IRRIGATION BILL

Second Reading

Adjourned debate on second reading.

(Continued from 24 March 2009. Page 1675.)

The Hon. J.S.L. DAWKINS (15:36): I rise to speak on behalf of the opposition in relation to this bill and also, in this contribution, I will make the great majority of my remarks in relation to the Renmark Irrigation Trust Bill. I understand that the Hon. Caroline Schaefer will also make a contribution on both bills.

I give credit to the work of the member for Hammond in another place, Mr Adrian Pederick, as the shadow minister for agriculture but also, importantly, as the shadow minister for the River Murray. I give him great credit for the way in which he works and consults with communities all along the River Murray in South Australia.

These bills replace the Irrigation Act 1994 and the Renmark Irrigation Trust Act 1936 respectively. The Irrigation Act 1994 is now at odds with the commonwealth water reform agenda which seeks to remove the regulatory barriers to the trade of permanent water outside a given area or irrigation district by separating water from land. The Renmark Irrigation Trust Act 1936 gave irrigators no opportunity to transform a right into a licence. Trade of water was not even mentioned in that act. A second matter in relation to the Renmark Irrigation Trust relates to its structure which left it outside the parameters of other newer pieces of legislation.

There are several objectives contained within these pieces of legislation, notably, the need to take into account current management practices and policy directions and the need for compliance with federal policy directions. Among other things, the bills also remove references to government irrigation districts which no longer exist and delineate the function of irrigation trusts to that of service providers rather than land tenants.

Other important features relate to the federal requirement for there to be no impediment to the trade of water outside irrigation districts. With respect to the Renmark Irrigation Trust, the bill's major function is to transform a member's existing water right into an owned and tradable right. Until now, members of the Renmark Irrigation Trust were not able to sell their rights separately as they remained with the trust and were consequently unable, among other things, to access the federal government exit packages.

In relation to the structure of the Renmark Irrigation Trust, ratepayers will, following the passage of this bill, become members, and members of the board will become directors, allowing definitions and other qualifications defined in the new acts to cover participants of the RIT. In addition, directors will now be elected from the membership as opposed to being appointed by the board.

My own research, as well as extensive consultation conducted by the member for Hammond, indicated that industry representatives were, without exception, supportive of these bills. They said that the changes were vital to allow irrigators access to water markets and that they also enabled them to apply for exit packages. The participants I spoke to were pleased by the department's consultation process and the fact that the resultant suggestions and requests were acted upon (other than for matters outside state control), and I give credit to the minister and the department for that.

I must say that the member for Hammond and I found that all those with whom we consulted agreed that certain matters under federal jurisdiction were the cause of much aggravation throughout the industry. They include, for example, the failure of the recent COAG agreement to properly vest control of the Murray in a central independent body, the weakness demonstrated by the federal government in negotiating with the Victorian government and the resultant restrictions on trade out of that state, as well as the extended grace period granted to Victoria and Queensland that forestalls any real positive action to restore reasonable flows to the Murray-Darling for several years. These matters fall outside the jurisdiction of this state parliament and so should not impede the progress of these bills.

Irrigators and trusts do have some related concerns that are a consequence of the changes. In disposing of the water right from the land within a trust district, for example, the cost of providing and maintaining distribution services will be shared among fewer members with a subsequent increase in the costs to individual members; however, all the trusts are strongly supportive of the changes within these bills and are very keen that they progress through the parliament. It is worth taking this opportunity to emphasise that this state government should do more to effect change in the thinking of federal policymakers—particularly the federal minister, Senator Wong—to take note of the fact that so many of the issues that were brought forward were outside the jurisdiction of these bills.

I reiterate the Liberal Party's support for both bills. I will speak very briefly on the Renmark Irrigation Trust but will not repeat anything I have said in this contribution. However, I would like to quickly mention a couple of other things. In our support of the bill we talk about the irrigation trusts; obviously, other than the Renmark Irrigation Trust, there are a number of others around this state that are either private trusts or are trusts that have resulted from the original irrigation districts, which were set up largely by the state government (although, in the case of Loxton, by the federal government).

