ADDRESS BY SENATOR SIMON BIRMINGHAM
SHADOW PARLIAMENTARY SECRETARY FOR THE MURRAY-DARLING BASIN
2010 AUSTRALIAN WATER SUMMIT, MELBOURNE
27 OCTOBER 2010
Today, I want to make a case for action – for real action, as our campaign slogan just a couple of months ago said – because it is important that we see the reform process in the Murray-Darling Basin through.
Mark Twain famously said that "whiskey is for drinking; water is for fighting over". That’s a classic quote and certainly anyone who’s followed the reaction to the release of the Murray-Darling Basin Authority’s Guide to the proposed Basin Plan over the last two and a half weeks would be hard pressed to argue that a truer statement were ever uttered than Twain’s seemingly timeless words.
Speaking of timeless words:
"Successive governments of South Australia played ignominious paths attending years of useless conferences discussing and wrangling with our sister states so the division of the water calculated to flow for given periods various through certain gauges. So far as New South Wales and Victoria were concerned the true object of these conferences was to discover how little South Australia could be induced to accept and to gain time to push on with their own works in their respective states."
Those words were from the memoirs of Simpson Newland, a prominent South Australian, published in 1926. There are earlier quotes to recite about how this debate has raged for more than a century in Australia and, although I will share a couple more, I emphasise that I am not speaking in a parochial sense, as a South Australian, despite the continued importance of this issue to my home state as a top of mind concern for the overwhelming majority of South Australians.
But I want to focus more broadly on the importance of reform because it is essential to everyone who is reliant on the Basin, whichever state they are in, that we actually get this reform process right and we provide some certainty for the future – certainty for every Basin community and certainty for every irrigator; certainty for every state and community who relies upon the Basin. They will always have to suffer the vagaries of the weather, the vagaries of inflows, but at the very least we should establish a sustainable management system, a framework that can hopefully stand the test of time.
If I can offer another quote, this time from a US Senator, Christopher Bond, who said that:
"History’s lessons are to make the most of reform opportunities when they arise because they do not arise often and they do not last long".
Australia cannot afford to let this opportunity, the current opportunity, for Murray-Darling Basin reform slip through our fingers. It may have come about as a result of drought and of pressure in the system built up over many, many years, but just because it has rained, and because people may feel the pressure is a little less acute today, we cannot allow that pace, that momentum, that need for reform to slip away.
As I said, we were debating this at the time of federation. Charles Cameron Kingston, the then South Australian Premier, bowled up to the 1897 Federation Convention in Adelaide and said of the decision not to have federal management of the Murray-Darling that:
"I hope it may be reconsidered and that a measure of hope may be held out that the federal parliament will be trusted with federal questions of the gravity involved in the use of the waters of the Murray."
That was 1897. A year later he went to the 1898 Melbourne Constitutional Convention and again said of the ongoing debate that:
"we ought to give the federal parliament which we propose to call into existence the power, when it deems fit, to legislate on this question in order to remove this fertile source of conflict and friction between colonies."
Again, close to 120 years later and this remains a fertile source of friction between the colonies. The only way that we can hope to remove that friction is by having some form of effective national management, where decisions are seen to be taken fairly and equitably across the interests of each of the states and the territories involved.
We’ve gone through more than a century of argument but it took the once in a century drought to force our hand … it took emergency management measures across the Basin; record low allocations to irrigators and the impacts that of course flow through to those communities; and the Murray Mouth being closed, basically permanently, for an entire decade, with virtually no outflow through the mouth of our great river system.
We’ve seen agreements before, many agreements throughout the life of the Federation. We saw a significant one in 2004, the National Water Initiative, designed to see the states address over-allocation. Having seen the states renege and drag their heels on that agreement, then Prime Minister John Howard declared that enough was enough, that it was time for national management and that in managing the system we should pay the same attention to state borders as the rivers themselves do, namely, none.
The rivers don’t recognise state borders, nor of course should management of the system. Yes, the states have expertise, they have a key role to play, it’s been built up historically and they should not be shut out of the process, but the overall planning should be taken at a national level.
I entered the Senate in 2007, just a couple of months after Howard made his Australia Day declaration in support of national management of the system. We had numerous debates during that time and as a new, young, South Australian Senator, I was eager to ensure that I made clear my position in support of national management. In recent days, as I’ve been critical and others have been critical of Labor's bungling the national management agenda, I thought it was useful to go back and look at what I said in those early debates. At the time I said that:
"Action is needed because of decades of mismanagement of the river and of the emerging realisation that the consequences of this mismanagement will have severe and long term effects."
In regards to the legislation being passed at the time, I highlighted that the Water Act would establish the Murray-Darling Basin Authority:
"An independent, expert body, it is charged with the responsibility of developing an evidence-based Basin Plan that balances the needs of all stakeholders."
