4.1
The evidence received to this inquiry indicates the complexity and interdependence of water systems – adjustments to water allocation, water returns, water pricing and water productivity can have a range of dynamic and both positive and negative impacts. Further, it is essential that water use efficiency (WUE) programs and Government intervention do not skew commercial market decisions, but rather establish a pathway towards long-term balanced sustainability for the environment, the irrigated agricultural sector, and regional communities.
4.2
The suite of Australian Government funded WUE programs is extensive and represents a significant ongoing investment. There are a number of reviews underway to assess some of the regional water plans in place and to assess the operation of the National Water Initiative.
4.3
The focus of this inquiry is on how Government program investment is best provided to achieve the balance of long-term goals i.e. achieving adequate and sustainable water levels for the environment though the implementation of efficient agricultural irrigation methods. In addition, there is the expectation that WUE programs will assist in building a productive and financially independent irrigated agriculture sector which is resilient and adaptable to fluctuating weather patterns.
4.4
This chapter outlines evidence the Committee has received in relation to the efficacy of WUE programs in meeting these objectives, with particular regard to:
program design and alignment with national water objectives, and
program administration, monitoring and evaluation.
Program design and water objectives
4.5
Evidence from Federal and State Governments expressed the view that WUE programs are generally effective, and highlighted the effort governments go to in order to ensure the efficacy of programs, particularly in regards to designing programs to meet national water policy objectives.
4.6
The Department of Agriculture and Water Resources (DAWR) noted that data from completed on-farm WUE programs such as the On-farm Irrigation Efficiency Program (OFIEP) indicates that they have had a positive impact:
Data from over 1,000 individual projects funded through OFIEP indicates that on-farm water use efficiency is expected to increase by an average of 18 per cent, based on the annual average volume of water used before project works were undertaken compared with the volume that would be required following infrastructure works.
4.7
DAWR pointed to a range of specific positive outcomes the program has generated:
Irrigators are evidencing increases to water use efficiency through a variety of outcomes including producing the same output with less water, through flexibility in the type of crop they are able to produce and/or through the quality of the produce grown. Infrastructure investments are also delivering tangible benefits at the farm gate beyond water use efficiency, such as increased ability for crop rotation, increasing crop diversification and improved soil management.
4.8
The South Australian Government submission argued that the level of interest from market participants is a good way to measure the adequacy of WUE program design:
A key piece of evidence that demonstrates the adequacy and efficacy of current funding programmes is the level of demand from proponents. Ultimately, the best judges of the merit of a programme will be the market participants themselves. If businesses see it as a good deal, then they will participate.
4.9
The submission went on to note that demand for WUE programs has been and continues to be strong in South Australia, which it argues is a positive signal:
On-farm efficiency funding programmes have received a strong level of interest in South Australia to date:
Private Irrigation Infrastructure Program – SA (PIIP-SA) provided grants to a total value of $14.4 million for 28 projects. These projects delivered over 3 GL of water entitlements to the environment.
On-farm Irrigation Efficiency Program (OFIEP) invested $60.4 million in 362 projects. In aggregate, these projects delivered 17.3 GL of water to the environment.
SARMS Industry Improvement Programme (3IP) is committed to investing $240 million for 40 GL of water entitlements for the environment. Around $177 million has been committed to over 180 projects so far. Existing projects have already recovered around 35 GL in water entitlements for the environment.
While the COFFIE pilot programme only commenced in September 2016, the revised programme design has been well received by the irrigation community with over 50 expressions of interest received to date. Significantly, a number of these expressions of interests have been received from potential proponents in other Basin states.
4.10
The South Australian Government submission also drew the Committee’s attention to post-implementation assessments of WUE programs which are showing positive outcomes:
Case studies of on-farm efficiency projects show that participating agribusinesses are now benefiting from greater productivity, crop diversification and quality. Many agribusinesses now have increased flexibility and resilience, which will enable them to adapt more easily to future climate change and market conditions. Improved irrigation efficiency has also led to land management benefits, such as reduced water logging and improved salinity management.
