Budget Review 2020–21 Index
Clare Murdoch
As part of the 2020–21 Budget, the Australian Government
announced that $269.6 million would be allocated over four years to a Murray-Darling
Communities Investment Package (the Package) (Budget Measures:
Budget Paper No. 2: 2020–21, pp. 52–53). The Minister for Resources, Water
and Northern Australia (the Minister) initially announced
the Package on 4 September 2020. The Budget measure is $35.4 million
more than was initially announced. The Package includes 11 initiatives that are
designed to invest in community resilience and river health; build trust,
transparency and accountability in government; and improve implementation of
the Murray-Darling
Basin Plan 2012 (the Basin Plan).
The $269.6 million Package consists of $183.1 million in
additional funding with part of the cost offset from a reallocation of funding
from the Water
for Fodder program and the Sustainable
Rural Water Use and Infrastructure Program. The now-discontinued Water for
Fodder program, introduced in December 2019, enabled farmers to purchase water
to grow fodder and pasture at a discounted rate from additional water releases
in the southern Basin. The Sustainable
Rural Water Use and Infrastructure Program, established in 2008, is the key
mechanism for water recovery required by the Basin Plan.
Implementation
of the Basin Plan, led by the Murray Darling Basin Authority (MDBA), has
now been underway for eight years, with full implementation due by 2024. In
total, the Australian Government has committed
more than $13 billion to implement the Basin Plan. There have been a number
of recent reviews of the Basin Plan’s progress which highlight current issues
and challenges of Basin Plan implementation.[1] The current budget
measures are cited as a response to the findings of two recent reports: the Independent Assessment
of Social and Economic Conditions in the Murray–Darling Basin (Sefton
Report), and the First
Review of the Water for the Environment Special Account (WESA Review). This
Policy Area Brief provides a brief background to some of these key issues.
Supply and constraints projects
The Basin Plan sets limits (called sustainable
diversion limits (SDLs)) on how much water, on an annual average, can be
used for consumptive (household, urban, industrial and agricultural) purposes based
on a determined environmentally sustainable level of take. When the Basin Plan
was legislated in 2012, annual water use in the Basin exceeded the SDLs. Therefore,
in order to ‘bridge the gap’ between those usage rates and more sustainable levels
of water use, the Basin Plan set an environmental water recovery target. This target has now mostly been
met, through the purchase of water licences (water buybacks) and the
implementation of infrastructure projects. However, the SDLs have also been
increased on the condition that the New South Wales (NSW), Victorian and South
Australian governments implement a range
of supply and constraints projects, designed to achieve equivalent
environmental outcomes with a lower volume of environmental water. The Basin
Plan requires these projects to be implemented by June 2024. Failure to meet
this deadline will
require governments to make up the shortfall through more water recovery. There
is significant risk these projects will not be delivered in time.
Basin states are responsible for delivering the supply and
constraints projects. The budget announcement includes $70.5 million over four
years to work with Basin states to accelerate planning and delivery of projects
that are at risk of not being delivered by 2024, and to develop a new National
Partnership Agreement with Basin states. The supporting
policy document of the Department of Agriculture, Water and the Environment
(the Department) suggests that this funding is targeted at the delivery of
supply and constraints projects, and is in addition to existing Australian
Government commitments of up
to $1.3 billion to support the implementation of supply measures, and $200
million allocated in the Water for the Environment Special Account (WESA) to
fund constraints projects. The early stage of many of these projects means that
much of this committed funding remains to be delivered. Throughout 2019–20, $129
million was delivered to the relevant states to progress supply projects,
on top of $34
million spent to 2018. To the end of 2018–19, approximately $4.9 million
had been spent on constraints projects from the WESA, with additional funding
agreements worth $67 million signed (based on expenditure reported in WESA
annual reports from 2015–16 to 2018–19).
Since the announcement of the Package, NSW
Minister for Water Melinda Pavey provided evidence to the current Senate
inquiry into Basin Plan management that NSW cannot deliver key supply
projects by 2024. The Department has indicated
it will partner with the National
Water Grid Authority to deliver supply projects—the Budget’s funding for
the National Water Grid is addressed in the separate Budget Review brief
‘Infrastructure portfolio’.