I highlight those last few words, "balances the needs of all stakeholders" … my intent and, I believe, the intent of all from both sides of the parliament was, at that time, clear.
I went on and highlighted that this was not just a legislative solution, but also that the accompanying $10 billion in funding was an integral part of the reform package:
"The funding provided support for the structural adjustment necessary in the community that needed to deal with living with less water. It provided support for both on-farm and off-farm infrastructure, privately owned and publicly owned infrastructure, to ensure that it could all be delivered in a more efficient and effective manner to enure that ultimately, given the finite resources of the river system, we would be able to do more with less."
The Howard-Turnbull reforms were, at their heart, balanced reforms … theirs were not just legislative reforms, but also a $10 billion package to make that legislation work, to make transition possible, to ensure that we did end up with a balanced outcome … a balanced outcome for the economy, for the communities of the Basin and to the environment and ecology of the river system.
So, why the history lesson today and why am I attempting to remake and repeat the case for reform, as an Opposition spokesman? The main reason is because the Government doesn’t seem to be making that case at present. Shamefully, the Government that took office in 2007 has mismanaged three years of opportunity and in doing so they’ve put this important reform agenda in real jeopardy. Shamefully, they no longer seem to speak with a sense of urgency or conviction about delivering Murray-Darling Basin reform. And, shamefully, when the going has gotten tough, as it has over the last couple of weeks, rather than admitting their mistakes and laying out a plan to get the reform back on track, this Government seems to have retreated, abdicated responsibility and has been all too willing to allow potential delay and uncertainty to plague this important reform agenda.
There are seven specific areas in which the mishandling of Murray-Darling reform by this government has contributed to the angst of communities and, in doing so, has endangered the reform process … seven deadly sins that risk sinking Murray-Darling reform unless they are turned around. Today I intend to highlight those failures and why they must be addressed to get this critical process back on the straight and narrow.
First and foremost is the failure to deliver the water saving infrastructure projects that were promised in 2007 by Howard. The $10 billion package comprised $5.8 billion for on- and off-farm infrastructure upgrades. It comprised about $3.1 billion for water buybacks and structural adjustment assistance. It was deliberately skewed, and it was skewed very clearly towards trying to recover water for the environment through efficiency measures, knowing that although that may be a more expensive way to recover environmental flows, it is the only way you can do so whilst maintaining productive capacity and whilst ensuring that Basin communities have the healthiest future possible.
The failure to deliver on those promised infrastructure projects has only heightened concern up and down the river system and throughout Basin communities that all of the required savings, all of the required cuts in water diversions necessary to meet whatever sustainable diversion limits are eventually agreed upon, will simply come from buybacks.
The budget facts from the last few years speak for themselves. Over the last three years, $750 million more has been spent on water buyback than was originally budgeted. This is despite the fact that for most of those years those entitlements had virtually no allocations of real water against them in many parts of the system; and despite there being no Murray-Darling Basin Plan against which to strategically make those buybacks, and therefore no certainty that government was buying the right entitlements in the right places to match against that Plan in the future.
By comparison, over the same three-year period, $300 million less than was budgeted was spent on water saving infrastructure. Little wonder then that Basin communities think the process is skewed towards simply buying it all back. Is that what we were told or promised by the new government when they took office in 2007? Far from it … in Labor's national plan to tackle the water crisis, their Election 07 Policy Document, they claimed that:
"A Rudd Labor Government will accelerate investment in all water saving infrastructure from the National Plan for Water Security."
The Labor talk of acceleration didn't stop there. Last year Penny Wong told the South Australian Press Club that:
"It's time to hit the accelerator. Rapid progress of these projects is essential – not only to address the urgent situation of many Basin communities, but also to support regional economic activity."
Far from hitting the accelerator though, Labor was unable to get these critically important projects out of first gear. You don't need to take my word for it, or study the budget papers to see the failure to deliver expenditure targets, because helpfully the COAG Reform Council has just published a report that belled the cat on Labor's chronic failure to deliver. COAG stated:
"… in the 18 month period, only two [of 17] projects were completed or largely completed, and there were significant delays in the development and approval of all other projects."
COAG went on to state the obvious:
"The fact that most projects remain in the development and pre-approval stages appears contrary to the need for urgent action."
It is also contrary to the many promises and statements made about accelerating investment by the government.
Delivery of these projects is central to how we return water to the environment in a way that delivers win-win outcomes. If the federal government is unable to deliver them – and if the states are unable to deliver them – then we need to find a better of ensuring real action on such water saving projects. Perhaps we need to look at how we can better empower and engage local experts, the people who know where the flaws in their irrigation districts are or where the opportunities to better manage the river are. And we need to find better ways to cut through the red tape that seems to plague these projects, including the environmental red tape that seems to potentially impede the capacity to deliver a greater environmental good.