Box 4.1: Barossa Infrastructure, South Australia
On 23 August 2017 the Committee travelled to the Barossa Valley in South Australia. The Committee met with Barossa Infrastructure (BI), a private irrigation company which supplies water sourced from the Murray River to vineyards across the Barossa. Committee members were briefed on the history of the BI irrigation system, which was constructed in the late 1990s.
The visit highlighted the benefits that can be derived from an open water trading market. Uniquely among those seen by the Committee during this inquiry, the Barossa Infrastructure irrigation scheme was funded and built privately, without any substantial government investment.
Prior to the system’s construction, BI's customers relied on groundwater to irrigate their grapes. As that groundwater depleted and became more saline, irrigators in the area came together to build a pressurised irrigation system. BI was able to purchase additional water entitlements from the Murray River to make use of the system.
Access to additional water provided economic security for Barossa Valley winemakers and enabled BI to construct nearly 200 kilometres of irrigation pipelines over a 450 square kilometre distribution area, including four pumping stations. The BI network represents a substantial achievement.
4.11
The New South Wales Department of Primary Industries (NSW-DPI) submission pointed out that improvements in WUE have the potential to deliver large economic benefits to the state:
It has been estimated that increasing the water productivity of NSW rain-fed and irrigated agriculture by 2% by 2020 could contribute up to $226 million annually to the NSW economy. The majority of this increase would be due to productivity gains resulting from improvements in water use efficiency and adoption of best management practices.
4.12
The DAWR submission highlighted evidence of socio-economic benefits for irrigation operators arising from WUE programs:
In addition, there is early evidence that infrastructure modernisation programmes are having positive socio-economic outcomes for farmers who participate. Lifestyle benefits and labour savings reported by irrigators include:
remote system operation eliminating the need to get up at night to manually manage watering
the ability to take advantage of night time off-peak electricity rates
reduction in maintenance requirements
increased labour efficiency.
4.13
In addition, the South Australian Government submission highlighted the broad economic benefits WUE programs can have, pointing out that they benefit more than irrigators alone:
The benefits of water efficiency investment are accrued by more than just individual irrigators … Many funding recipients are making it a priority to engage local firms to assist with their redevelopment and local suppliers and construction firms are seeing the benefits. This in turn is creating increased demand in other sectors, such as retail and hospitality.
4.14
DAWR argued that WUE program design prioritises value for money for the Australian taxpayer:
Value for money is a core principle that underpins Australian Government investment in water programmes. Funding under these programmes is provided in accordance with the Public Governance, Performance and Accountability Act 2013 that requires public monies to be used in an effective, efficient, economical and ethical manner.
4.15
The Department submission described its program delivery structure, noting firstly that programs may be delivered through State Governments:
Funding is provided through a range of delivery models, including through States as part of the Intergovernmental Agreement on Murray-Darling Basin Reform 2008 and the Intergovernmental Agreement on Implementing Water Reform in the Murray Darling Basin 2013.
4.16
The submission noted that WUE funding provided to State Governments comes with the requirement to meet pre-determined performance standards to ensure program goals are met:
Funding to State governments is provided in accordance with Federal Financial Relations arrangements which aim to support the delivery of specified outputs or projects. This is achieved through the requirement for States to meet pre-determined projects milestones or performance benchmarks before an associated payment is provided by the Australian Government.
Program administration, delivery and evaluation
4.17
The Department and governments argued the strength of WUE programs and their sound processes for administration and evaluation, and this view was generally supported by irrigators, agricultural groups, irrigation infrastructure operators (IIOs) and WUE program delivery partners. However there was also significant evidence that suggested further improvements could be made, particularly with regard to some administrative processes and monitoring/evaluating impacts.
4.18
DAWR noted that it funds some projects directly, with responsibility for delivery spread across a range of bodies:
… the Australian Government also runs its own programmes which are delivered through a wide range of project partners including irrigation infrastructure operators, irrigation industry associations, industry commodity bodies, individual irrigators, catchment management (resource management) authorities and local governments.