Efficiency measures
The Australian Government has a legislated
requirement to recover an additional 450 gigalitres (GL) for enhanced
environmental outcomes by June 2024. This water recovery must be delivered
through efficiency measures: projects that provide additional environmental
water through improved water use practices, while maintaining or improving
social and economic outcomes. This additional
water recovery is controversial—negotiated by the South Australian
Government during development of the Basin Plan, the NSW and Victorian
governments have opposed the measure since
its introduction. Almost the entire amount remains to be
recovered. The WESA Review concludes that the 450 GL of additional water
will not be recovered by June 2024 (pp. 19–20).
The Australian Government is responsible for additional water
recovery. This budget announcement includes $37.6 million over two years to
deliver projects to sustain environments in the Riverland, South Australia. The
Department notes that this measure contributes to the recovery of the
additional 450 GL in recognition of delays in securing this water. The WESA
allocates $1.6 billion to fund efficiency measures, delivered through the Water
Efficiency Program since July 2019. It is unclear if this budget measure
will be funded by the WESA or represents additional funding. As at 1 June 2020,
the WESA had provided total funding for efficiency measures of approximately
$12.2 million: around
$12 million on the Commonwealth
On-Farm Further Irrigation Efficiency pilot program in South Australia, and
$0.2
million for two South Australian projects under the Water Efficiency
Program.
The most controversial aspect of this measure is that, when
announcing the Package, the Minister indicated that the Australian Government has
ruled out further water buybacks, and will focus on off‑farm
efficiencies to deliver further water recovery. This strategy is recommended by
the Sefton Report and largely supported
by irrigators and farmers,
but has also attracted
criticism on the basis that water recovered from infrastructure programs
comes at a higher cost than water buybacks,[2] and there is uncertainty
around the effectiveness of efficiency measures.[3]
Compliance
Compliance is critical to the integrity of the Basin Plan. The
compliance framework for the Basin has developed since July 2017, when an ABC
Four Corners report exposed problems with water take enforcement and
state compliance regimes, including allegations of water theft and corruption. Following
the report, investigations at state and federal levels[4]
found deficiencies in water metering and measurement, water accounting and
management, and compliance and enforcement, particularly in the northern Basin.
Subsequently, the Commonwealth and Basin states signed the Murray-Darling
Basin Compliance Compact and the MDBA implemented a range of measures
to ensure transparency and accountability of Basin governments, including
establishing an Office of Compliance.
The Budget includes $38.7 million over four years, and then
an ongoing $9.8 million per year, for the establishment and operation of a new
statutory authority, the Inspector-General of Water Compliance. The
Inspector-General of Water Compliance will be the third iteration since 2017 of
an oversight role separate from the MDBA. The position of Northern Basin
Commissioner was initially established, with former Australian Federal Police
Commissioner Mick
Keelty appointed to the role in August 2018. In August 2019, the Australian
Government announced
plans to establish an Inspector-General
of Murray-Darling Basin Water Resources to provide independent oversight of
Basin Plan implementation and improve transparency, accountability and
community confidence across the whole Basin. On 1 October 2019, Keelty was
appointed as the Interim Inspector-General, pending legislative changes to
establish the role as a statutory appointment; however, to date, legislation
has not been introduced.
The Inspector-General of Water Compliance is slated to merge
the responsibilities of the Interim Inspector-General of Murray-Darling Basin
(MDB) Water Resources and the MDBA’s Office of Compliance. These changes align
with recommendations made by the Productivity Commission Inquiry
Report (see recommendation 14.2). The Department’s schedule
for implementation of this budget measure sets a target for the
Inspector-General of Water Compliance role to be established by the third
quarter of 2021, although this will be subject to the passage of legislation.
Community resilience
Community
resilience refers to the ability to cope with and adapt to changing
conditions, such as climatic and economic variability. In the MDB, communities
must also adapt to decreases in consumptive water use as a result of water
recovery required by the Basin Plan. This has, from
the outset, prompted concern and protest
from many rural and regional communities, and even prior to implementation
it was recognised
that some communities would be more vulnerable than others to the impacts
of water recovery under the Basin Plan. However, initial management of the
socioeconomic impacts of the Basin Plan focused on water recovery rather than
community resilience. The Sefton Report found that, while around $6 billion has
been invested by the Australian and Basin state governments in water
infrastructure, since 2008 only $260 million had been committed to support
communities to adapt to less available water (with approximately $176 million
of this spent by the Australian Government)(p. 73).