Put simply, half the problem with the reform process over the last three years is that all of the energy seems to have gone into determining how much water we need to recover for the river system, while not enough energy has been dedicated to determining how we can best recover that water.
The second and related area where federal failings at a policy level have clearly jeopardised the reform process is the failure to ensure water buybacks were strategic purchases that considered impacts on system functionality and were matched against the long-term needs of the Basin Plan.
If you travel throughout the Basin, as I and many other Coalition members do on a near constant basis, you will find the examples of communities where small groups of irrigators on adjoining properties have volunteered to retire entire channels, committing to fill them in and return their properties to dry-land farming. Yet they are rejected because they don't fit the neat tender requirements of Labor's buyback program.
Meanwhile, other irrigators are blocked from maintaining or increasing local production because of restrictive conditions placed upon those who have taken exit grants. These conditions require that upon selling their water entitlement and receiving an exit grant all irrigation infrastructure is demolished, and they prohibit the use of the land for irrigation purposes for a number of years. Never mind if it was very productive land, never mind if the adjoining property owner has the capacity to expand within their existing water entitlements. These rules are just contrary to the idea that government recovers the water entitlement for the environment, but then lets the market sort out land use, ownership and the like to fit remaining entitlements.
The result of these policy failures is that irrigation systems get eaten away at with a Swiss cheese effect, where quite random gaps of virtual wasteland exist in between productive irrigated properties, stranding assets, leaving higher maintenance costs for those who remain and failing to ensure maximum efficiency gains from the retirement of properties or the recovery of water.
Buybacks are an essential part of dealing with over allocation. They were part of the Howard plan. But the failure to be clever, engaging and strategic in undertaking buybacks means that no matter how much Tony Burke protests that he will only buy from willing sellers, others worry that they will be the ones left with higher costs and less efficient systems as a result.
The third and, once again, somewhat related area of government policy failure that is only impeding effective Murray-Darling reform is the failure to fix the water market fast enough. Proper and comparable licensing of all entitlements, effective monitoring and measuring of all diversions and total transparency in trading are essential to having a fully functioning water market, which is essential to implementing Basin reform.
The most recent biennial assessment of the 2004 National Water Initiative, released late last year by the National Water Commission found that:
· the pace of water reform has slowed on almost every front and is now critically inadequate;
· governments will not meet the central commitment under the National Water Initiative to fix over-allocation by 2010, despite commitments going back to 1994; and
· the Murray-Darling Basin Authority has had a disappointingly slow start.
When governments are again and again proven incapable of delivering what they promise, it is little wonder that farmers and communities express outrage when presented with a plan involving immense pain because they have no confidence the government can provide any pain relief, whatever ministers and others may say.
My fourth area of failure brings us to the MDBA's Guide and, in particular, the failure of government to ensure the MDBA undertook a thorough socio-economic analysis and included consideration of such analysis in its development.
Let's be honest, who releases a report three years and $100 million in the making only to declare on the very day of its release that the economic analysis is underdone and the predictions of job losses are underestimates? It's not like they didn’t know there would be scrutiny of this area, as the Coalition and others had been questioning whether this part of the work had been effectively done for months, with the Coalition committing at the last election to a full Productivity Commission analysis of the socio-economic impacts.
This failure sank the credibility of the Guide from the very day of its release. While the announcement of a new study to be commissioned by the MDBA is welcome, the government should swallow its pride and get that analysis done by the most able, qualified and well equipped people, namely the team at the Productivity Commission. Labor should accept that the Coalition was on the right track here and they should empower them to not just look at the impacts of the proposed sustainable diversion limits (SDLs) but look also at the most effective ways to meet those SDLs while minimising social and economic harms.
Once again I make the point, there is little point knowing how much we want to reduce diversions by unless we also know how we can reduce those diversions in the most pain free manner.
Fifthly, the failure of the minister or any Labor MP to front up to any of the MDBA consultation sessions at all, and to take two weeks to even undertake a decent visit to a major Basin community, only raised the level of anger by adding to concerns the government just wasn't going to listen. The process started with the bizarre spectacle of a minister conducting his press conference before the Guide was even released and then disappearing, uncontactable for the afternoon.
By contrast, Barnaby Joyce and I visited communities in every Basin state within a week of the Guide's release. We have attended numerous MDBA consultation sessions and have had Coalition MPs at all of those conducted on non-parliamentary sitting days.
I'm sure Tony Burke is a good man, but he needs to actually lead this process. Reform doesn't just happen, it takes people to lead it, argue for it and inspire confidence that it can be accomplished without massive upheaval. Tony Burke needs to get out into this debate, mount the arguments for Murray-Darling reform by developing policies that demonstrate how water will be recovered for the environment without the decimation of communities and reassuring people that those policies will actually be delivered, in contrast to the failures of the past. He won't provide that reassurance by staying put in Canberra or Sydney.