4.19
The South Australian Government argued that the delivery model adopted by governments has been one of its best attributes:
A key strength of programmes such as PIIP-SA, OFIEP and COFFIE has been the delivery partner model which has enabled regional staff to act as an effective conduit between the Commonwealth and irrigation community. The ability for regional staff to assist proponents through all stages of the project has contributed to administrative efficiencies. Regional staff have also received positive feedback from proponents about the simplicity of the application process associated with these programmes.
4.20
DAWR argued that the assessment and validation processes applied to project applications are robust and successful:
Applications submitted by State governments or proponents under Australian Government water programmes are assessed in accordance with programme guidelines that align Australian Government objectives and anticipated programme outcomes. Applications are subject to robust due diligence processes that may include technical input from other Australian Government agencies, such as modelling advice from the MDBA, and private consultants.
4.21
In addition, the Department argued that its use of best-practice project management processes has helped to ensure that WUE programs are well administered:
At the project level, the department oversees the delivery of projects through established project management processes. Proponents that receive Australian Government funding must meet reporting requirements outlined in project agreements, including in many instances, reporting on potential ways to improve the delivery of the project. These lessons are captured by the department and are used to inform the design and delivery of subsequent programmes.
4.22
Further, the Department argued that it has processes in place to monitor project implementation and incorporate lessons learned into future project design and delivery:
The department recognises the importance of continuous improvement and monitors programme delivery to identify and implement improvements to the design, methodology and administration of its programmes ... The department has Monitoring, Evaluation, Review and Improvement frameworks in place for all its programs including those that support the Basin Plan. The monitoring and evaluation in place for SRWUIP supports the objectives of the program and includes monthly reporting on water entitlements, collection of program information and statistics and case studies. It also includes opportunities to apply lessons learnt in previous grant rounds or programs.
4.23
DAWR also argued that the Commonwealth On-farm Further Irrigation Efficiency (COFFIE) program, which was in the pilot project phase at the time the Department’s submission was prepared, has benefited from this improvement process:
As part of the design of COFFIE, the department has sought feedback from industry and participants in earlier programmes. Specific feedback was sought on the elements of previous programmes that had worked well, as well as those elements that could be improved in managing and undertaking projects. This feedback has been tested with Australian and State government officers and incorporated into the design of COFFIE.
4.24
The Department noted that the COFFIE program design process involved substantial stakeholder feedback, which it argued was then taken into account to good effect at the pilot phase:
The department released the draft design of COFFIE for public consultation and received 12 submissions and held 30 meetings with a range of stakeholders. Stakeholders at a number of these meetings noted that their previous feedback had been incorporated into the design of COFFIE and considered it to be an improvement on previous programmes. The department has subsequently initiated a pilot programme in South Australia, with initial feedback from participants indicating that the programme design is far more appealing and user friendly.
4.25
One of the most frequently noted problems was the substantial delays program participants faced in securing government approval of proposed projects. The Ricegrowers’ Association of Australia (RGA), for example, noted that:
Most rounds of the OFIEP experienced a significant delay between the participants’ submitting the expressions of interests to the Commonwealth, and the Commonwealth approving the projects and funding (up to and longer than 12 months). This time-lag was particularly problematic for participants as the project budget (including both the value of water and project costs) was ‘locked-in’ at the expression of interest stage and could not be reviewed at time of contract signing. Hence participants were exposed to cost increases incurred during this period. This lead[sic] to many participants either significantly over-spending or otherwise withdrawing their projects.
4.26
The South Australian Government submission likewise noted that the long delays in some programs have caused problems for participants:
… a key limitation of OFIEP has been the long, drawn out timeframes between submission of an initial expression of interest and execution of a formal agreement. This process has taken up to 18 months and industry circumstances, such as water prices and commodity prices, can change quite significantly during this time period.