There is now a general recognition
by the Australian and Basin state governments that more must be done to
build resilient Basin communities. To this end, the Budget includes $37.6
million over two years to extend the MDB
Economic Development Program. The Australian Government established
the MDB Economic Development Program in January 2019. The Sefton Report
considers the MDB Economic Development Program to be better targeted and
potentially more effective at supporting transitioning regions and communities
than previous programs. As such, the Sefton Report recommended the program be
extended to 2030, with priority given to communities most affected by Basin
water reforms (see recommendation 9).
The MDB Economic Development Program has so far provided
funding of almost $38.8 million to 74 projects across 44 communities,
including the development of tourism-related infrastructure and services,
health services and community sporting facilities. However, this budget measure
only commits to a two-year extension of the program, which is considerably less
than recommended by the Sefton Report.
First Nations engagement
The Sefton Report echoes the findings of previous reports
that implementation of the Basin Plan requires improved engagement with First
Nations communities and improvements in the recognition and provision of
cultural flows. Cultural flows are water entitlements that are owned and used
for cultural, social, spiritual and customary purposes by Traditional Owners. To
date only a small portion of water entitlements have been allocated to First
Nations peoples, with water
licences limiting use to cultural purposes, preventing trade or use for
economic purposes.
Recent Australian Government initiatives to address these
concerns include providing
for a ‘standing Indigenous Authority member’ position on the MDBA, and a commitment
of $40 million to support MDB First Nations investment in cultural and
economic water entitlements and planning activities. It is unclear
if any of this committed funding has been distributed to date—the
Department’s schedule for implementation of this measure includes a
commitment to ‘agree the framework for implementing the $40 million Aboriginal
water entitlements program’ by the first quarter of 2021.
The National Indigenous
Australians Agency will coordinate
the MDB River Rangers Program, which will operate for 12 months commencing
from 1 July 2021, and is estimated
to generate 20 jobs. There are around 12 existing Indigenous Ranger Groups
within the Basin area. Funding in this budget measure is in addition to funding
for the broader Indigenous
Ranger Program, which was recently extended
to 2028. This program has received support from representative groups
including the Northern
Land Council and Country
Needs People. Broader budget funding for First Nations peoples is addressed
in a separate Budget Review brief on Indigenous Affairs.
[1].
Including the Productivity Commission’s (PC) 2018 Inquiry
Report on the Basin Plan, the Australian Competition and Consumer
Commission (ACCC) Interim
Report on Murray-Darling Basin water markets, the Independent
Assessment of Social and Economic Conditions in the Murray–Darling Basin
(Sefton Report), and the First Review of
the Water for the Environment Special Account (WESA Review), as well as
a number of reviews into specific issues, such as the impact
of low inflows on Basin state water shares, fish
kill events in the Darling River near Menindee, NSW, and management
of the Lower Lakes, South Australia.
[2].
See, for example, Department of the Environment (DoE), Water
Recovery Strategy for the Murray-Darling Basin, DoE, Canberra, 2014,
pp. 15, 17; and L Whittle, D Galeano, N Hughes, M Gupta, P Legg, T Westwood, T
Jackson and S Hatfield-Dodds, Economic
effects of water recovery in the Murray–Darling Basin, Australian
Bureau of Agricultural and Resource Economics and Sciences, Canberra, 1
September 2020, p. 7.
[3].
See, for example, J Williams and RQ Grafton, ‘Missing
in action: possible effects of water recovery on stream and river flows in the
Murray–Darling Basin’ Australasian
Journal of Water Resources, 23(2), 2019, pp. 78–87; QJ Wang, G Walker and A
Horne, Potential
impacts of groundwater Sustainable Diversion Limits and irrigation efficiency
projects on river flow volume under the Murray-Darling Basin Plan,
Independent Review, report for the MDBA, October 2018.
[4].
Including the Matthews
Investigation into NSW water management and compliance, the independent
audit of Queensland water measurement and compliance, and the Murray-Darling
Basin Water Compliance Review.
All online articles accessed October 2020
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