Speech – National Irrigation Conference
Gold Coast, 3 June 2014
Thanks very much Simon for that introduction, to the President of Irrigation Australia Limited Ian, to all of those attending, thank you for your cooperation and perseverance with the schedule changes this morning, I spent a delightful 45 minutes or so circling above Brisbane airport before coming here and whilst it's lovely to have a bird’s eye view of Brisbane it's even better to get on the ground and finally get here, so apologies that I wasn't here for the start of the day as planned.
Ladies and gentlemen, the Australian Government, the Abbott Government, has a very clear vision of what we want to achieve and see when it comes to the management of rivers and water resources in Australia. We want to see sustainable and healthy rivers, but we want to see those sustainable and healthy rivers operating alongside of sustainable and productive river communities and it is achieving these two things in tandem that we are eager to achieve and our policies are very much geared at deliver upon this over the coming years.
Your conference today with its title and topic of “water for life, a future for all” is a very appropriate topic and very much reflects the objective and desires that the Government has for where we hope to take water policy in Australia. Prior to the last election, Tony Abbott outlined the core pillars that he believed were drivers of the Australian economy, now and into the future, and central to those core pillars was agriculture and in supporting agriculture we very much recognise that irrigated agriculture sits at the heart of our opportunity to be able to deliver growth in our agricultural sector, growth in our exports, growth in higher value goods, growth in value adding and production, growth to our economy overall.
We the Government see a positive future for agriculture, and irrigated agriculture in particular, and of course we know that good water policy is central to that as it is across so many different parts of society.
Today I want to make sure that I cover four key areas for you. Firstly, to talk about reform in the Murray-Darling Basin; secondly to talk about the importance of the National Water Initiative and our commitment to it, especially in the sustainable management of groundwater; thirdly, to talk about our vision for the expansion of agriculture, including in Northern Australia; and finally to talk about our desire to improve the competitiveness of Australian agriculture and to reduce your cost base where ever possible.
Firstly in the area of the Murray Darling, we as a Government are committed to seeing the Murray Darling Basin Plan implemented in full and on time, as legislated by 2019, we expect to see full delivery by then of the targets, including the target for recovery of surface water levels of 2750 gigalitres to meet the new sustainable diversion limits set within that Basin Plan.
Just yesterday I was pleased to release a water recovery strategy that outlines how it is as a government that we will deliver on that Basin Plan the water recovery importantly gives effect to our commitment, not just to deliver the Basin Plan, but also to cap the level of buybacks in delivering that Basin Plan at some 1500 gigalitres.
I travelled in Opposition extensively throughout the Basin, as did Tony Abbott, as did Barnaby Joyce and many others, and we heard crystal clear the concerns of many in the community, they were worried about the extent of buybacks, about the fact that under the previous government buybacks often lacked strategy, they were undertaken in a piece-meal way, they created a Swiss cheese effect in many irrigation communities that undermined the productivity of those irrigation systems and so we committed, as an Opposition, to cap the level of buybacks in implementing the Basin Plan and to give real priority to delivering on infrastructure, ahead of buybacks in seeing heat Basin Plan implemented and the water recovery strategy released yesterday gives effect to those commitments and demonstrates how it is that we can deliver the Basin Plan within that 1500 gigalitre cap.
We'll get to the 2750 gigalitre figure by firstly delivering around 650 gigalitres in infrastructure efficiency dividends, by investing in making farms more efficient, irrigation systems more efficient and making sure from those efficiencies we get a dividend back towards meeting the Basin Plan targets. We'll get a further 650 gigalitres towards that target by investing with the states in environmental works and measures, that ensure that we get the same or better environmental outcomes from the Basin Plan, without necessarily needing held entitlement of water, but through smarter actions for how we deliver environmental water to environmental outcomes. We get a further 150 gigalitres from measures and activities that the states have or are undertaking and from all of those actions we're then left with a target of 1300 gigalitres to bridge the gap to that 2750 figure – 1300 gigalitres – well below the 1500 gigalitre cap on buybacks that we've set.