The Central Irrigation Trust actually involves 10 of those former government irrigation districts, and in the consultation process the Central Irrigation Trust not only assisted the consultation work by gathering its own 10 trusts together but I understand it also convened a meeting which included a total of some 20 trusts. I believe that work is very valuable to the whole process.

In conclusion, I want to add that, in the work I do across the Riverland and into the Murraylands area, I have sought the views of participants in the irrigation industry right along the river, and there has been general support for this bill and the hope expressed that it will pass this chamber in the near future.

Once again, I express my gratitude for the work done by the member for Hammond for the way in which he diligently sought the views of so many representatives of all the trusts and different irrigator bodies. I commend the bill to the council.

The Hon. R.L. BROKENSHIRE (15:46): I rise on behalf of the Family First Party to support the second reading of this bill. With the forbearance of the chamber, I will speak to the Renmark Irrigation Trust Bill at the same time, as the two bills are inter-related, to save my colleagues valuable time. I want to reinforce the fact that Family First strongly supports both bills.

When reading in Hansard the debate on this bill in the other place, I noted that the opposition's experience mirrors my experience, namely, the opposition's consultation revealed that the government had consulted with all of the trusts and had even made a number of changes proposed by the trusts. Hence, as reported in the other place—and, no doubt, as the minister knows—there is not a lot of angst amongst the trusts about this bill and its passage through this chamber today.

However, I can tell you, Mr President, that there is a lot of angst in the irrigator districts because South Australian irrigators remain today on 18 per cent allocation. Family First is hearing that irrigators are harvesting crops and then permanently switching off the water to their crops. Sadly, and unfortunately, some are giving up.

The government might like its black balloon ads promoting climate change, but I would like to see the government send off a black balloon every time an irrigator along the River Murray gives up and switches off what water they have available, because there would be plenty of black balloons. An absolute tragedy is unfolding up and down the river and, sadly, it is often the smaller or poorer families who are suffering the most. The big managed investment schemes, with money coming in from other sectors and the significant tax breaks they receive from the federal government, seem to be doing all right. However, the rest of the irrigators are struggling like you would not believe.

I ask the minister, on behalf of the state and federal governments, to tell this chamber whether they still support family farming. I have talked about this a lot in this chamber. I have met a lot of family irrigators, and it saddens me as a farmer myself, with a fourth-generation son at home looking after our farm, that when I go to the Riverland now I am confronted by irrigators who tell me that they are discouraging their sons and daughters from continuing. Frankly, given the way in which the government has handled a lot of the lead-up to issues around irrigation in the Riverland, one would have to hold the government responsible for this happening. What is the South Australian government doing, in conjunction with the federal government, first, to ensure national food security and, secondly, to give a reasonable opportunity to family farmers by providing proper government-initiated policy and relevant incentives?

In summary, irrigators are desperate. Gavin McMahon of CIT appeared on the ABC Country Hour of 31 March. As someone who has listened to the program since I was very young, I want to add some positive comments at this point about Country Hour and the fact that it is good that you can get 639AM (the Country Hour station) in the city. It is a valuable service provided by our national broadcaster, and it is a good program produced in South Australia by Bec Kemp, Annabelle Homer, Drew Radford and others. It provides a great service to country people and also those interested in food production in the city.

Mr McMahon explained that in the Riverland 4,600 megalitres of permanent water entitlement had been sold, which he indicated, while significant on its own, was not large in the overall allocation picture. There were various reasons irrigators were selling permanent water, some to avail themselves of exit grants, others to recapitalise and others simply realising that in all likelihood they would never see a 100 per cent allocation again, considering that at present they are on only 18 per cent. Hence they are already buying most of their water on the temporary market and saw greater value in trying to get all their water on the temporary market from year to year than in relying on this government to give them a decent allocation.

The risk they are taking is that prices might be so high they will not be able to afford it, but this is the only option our irrigators are left with: gambling on the open market. Mr McMahon concluded with an excellent summation of why there are such big problems in the Riverland, as follows:

Devastation has come from very low allocations, low commodity prices and the global financial crisis making borrowing very difficult.

