to make decisions about
how best to allocate water, and to share, manage and allocate the Basin water
resources as well as manage all processes that may adversely affect them.
In this respect, the Minister will also be responsible for
determining the share of water that is needed to maintain essential system
functions and water quality, the share of the remaining non-flood water to
which a Basin State is entitled and, the share, if any, to be granted to the
environment as a clearly identifiable and inalienable entitlement to a water
allocation in the water resource plan area.[2]
4.4
The bill prohibits persons or agencies of states from limiting or
impeding the transfer or sale and purchase of water access entitlements, water
access rights and water allocations among Basin states. It also proscribes any
state or territory from acting in a manner inconsistent with an Interim Basin
Plan or a determination made under the bill.
4.5
Thirdly, the bill prohibits constitutional corporations from undertaking
activities that impede the flow of water from the Murray-Darling or taking part
in activities that divert or significantly intercept water from the system.
4.6
Fourthly, the bill allows the minister to acquire, on just terms, a
proportion or all of a water access entitlement or a water access right in a
water resource plan area, or any land associated with an acquired water access
entitlement or an acquired water access right if appropriate.
4.7
Fifthly, the bill addresses the issue of taxation schemes that are
detrimental to the management of Basin water resources by requiring the ACCC to
inquire into the effects of arrangements in the Income Tax Assessment Act
1997 on the water market, and on the nature of irrigation practice and
investment.
4.8
The bill also addresses the issue of states that fail to comply with an
Interim Basin Plan by reducing their share in the Basin water resources by ten
times the quantitative effect of that failure to comply. It also enables the minister
to apply an injunction against a Basin state that continues to fail to comply.[3]
Issues raised by the bill
Interim plan
4.9
The Water Act 2007 has already established the Murray-Darling
Basin Authority (MDBA, the Authority), reporting to the Minister for Climate
Change and Water and requires it to prepare a strategic plan for the integrated
and sustainable management of water resources in the Murray-Darling Basin. This
plan is referred to as the Basin Plan and will be available in 2011, and a
draft plan will be out at the beginning of 2009.[4]
4.10
The committee is not persuaded that an additional act is necessary to
direct the Authority to prepare an interim plan, given that a draft of the
final plan will be completed soon and that accelerating such a complex process
is not likely to result in a useful document. The head of the MDBA outlined the
current timeframe for a draft plan and the complexity of the task:
To satisfy the statutory requirements of the Water Act, we will
need to have a draft plan out by the end of next year in order to meet the 2011
date. There are 16 weeks of public consultation; there is statutory
consultation with states et cetera. We will have a draft plan to meet that 2011
date developed by 2009. It is the issue about tactics versus strategy, isn’t
it? The there is clearly a crisis in the Lower Lakes clearly, and we need to be
able to respond. The Basin Plan is a strategic document which is trying to make
quite explicit those trade-offs between social, economic and environmental
assets. That has never been done explicitly. At the moment, we are seeing
environmental assets deteriorate and communities implode. We need to make some
hard decisions on whether we can sustain all the environment or whether we can
sustain all the economy that is currently reliant on that river system. That is
why it is such a long-run issue. To identify in a year all the social, economic
and environmental assets of the basin, the water requirements that are
necessary to sustain those and then have quite an explicit trade-off process, not
only within classes that say, ‘This bit of the environment is more important
than another bit of the environment,’ but across classes—between the environment
and economic classes, for instance. That is what the Basin Plan is on about. I
think it is fair to say that it is a planning task that has never been
undertaken at that level of complexity in the world.[5]
4.11
The NSW Irrigators Council expressed their opinion of the feasibility of
the proposed interim plan:
In terms of the preparation of a basin plan within 30 days, the
time frame is absolutely outrageous at best. It is simply not possible to
engage in the level of scientific, social and economic work needed to prepare a
plan for managing water across the basin in that time frame. I think that is
recognised by the process that the current Water Act sets out, requiring a
basin plan to be in place, I understand, by 2012. That time frame, in and of
itself, is reasonably short to achieve the massive ends that the Water Act sets
out. We do believe it is achievable, but it certainly cannot be done within 30
days.[6]
4.12
The committee also heard that the MDBC has the authority to take action
in the short term to deal with immediate environmental issues.[7]
Acquisition of rights and
entitlements
4.13
The government is already acquiring water entitlements on the open
market under the guise of the Commonwealth Environmental Water Holder. The bill
would extend this power to allow compulsory acquisition.
4.14
Attitudes to compulsory acquisition differed among farming groups, with
some opposed and others feeling it would depend on the terms offered.
The New South Wales Irrigators Council is unanimously opposed to
compulsory acquisition and notes the position of the national irrigators
council, which is also unanimously opposed to compulsory acquisition. We do not
believe that compulsory acquisition will provide any solutions that market
activity cannot.[8]
We are certainly opposed to compulsory acquisition. Irrigators
have a property right to water entitlements. There is a market and trade there.
The devastation of having carryover water suspended in New South Wales—it was
52 per cent of our carryover water in 2006—was caused by government interference
in the market. That water was carried over water or water that people had gone
out in the market and bought to set up their own drought management strategy.
To have the government then pull the rug out from under them really did
interfere with that market and the confidence people had that they could manage
their own risk and security by entering the market.[9]
It depends on equity in compensation for people and it has to be
a good outcome. It has to be more than feel-good....but it is about getting good
outcomes. No farmer wants to be sold up or compulsorily acquired. The reality
is, and it has happened in the South-East, that industries fail and one way or
another people are given an opportunity to get out of industries with some
dignity. It happened in the South-East with the MIS schemes which we bitterly
opposed, but there were good outcomes from them. [10]
4.15
The issue of assessing 'just terms' in the context of water rights
appears to need greater clarification. The loss of a water right is likely to
affect property values and the viability of local communities in far reaching
ways. Any proposal to compulsorily acquire water rights would need to take
these impacts into account.
4.16
The committee also notes that the bill would not, in its current form,
allow acquisition of current allocations or physical water in storages. As a
result the exercise of this power might not have the intended effect of
returning water to the system immediately.
4.17
The committee agrees that a more efficient water market would be of considerable
benefit in terms of managing the basin.
Failure to comply
4.18
The committee regards the bill's proposed mechanism to ensure compliance
– reducing a state's share of basin water resources by ten times the quantative
effect – is problematic. The end result of such an act would potentially be to
punish water end-users in a devastating way, for an action by a state
government which is beyond their control. The bill also proposes punishing
state governments for failing to comply with an interim plan, however, the bill
does not allow or require consultation with or approval by those state
governments.
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