Already the Government has managed to contract or receive around 1900 gigalitres of long term cap equivalent water, towards the 2750 figure, 1100 of which was recovered by buybacks that means the remaining level of likely buybacks, assuming implementation of our infrastructure actions for environmental works and measures go to plan, is around 200 gigalitres into the future, but we’ve also reassessed our budget and made sure that over the coming few years we give absolute priority to infrastructure investment with some $2.3 billion being invested over the forward estimates period of the budget in infrastructure projects and those water saving efficiency projects to give every chance to maximise or improve on that 650 gigalitre target for infrastructure investment and to give opportunity to potentially further minimise the need for buybacks below that figure of 1300.
It is certainly my intention that so far as we possibly can that we keep the level of buybacks to a minimum and that will be the objective of our Government, within reasonable budget constraints and parameters, to make sure that we keep buybacks low by delivering on the infrastructure projects that we have promised and that we are working on and we’ve been able to make good progress on a variety of projects to date, big projects like the long talked about Menindee Lakes, where we’ve got the New South Wales Government into agreement, undertaking work, having done the groundwater studies on alternative water supplies for Broken Hill and we hope to have from them by the end of this year a detailed plan about how the Menindee Lakes could be reformed to provide savings of around 70 gigalitres per annum on average.
As well as more targeted activities that are of course so important to the irrigation sector like our on-farm irrigation infrastructure investments, where in the latest round as Government we went out saying we were willing to spend $100 million on on-farm infrastructure improvements, but because of the high quality and calibre of the applications that were received we upped that figure to $158 million, committing to support some 476 different on-farm improvements, providing water savings back to the environment of around 60 gigalitres in total. So we’re demonstrating through our actions as well as our plans to a real commitment to follow through on giving that priority to infrastructure activities and ensuring that buyback is the last resort to finally bridge the gap towards implementing the Basin Plan.
It is important as well that we have the cooperation of all of the relevant jurisdictions in the Murray Darling to be able to deliver on these reforms. I’m pleased that as a Government we have been able to seal the deal with New South Wales and Queensland, so that all the relevant jurisdictions have signed onto the Intergovernmental Agreement to implement the Murray Darling Basin Plan, that’s critically important because they have a key role to play in helping us to achieve the 650 gigalitres of offsets through environmental works and supply measures that we hope to achieve.
It is the states who will be putting forward proposals for more efficient activities in watering of environmental assets for any potential rule changes that can deliver more efficient environmental outcomes. It is the states that will put those forward and we will collectively then assess them as a Ministerial Council, but it is certainly my ambition that we maximise the capacity of that adjustment mechanism that gives us the chance to have 650 gigalitres of offsets, offsets that give us an opportunity to not need to take so much out of productive use, but still get us the same or improved environmental outcomes in terms of the use of environmental water and it is certainly in that area of using environmental water that we look forward now in coming years to seeing clearer plans developed and ensuring irrigation communities and irrigation industry have a good understanding of what the priorities are for the use of environmental water, that they see genuine cooperation across the different holders of environmental water throughout the Basin, be that the Commonwealth Environmental Water Holder as the largest entitlement holder, the states who have various holdings or of course other private environmental water holders throughout the Basin.
We want to see strong cooperation and coordination to maximise those environmental benefits and to be able to demonstrate that all the pain and change of reform over the last few years is delivering dividends for the environment because of its effective and efficient management.
The process through til 2019 I’m sure will still have its hurdles, the water recovery strategy that I’ve released will be updated periodically and then will face a significant update in 2016 when the adjustment mechanism to those SDLs is run, when we determine how much of that 650 gigalitres of offsets can be achieved, whether we can get it all and whether indeed constraints can be lifted, facilitating potentially further water going to the environment in the future, subject to it not having any economic or social detriment.
So there are a number of hurdles still to go, a lot of work that’s being undertaken, but I am very encouraged by the positive steps that are being taken, cooperation from the states to date to make sure all elements of this work and that they all get on board with our strategy as a new Government to make sure that in implementing this Plan, we do it in a way that from here on in it does not undermine the productive capacity of communities, but ideally strengthens that through the significant investments in infrastructure that we have planned.