Water trade figures published yesterday on the website of the Department of Water, Land and Biodiversity also show that for this financial year South Australian irrigators have brought in 228 gigalitres of water from interstate in 1,629 water trades. That is an average purchase of 139 megalitres of water. Most of that came in from New South Wales, and by contrast only two gigalitres was sold interstate; in other words, 82 gigalitres has now been traded between irrigators within South Australia.

To all the people I am visiting on my regular trips to the Riverland and with whom I come into contact through my connections, I point out that the smaller family farmers are struggling to buy this temporary water or any other permanent water. I ask the minister to explain how Mr McMahon's advice and the DWLBC advice fit in by comparison with previous financial years' permanent and temporary water sale and purchase activity. The information I am getting from irrigators is that this is unprecedented trade activity, and for many of them I am told it is the last desperate roll of the dice: if conditions do not improve—and I am not exaggerating—many of them will be letting their crops die and walking off the land. That is not a potential tragedy but a tragedy for family farming unfolding right now.

I turn to deal briefly with the Renmark Irrigation Trust, separately dealt with in its own bill. Largely this is because at present they do not have tradable water rights and the government is moving everyone in that direction. I have a few questions that relate to both bills. Why are we going it alone first when Victoria is not dealing with the issue? It is well and good to be market leaders, but I ask what steps Victoria and New South Wales are taking in their irrigation districts approximate with this issue. What confidence does the minister have that these bills are not creating fertile ground for water speculators or water barons? I ask this because I wrote to minister Wong about what action her government would be taking against water speculators, and her response was quite cryptic. I read the letter as saying that the government does not care about water speculators, but perhaps I am being a bit tough on her, although I was extremely disappointed with her response.

I seek clarification from this government on the assurances it can give that the new regime for water trading will ensure that there is no room for water speculation. I am of the firm belief that our irrigation areas in this nation are our food bowl, and there should never be a group of investors who control whether we can produce our own food just because they are charging too much for water while they sit up on the Gold Coast enjoying the sun and are not involved in the day-to-day difficulties and activities of our fruit and vegetable growers, horticulturalists and viticulturists. Water allocation should be tied to land, not in terms of the situation which has existed and which the bill is breaking up but in the sense that the person holding a water allocation, wherever they bought it from, should be someone engaged in the business of food or other primary production and not merely a speculator. That is one of the real problems that has now been created and really works against the best interests of strong economic opportunities for those of us who work the land on a daily basis.

I conclude by making a couple of other remarks about the bills and irrigation generally. As I said, Family First supports the government's introduction of both bills and we will be supporting them through all stages. Again, I place on the public record, as I did when the handover bill for the River Murray was put through both houses of the South Australian parliament at a rapid rate of knots, that not only are our irrigators in South Australia being done over but the people involved in tourism along the River Murray system in South Australia, the communities, all the small businesses in those regions which are also very badly affected by the lack of expenditure through the lack of water availability and, of course, the whole of Adelaide are suffering as a result of such low flows coming into the system.

The point is that we were told that the River Murray handover bill was going to be good for South Australia. At that time, we could see only a couple of aspects that would be good and we were fearful that much of it would be of little or no benefit to South Australians. I trust that these bills will be of benefit to some irrigators, but I remind the council that recently we have seen examples of threats to use the veto power to go away from that handover bill. We have had confirmation that it is not a proper independent authority removed from politicians, ministers in particular, and the Council of Australian Government. We have a situation where we now see the Premier mounting a constitutional challenge about the 4 per cent cap in Victoria.

Frankly, I would have thought that those sorts of things would have and should have been negotiated around the COAG table prior to that bill being put before this chamber. I do not believe that there was a plan, once that legislation went through, to then look at a constitutional challenge. I believe that it was only recent polling and media pressure that forced the Premier to mount a constitutional challenge.

Whilst I support the constitutional challenge—and I hope it will be successful—the people of South Australia, particularly the irrigators, need to know that it will make little difference. As a result of the government and the parliament being intimidated into supporting those handover bills (as they are), we are in a difficult position when it comes to getting a fair go for South Australia, a better water flow, a better percentage and an absolutely independent authority to look after the Murray-Darling Basin system.