4.27
Its submission goes on to note that the Australian Government’s decision to recover water at prices determined using a volume-weighted average price (a measure of the average price at which water is valued over a given time) caused concern:
Use of a Volume Weighted Average Price was also cited as a concern for many stakeholders and considered to undervalue water access entitlements. This issue, in addition to the lengthy approval time, significantly impacted on participation in later rounds of OFIEP in South Australia.
4.28
The South Australian Government noted, however, that its feedback on these problems was taken into account by DAWR in the design of subsequent programs, and reported that many of the ‘limitations’ of the OFIEP have been addressed in the program design for COFFIE, which is in its pilot phase at present.
4.29
The National Farmers’ Federation (NFF) argued that WUE programs were a better way to recover water for the environment than the direct purchase of water entitlements (or ‘buybacks’) from irrigators:
…investment in WUE for both on-farm and off-farm distribution systems has provided the least-worst outcome for recovering water to implement the Murray-Darling Basin Plan. For this reason, the sector has been a very active participant in past efficiency programs, both as farmer participants, and as delivery partners with the Commonwealth.
4.30
However, the NFF argued that much of the ‘low-hanging fruit’ of WUE has been taken by the earlier rounds of WUE programs, and that irrigators will have a much lower appetite for future programs. It pointed to the following factors limiting irrigator involvement:
temporary water prices are higher, which can make a capital investment in WUE technology uneconomical
energy prices have increased dramatically, and since more efficient irrigation systems generally consume more energy, they cost more to operate
water prices are higher, making irrigators more reluctant to sell an appreciating asset
irrigators have generally been profitable in recent years, increasing the likelihood that they will self-fund WUE improvements.
4.31
The NFF argued that to be successful, future WUE programs should
include smaller irrigators by lowering the minimum volume requirement of water that can be recovered
broaden the types of water entitlements that can be recovered, and
minimise the administrative demands placed on WUE program participants.
4.32
A number of submissions drew the Committee’s attention to the requirement for program delivery partners to determine their administrative costs when applying for project funding, before actual administration costs can be determined. For example, the RGA submission said:
Delivery Partners are required to determine their administration cost at the expression of interest stage of the program. The total administration cost a Delivery Partners can claim is up to 8% of the value of the project delivered ... the actual administration funding received is determined by both the number of projects approved and the value of those projects.
However at the expression of interest stage, the Delivery Partner cannot determine which of the proposed projects will receive funding from the Commonwealth. This means it is very difficult to determine whether or not the administration fee received will adequately compensate the Delivery Partner for the cost of delivery the program.
4.33
The RGA therefore suggested that the Government should change the way it reimburses administrative costs:
It is therefore suggested that the Commonwealth investigate opportunities to limit the impact of the value of the projects on the total administration funding received by the delivery partner. One option for consideration is to provide the delivery partners with a base (start-up) administration fee and then pay the delivery partner on a project basis, rather than a flat percentage of the total funding received.
4.34
Murrumbidgee Irrigation (MI), an IIO that serves the Murrumbidgee Irrigation Area in southern NSW, noted that its experience with WUE programs had been positive overall. It highlighted the expertise and continuity of program staff as a particular benefit, arguing that this made it easier to adjust program scope as needed throughout the project’s implementation period. MI noted, however, that the ‘policy-constrained timelines’ of WUE programs were a concern:
Our current program of works is complex and integrated requiring significant effort and construction hours. Being driven by a political deadline (June 2019) adds cost risk and increases customer impacts. For example, this year we have extended our usual winter maintenance period from 6 to 11 weeks in order to upgrade all the regulating structures on our Main Canal. The works cannot be done ‘in-season’ because dry site access is required. Additionally the works cannot be staged over several winter maintenance periods because of the significant program of works that must be completed by June 2019.
4.35
Mr Lindsay Krieg from Central Downs Irrigators Ltd was similarly positive on WUE programs overall, but told the Committee at its public hearing in Toowoomba that constrained program timelines can limit uptake:
Not everybody is going to have the money this year. Not everyone has a good year this year. It may take five or 10 years for somebody to have the opportunity to utilise that offer. Having it one budget process is probably not enough. It is probably something that needs to be longer term, particularly in agriculture with our ups and downs in production.