The second area that I wanted to touch on today was in relation to the National Water Initiative, it’s ten years now since the National Water Initiative was signed, a landmark agreement between the states and the Commonwealth that set in train a recognition that we needed to have sustainable limits on the use of water, both ground and surface water, that we needed to have legal rights attached to that water, separate from land that facilitated trading of that water and a market in that water that allowed for its utilisation to the highest value use and ensured that throughout Australia we ideally have markets and systems for the use of water that best benefit, not just local communities, but our overall national economy.
We’ve come a long way in the implementation of those NWI principles, a number of states are still undertaking significant reforms and there is of course still much to be done, but over that period of time the National Water Commission has played a critical role in helping to implement the NWI and in assisting the states through that process in auditing their work. This year when they conclude the triennial review of implementation the NWI, the NWC – the National Water Commission – will cease to exist.
But I want to give an assurance to all that throughout the water industry of our Government s commitment to the principles of the National Water Initiative remains strong. Our intention to ensure that the audit of the states against their compliance with it, our intention is to ensure that that audit continues and that we have an audit undertaken at regular intervals, by people with independence, to ensure that we don’t lose the reforms that have been achieved to date and that we continue to see improvements from the states in how they manage water rights and activities and policies into the future.
The NWI is important and has been critical to seeing the reform we are unable to undertake in the Murray Darling, the change to tradeable water rights has helped to see many irrigators through tough times of drought, providing alternative opportunities for income, allowing water to flow to permanent planting when in shortage, providing a level of market responsiveness that is so critical to ensure that the valuable asset of our water resources is best utilised.
There’s a particular role for the NWI in ensuring that our groundwater resources in the future are properly managed, I want to see, and we are looking as a Government, at making sure that we deliver on some key reforms and some key policies in groundwater management and I hope they will provide springboard for action into the future. This is especially relevant as we see continued growth in mining activities and exploration activities and CSG development and the concern that exists in certain communities around Australia about its potential on groundwater resources.
As a government we’ve committed significant funding to the work of the independent expert Scientific Committee that advises both state and Commonwealth Governments on CSG applications and makes sure we have expert advice to inform development approvals and can give the community confidence about the fact that those approvals when granted are based on the best independent scientific advice available. To further inform that, we’re undertaking bioregional assessments in up to 15 areas of likely and prospective CSG development around Australia, so than rather than just taking a piecemeal approach to assessing one project at a time we have a regional assessment that of course can capture cumulative impacts and other effects on water resources and importantly through our reforms to streamline environmental regulation by having a one stop shop approach with the states where all environmental approvals that brings state environmental approvals, Commonwealth environmental approvals in the one system on a state-by-state basis, where people don’t have to jump through a hoop at a state level and a hoop at a Federal level, through that process we’re writing agreements, bilateral agreements, with each of the states around how we will achieve and implement the on-stop shops and through that great work is being done to ensure that again we have robust assessments and utilisation of that Independent Expert Scientific advice on how groundwater is utilised in the future.
Ultimately when it comes to utilisation of our groundwater resources, it is a matter for the states, it is their right and responsibility to ensure that those resources are utilised effectively, but the Commonwealth is hoping through our work and our investment in the best science and the best bioregional assessments possible that we can set high standards that ensure that all water users and all with concern for the proper use of water can have confidence I the activities that are being undertaken.
I also wanted to touch today on the potential for expansion in agriculture, from the outset I spoke about the Government s commitment and the Prime Minister’s commitment to see agriculture as an economic pillar for Australia and to see continued growth and opportunity in that space.
Much focus of course, and we are in Queensland today, is given to Northern Australia and we are undertaking a White Paper process, which is a process for Government to set key policies and directions for the future in the development of Northern Australia.
Now the development of Northern Australia is a great prospect for agriculture, but of course the challenges it faces in developing are not just about water, there are equal challenges in terms of labour and transport and market access and a whole range of other factors that need to be addressed and we’re working with the states to cooperatively assess all of those different policy areas and make sure that into the future we have the right policies to advance development across the north and critically to be able to advance of course the development of agriculture and potentially irrigated agriculture across the north.
