WATER TRADING

The Hon. K.A. MAYWALD (Chaffey—Minister for the River Murray, Minister for Water Security) (14:05): I seek leave to make a ministerial statement.

Leave granted.

The Hon. K.A. MAYWALD: I wish to update the house on the progress of South Australia's High Court challenge to unlock billions of litres of water tied up in licences held by irrigators upstream. In March, the government announced that it would mount a High Court challenge against Victoria's 4 per cent trading cap, which limits the options available to Victorian licensees to trade their water.

Today I advise the house that the government will be broadening its challenge to include tackling a little known 10 per cent cap on Victoria's water trading market. This cap stops water licences being purchased from a particular irrigation district. South Australia is firmly of the view that this is a serious impediment to permanent trade.

We have been told by our legal experts assembled to mount this High Court challenge that the 10 per cent cap will soon become the real culprit in blocking the free trade of water licences held by Victorian irrigators. Therefore, even if the 4 per cent annual cap were to be completely abolished, the 10 per cent cap would remain and continue to place a noose around the neck of water trading in Victoria.

We understand that some Victorian irrigation areas will soon reach the 10 per cent cap. This was not a cap agreed to by the other basin states and constitutes a breach of the National Water Initiative. As far as South Australia is concerned, all caps imposed by the Victorian government need to be removed so that irrigators are free to sell their water licences where and when they see fit.

The commonwealth has allocated $3 billion to buy permanent water to restore healthy environmental flows to the river. If caps are not lifted, the ability of the commonwealth to buy back water under its accelerated program to benefit the river, the Lower Lakes and the Coorong will be severely compromised.

It should also be pointed out that some states, most notably New South Wales, will bear the brunt of the buyback scheme if the Victorian trade barriers remain in place. We are also aware of Victorian irrigators who are being hindered by these ludicrous state-imposed trading caps, so very little water can be freed up in Victoria.

Our legal team is also examining whether the commonwealth has legal responsibilities that it must uphold in maintaining the health of the Ramsar-listed Coorong. This government is seeking advice on a number of legal options intended to ensure that we get the water flows that our river, the Lower Lakes and the Coorong need to remain healthy and sustainable.

South Australia has fought hard for an independent national body to manage the Murray-Darling Basin to make decisions on the river's health and management—

Members interjecting:

The SPEAKER: The member for MacKillop!

The Hon. K.A. MAYWALD: —using the best independent scientific advice available, free from political veto by the states, or the opposition. At this point I should make mention of the fact that the opposition went to the March 2006 election with the policy to maintain the Murray-Darling Basin in state hands. That is a fact.

The new basin-wide plan will develop a new plan to cap the use of ground and surface water in the basin. This will address over-allocation in the Murray-Darling Basin for the longer term. South Australia believes that we need to remove the barriers to water trading as a matter of some urgency. I advise that we expect to be ready to lodge the challenge toward the end of July, and I look forward to a bipartisan approach on water from the opposition.