The sixth area relates to the very current debate surrounding the legal interpretation of the Water Act. Inaction by the Labor Government has allowed this perception to take hold that the Act is flawed and does not allow for appropriate balance between economic, social and environmental objectives. The Coalition knows what we wrote in government and what we voted for – and balance was at the key of that. Indeed, the former Coalition Water Minister, Malcolm Turnbull, has mounted a strident and eloquent defence of the balance within the Water Act over the last few days.
However, it is clear the MDBA pursued a different interpretation, which skewed the intended balanced approach. The MDBA chairman, Mike Taylor, has publicly declared that he raised what now seems to be a misinterpretation of the Act with the minister at their very first meeting. Yet the minister did nothing. In all likelihood, Penny Wong was told much earlier. And, seemingly, she did nothing too. Even the Productivity Commission a possible misinterpretation within the MDBA as early as March this year, stating in their report into water buybacks that:
"Good science is a necessary but not sufficient basis for optimising the use of the basin's water resources. The value people place on environmental outcomes, the opportunity cost of forgone irrigation, and the role of other inputs such as land management must also be considered. If the Water Act 2007 precludes this approach, it should be amended."
Yet, again, the government did nothing. Why did the government wait until after the Guide had been written – and all hell had broken loose – to seek a legal opinion to set things straight? Having now belatedly obtained that advice, the minister now says that it would allow the MDBA to make the decisions necessary to achieve balance.
Wouldn't it have been easier for all concerned if this advice had been provided earlier, whenever the first warnings were made to the government? An accurate interpretation of the Act that ensured the MDBA did the job the parliament intended of them would have avoided some of the heightened angst that is now plaguing the debate and making the pathway for reform harder.
Now to the seventh and final area of government failure that I want to identify as setting the case for Murray-Darling reform back, just when it should have been moving forwards. And this one is purely political. It is based on what was a great election con … the creation of a belief that the government was going to abandon the ministerial checks and balances in the Water Act and would instead accept whatever recommendations the MDBA made.
Julia Gillard started it off:
"I'm determined as Prime Minister to implement the plan which will be released by the Murray-Darling Basin Authority."
Her pronouncements were greeted by the Adelaide Advertiser with an entire front page picture under the headline of "River Queen". Lest there be any doubt about their populist appeal to a then water starved Adelaide voting public, Penny Wong hit the Adelaide airwaves of local radio to state:
"… the cap will ultimately be set by the independent Authority … this is a Government that is prepared to back the independent Authority in its determination on what the rivers need."
All the while Tony Abbott and the Coalition protested that we would implement a good plan, not just any plan. But of course Labor got away with their con job because of the suspicious decision not to release the Guide until after the election.
Tony Burke has now been left with the job of tortuously walking away from these statements, without of course conceding that his Prime Minister lied her way through the election campaign. He has returned to the formula that existed in the Act written by Turnbull, which provides for ministerial checks and balances at the end of the process of developing a Basin Plan.
Yet again the mismanagement of this process by the government, this time very deliberate mismanagement for base political purposes, raised the temperature within Basin communities, leaving them fearful that the government of the day would take a hands-off approach rather than help them through reform.
And so we have it, seven potentially deadly sins that have left one of the most important social, economic and environmental reforms to be undertaken in Australia drowning in a sea of maladministration. Having been left not only the formula for reform by the Howard Government but also the legislative and budgetary tools to implement that reform, Labor has bungled every step of it.
Having started the process of Murray-Darling reform the Coalition remains committed to seeing it through, as evidenced by the policy we took to the recent election, which committed to:
· timelines to get the promised and needed water saving infrastructure actually happening;
· provide more funding to help communities adjust to the changes that lie ahead; and
· guaranteed thorough analysis and consideration of the socio-economic aspects of reform.
As I have said before, this reform agenda is not easy. It requires sacrifice from everyone. When I speak of balance it is with the knowledge that a balanced outcome is likely to involve some sacrifice across all three pillars that are enshrined in the Act – economic, social and environmental. But, at the end of it, hopefully we will have a more sustainable system, providing a fair flow for everyone and giving some long term certainty to all of those farmers and communities who rely on the river system.
By getting it right and getting it back on track we can work towards a future with healthy rivers, healthy communities and a healthy productive base in Australia's food bowl. Get it wrong and we risk years or decades of more uncertainty, infighting and degradation.
A competent Coalition Government made the decision to pursue Murray-Darling reform during the difficult days of a once in a century drought. Let's not allow an incompetent Labor Government slip slide away from seeing this through just because we've enjoyed some rain recently. It will take real action to get this back on track but I assure you we will be doing our best to ensure that is exactly what we get.