4.36
In the same vein, Mr Steven Carolan from Namoi Water told the Committee at its Narrabri hearing that his personal experience as a participant in WUE programs had been positive, but that inflexible deadlines can be unhelpful for irrigators:
Being able to have a longer time frame to complete projects would facilitate larger projects being started. The reality is that moving dirt is complex, and if weather conditions are adverse then the time frame for doing so can blow out significantly.
4.37
The RGA noted that the administrative burden of participating in WUE programs could at times be too high:
There is a real risk of micro-management of the delivery partner by the Commonwealth, rather than being prepared to contract an outcome (evidenced by processes such as the technical review of projects, the payment processes, the delivery partner audits etc.). It is suggested that the Commonwealth should investigate opportunities to reduce the reporting/administration demands placed on delivery partners , and to provide more guidance regarding the administration costs that can be claimed, and the process of claiming these costs.
4.38
Barossa Infrastructure Ltd also argued for a less ‘exhaustive’ administrative burden, but noted that the staff administering WUE programs had made the process easier to navigate:
What has been the best part of the administration has been the strong support from the agency staff and their support in completion of all necessary documentation. However, the tender process has been exhaustive and is likely to exclude worthy projects. The very nature of it being competitive discourages cooperation and isolates the grower/operator from the technical support from agencies during the project development phase.
4.39
Netafim Australia cited research indicating that many irrigators were unaware of the water savings that can be achieved by adopting drip irrigation technologies. It therefore argued that WUE programs should include an education component to address this problem:
Given that significant funds are provided to farmers by Governments for on-farm irrigation development, if farmers are not fully aware of the benefits of alterative irrigation technologies that might be applied to their properties using on-farm support funds, the economic and other outcomes of the use of the funds may not be optimal. ... Netafim accordingly wishes to bring it to the attention of the inquiry that there could be justification for some form of education resourcing as part of the process of providing on-farm funds that support decision-making by farmers on the alternative irrigation technologies that are available, and the most appropriate selection of technology for their on-farm irrigation development.
4.40
A number of submissions noted that rising water prices are making WUE programs less attractive to irrigators, as participation would require them to relinquish what is an appreciating asset. To address this problem, the Goulburn-Broken Catchment Management Authority argued that WUE programs should not require participants to surrender any water entitlement:
There is evidence that irrigators in the GMID are increasingly concerned about the impact of reducing their volume of Victorian High Reliability Water Shares through being involved with a FWP project (a minimum of 55 % of agreed water savings are to be transferred as part of the offer under the FWP for Round 5, and this has ranged from 50-60% depending on what was negotiated for each Round). Some irrigators have decided that the value of the water is greater than the benefits and have decided not to submit or proceed with projects …
To offset negative impacts from the Basin Plan … a modification of the water use efficiency program is strongly recommended. The new program would provide funding to improve farm irrigation water use and allow the irrigator to retain all of the water savings on the farm.
4.41
In its submission, Cotton Australia noted the impact high energy prices could have on the adoption of more water efficient irrigation technologies. As a consequence, it recommended that the scope of WUE programs be expanded to take this into account:
The scope should include funding of energy efficiency or generation capacity as a way of helping irrigators manage the WUE/Energy nexus. In some case WUE achievement comes at the cost of needing to pressurise water. Increasing energy costs have in some cases completely negated the WUE gains. This is a matter that needs to be addressed urgently.
4.42
The National Irrigators’ Council noted that under the Murray-Darling Basin Plan water recovered for the environment must be socio-economically neutral, as per section 7.17(2) of the Plan:
(b) The efficiency contributions to the proposed adjustments achieve neutral or improved socio-economic outcomes compared with the outcomes under benchmark conditions of development as evidenced by:
(i) the participation of consumptive water users in projects that recover water through works to improve irrigation water use efficiency on their farms; or
(ia) the participation of consumptive water users in projects that recover water through works to improve water use efficiency off-farm; or
(ii) alternative arrangements proposed by a Basin State, assessed by that State as achieving water recovery with neutral or improved socio- economic outcomes.