Within that we’ve also established a Ministerial Working Group on Water Infrastructure, chaired by Barnaby Joyce and with representatives across the agriculture, infrastructure and environment portfolios within Government, this group is feeding into the Northern Australia Paper, but is taking a look beyond Northern Australia as well and is having a look at water storage opportunities, not just dams but aquifer recharge opportunities that may exist and how we can best manage to put the right policy setting in place to encourage continued development and utilisation of our water resources in a sustainable way and as I send it’s not just looking at the North and over time I’ll look closely at opportunities for better use of storages, better storage opportunities right across Australia, as well as the potential further expansion in irrigated agriculture that already exists, especially in places like Tasmania.
And lastly in relation to the potential to grow agriculture, the agriculture portfolio itself is driving again a White Paper process for a whole of Government policy response to Agricultural Competitiveness and that feeds into the final that I wanted to discuss today and that is about how we improve the competitiveness and lower the cost base for agriculture and especially irrigated agriculture in Australia.
As a Government we are of course are committed, and it is our top priority and it will be a top item of business for the new Senate when it takes seat on the first of July, is the abolition of the Carbon Tax and the Carbon Tax had about a 10 per cent impact on electricity process right across Australia and we are incredibly conscious there is a strong nexus between electricity and irrigated agriculture and of course the high costs that many in irrigated agriculture face, due to the escalation in electricity prices. Getting rid of the Carbon will help in that regard and will help to reduce those electricity burdens.
We’re also reviewing the renewable energy target and one of the key terms of reference there is of course to again have a look at how we can have a renewable energy target that does not have such an impact on electricity prices into the future.
In addition, in terms of the cost base for many agribusinesses we’re cutting the level of company tax, which will be of benefit for many across the sector and we’re committing to significant reforms in terms of red tape reduction, we had the first repeal day recently and our intention across the entire economy is to reduce the cost of Government regulation in doing business by around $1 billion per annum.
Recently I announced a review of the Water Act, this review is important for red tape reduction and the reduction in the regulatory burden across the water industry and the irrigation sector in particular. Whilst it was a mandatory review required under the Act, I’ve used and the Government has used the powers available to us to broaden the terms of reference for that review to give it a specific focus on ways in which we can reduce regulation, compliance costs and red or green tape costs for those affected by the operation of the Commonwealth Water Act.
Submission have been invited recently to that review and I invite all those that might have views and ideas in this space to make submissions and to participate in the review process because certainly we hope it will provide real and good information to Government to be able to allow us to reduce some of the costs of this sector into the future.
The final link in competitiveness that the Government is focussed on are opportunities to improve market access and that is being driven by the trade portfolio and by the successful completion to date of trade deals with Japan and South Korea, the negotiations that are active with China and our desire to continue to advancement of better trade access for Australia business.
Now I recognise that there are those who understandable feel disappointment about some aspects of the trade deals that have been struck to date, but overall they continue to improve Australian market access and access for large parts of the Australian agricultural sector into those key markets and importantly they of course ensure that we do not get left further behind, as has been the case as countries like New Zealand have been off busily making and improving their trade access to countries like China and I look forward to seeing the finalisation of that China deal in the near term.
So across those four areas of reform in the Murray Darling, of our adherence and commitment to the National Water Initiative, of our expansion and desire to see expansion of agriculture, and of our plans and actions to try to improve the competitiveness and lower the cost base for all businesses in Australia, but particularly for agriculture, I think it is clear as a Government we do share the commitment to theme of this conference, that water is from our perspective of course essential for life and is a foundation for the future of all and especially of Australia’s economy in the future.
We want to see a country that produces as much food, fibre and produce as it sustainably can for sale in Australia and for export to the rest of the world, we want to gear our policies to help assist in that regard and we look forward to working with your industry into the future.
Thankyou very much for the opportunity to say a few words today and I look forward to taking your questions.