4.43
The Council argued that this test is inadequate as it does not take community impacts into account. It therefore recommended that the test should be amended:
[T]he socio-economic impact test must be improved for the efficiency projects as part of any spending on achieving 450 GL ‘up-water’ ... this test is completely inadequate being effectively a ‘single person’ test rather than a community impact test. In effect an individual’s willingness to accept the money is the only community impact test this involves.
4.44
Finally, the RGA noted that the level of Government spending on WUE programs has at times inflated the cost of works by distorting markets in irrigation areas:
the program resulted in inflated supplier/contractor costs for participants. This is due to there being a very large increase in the demand for irrigation products and services at the time when participants were required to undertake the individual projects. Hence suppliers/contractors were able to take advantage of this increase in demand by increasing prices. Hence the cost of the on-farm works significantly increased at the time of undertaking the works.
Committee comment
4.45
The Committee notes the range of evidence received regarding the efficacy of WUE programs. In general, evidence confirmed that programs were broadly effective in meeting national water objectives and the alignment between program design and policy objectives was generally sound. However, the Committee observes that the primary financial beneficiaries of WUE are irrigators, and the achievement of WUE programs must be considered across environmental and agricultural objectives.
4.46
The focus of this inquiry has not been to assess individual WUE programs or to assess their contribution to the different components of the NWI. The Committee notes the comprehensive work of the Productivity Commission Review of the NWI, which released its draft report in September 2017 and is due to provide its final report to Government on 31 December 2017.
4.47
Evidence that the Committee received to this inquiry focussed on aspects of the Australian Government’s WUE program administration, delivery and monitoring. The Committee is satisfied that WUE programs are robust in their design and that their administration and delivery is generally efficient and effective. However, some issues were raised in regards to:
delays following submission of expressions of interest,
program delivery partners determining administration costs,
impediments for smaller irrigators, and
constrained program timelines.
4.48
In addition, and noting concerns regarding environmental water flows that were discussed in Chapter 2, the Committee is concerned to ensure that the appropriate priority is placed on environmental water and accordingly that there is suitable baseline and ongoing environmental water monitoring. To ensure accountability to the primary policy objective of sustainable environmental water levels, the Committee recommends that, at the commencement of each program’s funding, baseline and then ongoing measuring of regional ground or surface water systems is undertaken to determine impacts of changed water practices resulting from WUE funded projects.
4.49
Further, the end objective must be the long-term completion of WUE programs, and the achievement of ongoing efficient irrigation methods which operate independently, without government assistance and which are sustainable through fluctuating weather patterns.
4.50
The Committee has some concerns that appropriate end of life cycle consideration is being designed into programs, and notes the need to ensure that programs are building resilience – not reliance – into the future. Given the range and scope of various WUE programs, the Committee sees value in reviewing existing Australian Government funded programs to ensure alignment with key principles and outcomes, and to address administrative concerns raised by submitters.
4.51
The Committee recommends that the Department of Agriculture and Water Resources conduct an internal review of water use efficiency (WUE) programs to address the following issues:
minimising delays following submission of expressions of interest to securing agreement and approvals,
assisting program delivery partners to determine administrative costs and consider mechanisms to reduce up-front costs borne by those delivering programs,
reducing impediments for smaller irrigators to participate in programs,
providing mechanisms for irrigators to apply for an extension to program timelines, given the impact of weather and other uncertainties,
undertaking baseline measuring of regional ground or surface water systems at the commencement of each program, and then ongoing measuring to determine impacts of changed water practices resulting from WUE funded projects,
ensuring that the assessment process includes consideration of the project life cycle contribution to the financial independence and long-term resilience of the irrigated agriculture sector, and does not skew market crop decisions or create reliance, and
ensuring defined regular evaluation points to monitor and assess achievement against a long term objective of financial independence for the irrigated agricultural sector.
The Department should provide the results of this review to this Committee no later than 1 June 2018.
4.52
The Productivity Commission has reviewed the policy and program framework of the NWI and is due to release its final report. Further to this, the Committee has recommended above that the Department review existing Australian Government WUE programs to address administration concerns, undertake baseline and ongoing monitoring of water impacts, and ensure proper lifecycle planning.
4.53
In addition, given the scale of Australian Government expenditure, the Committee considers that detailed external performance scrutiny of WUE programs is warranted. This would provide the public, the Department and the Australian Government with further reassurance regarding the overall efficacy of its WUE programs. While recognising the independence of the Auditor-General in determining audit priorities for any year, the Committee recommends that the Auditor-General give consideration to conducting a performance audit of WUE programs in 2018.
4.54
The Committee recommends that the Auditor-General consider conducting a performance audit of Australian Government funded water use efficiency programs to assess the design process, evaluation arrangements, and effective and efficient administration of these programs. The Committee recommends that the audit take place in 2018.
4.55
The Productivity Commission’s 2017 draft report for its review of the NWI makes 24 recommendations and 14 findings. The Committee notes that a number of the Productivity Commission’s draft recommendations propose adjustments to Australian, State, and Territory government programs to improve alignment to national water objectives. The Committee notes its support for the ongoing review process and, in particular, for the Productivity Commission’s draft recommendation for further progressing reform:
Productivity Commission Draft Recommendation 9.1
Australian, State and Territory Governments should recommit to a renewed National Water Initiative through COAG by 2020. This should:
a. maintain the achievements in water entitlements and planning, water markets, water accounting, water pricing and governance, knowledge and capacity building, and community engagement delivered by the current National Water Initiative as the key foundations underpinning sustainable water resource management and efficient infrastructure service delivery
b. revise a number of policy settings:
incorporating extractive industries and alternative water sources into water entitlement frameworks
water planning to take account of climate change and enable ongoing optimisation
Indigenous access to water for economic purposes
arrangements for water trading between irrigation and urban sectors
better targeted adjustment assistance
c. significantly enhance policy settings relating to:
urban water management to ensure innovative and efficient provision of services in the future under the combined pressures of population growth and climate change
environmental water management to ensure maximum return on government investment in this area
decision making on building and supporting new infrastructure for agriculture.
4.56
The Committee urges the Australian Government to give close consideration to these future steps.
4.57
The Productivity Commission also makes draft recommendations in relation to environment water management, infrastructure funding, and community structural adjustment. The Committee notes that submitters to this inquiry raised similar concerns. Further concerns were also raised regarding the limitation of WUE in relation to the promotion of water efficient irrigation technologies, the prohibitive cost of energy and its impact on the implementation of irrigation technologies, and managing community social and economic health through this transition. These issues are considered by the Committee later in the report.
4.58
The Committee considers the scope of the Productivity Commission draft findings and recommendations to be positive. National policy coordination and monitoring, and the rebalancing of initiatives should be a dynamic and continual process, given the complexity of water objectives and the multitude of factors at play. Regular reviews and adjustments are vital processes guiding new practices and achieving lasting change.
4.59
However, the Committee also notes that policy and program adjustments can give rise to uncertainty, particularly in the contested area of water policy where they can affect livelihoods and influence commercial decisions with long-term consequences. Accordingly, the Committee urges the Australian Government to act expeditiously in response to the Productivity Commission’s final report to ensure that:
the final report is promptly made available for public release,
the recommendations are considered and an Australian Government response is made public by 31 March 2018, and
recommendations requiring national agreement are considered by COAG at its first meeting of 2018.
4.60
The Committee recommends that the Australian Government act expeditiously in response to the final report of the Productivity Commission’s Review of the National Water Initiative (due to be provided to Government by 31 December 2017) and ensure that:
the final report is promptly made available for public release,
the recommendations are considered and an Australian Government response is made public by 31 March 2018, and
recommendations requiring national agreement are considered by COAG at its first meeting of 2018.