I summarise by reinforcing what the shadow minister for water said in the other house; that is, in 50 years people in South Australia will rue the day that the parliament in October 2008, in an intimidatory fashion, supported the Clayton's commonwealth handover of the River Murray system. However, we did not have to wait 50 years; we have already seen all the weaknesses, the inequities, the unfairness and the spin coming to fruition at the expense of irrigators right along the Murray system and all South Australians. I will continue to argue for a better go for irrigators when it comes to water opportunities along the River Murray. Again, I have pleasure at this point in supporting the second reading of both bills.

The Hon. C.V. SCHAEFER (15:59): I, too, support both bills and will speak to them both at the one time. I cannot resist commending the Hon. Robert Brokenshire on his contribution, much of which I agree with, even though it had absolutely nothing to do with either of the two bills about which we are talking.

These two bills repeal the Irrigation Act and the Renmark Irrigation Trust Act, the latter act having been written specifically for that particular trust in 1936. There has been no objection that either I or my colleagues have received from any of the parties involved with either of these acts. This bill has the effect of transferring water rights to the participants in the trusts so that they become owners of those water rights and now have an asset which can be traded. As sad as it is, as the Hon. Mr Brokenshire mentioned, a number of those irrigators are in dire financial straits. A standing committee yesterday received a briefing from Waterfind, which is the pre-eminent water trader in Australia, and I was interested to learn that a great number of irrigators are now in fact selling their permanent rights and simply leasing-in seasonal water rights, if you like, according to their needs in a particular year or, indeed, their financial ability to continue irrigating.

This, in fact, will give them greater flexibility of management, although I am sure that many of them would prefer not to be in that situation. It will also give those members of the former trusts the right to access exit packages. Again, as sad as that may be, it has been a great anomaly, as well as a sense of frustration, to a number of those people who, had they not been in a trust, would have been eligible for an exit package, and, because they were, they were not eligible for that package. Although those two reasons for repealing these bills are as a result of the ongoing tragedy of the lack of water in all our waterways, but in particular the Murray-Darling Basin, we do in fact give some flexibility to those people by repealing the two acts in question, and I support the passage of these two measures.

The Hon. R.P. WORTLEY (16:02): I rise today to offer some brief remarks on this bill. Both this bill and the Renmark Irrigation Trust Bill, which I also support, are interrelated. I will therefore make one speech taking in both bills. Both bills have been subject to review intended to make sure that our irrigation practices in South Australia are congruent with the federal government's water reform agenda. The review's dual purpose was to ensure that our water management practices were in line with current management protocols and practices. In my view, the bill before us amply reflects these aims.

Before discussing the provisions of the bill, I would like to take a few moments to discuss its context. The Irrigation Bill and the Renmark Irrigation Trust Act are of particular importance to me given that my duty electorate is Chaffey, an electorate which I think you, Mr President, had before me. I am very aware of the problems being experienced by those in the Riverland, and I am acutely concerned with the consequences, both short and long term, of our current parlous position in relation to water.

These few figures paint a sobering picture. In 2006-07, agriculture in the Riverland, the Lower Lakes and the Mid Murray employed 22 per cent of the region's workforce. Irrigated agriculture contributed $500 million to South Australia's gross value of production in 2007-08, with an additional $288 million of value adding. However, reduced water allocations have meant that areas under irrigation have fallen from 63,000 hectares in 2006-07 to 46,000 hectares in 2007-08. Wine production has been high but prices are depressed and export sales to the US are slowing. Citrus growers also experienced eroded export returns.

Dairy farmers cannot operate at a profit; their feed is bought from elsewhere. Milk output is halved. Processing and packaging businesses for milk, juice, wine and fruits face uncertainty, and the global economic crisis, of course, compounds the situation. Words fail me when I consider the potential for social dislocation that underlines this scenario.

Clearly, our most precious resource is under threat to what I believe is an unprecedented degree. The most recent River Murray Weekly Report, issued by the Murray-Darling Basin Authority, tells us that, despite the recent very heavy rains along the New South Wales coast, very little rain fell into the basin. The Eastern Highlands received up to 15 millimetres, but the western half of the basin received no rain at all.

Even more ominously, the authority's drought report for March, released today, notes that South Australia, along with New South Wales and Victoria, has only enough critical needs water for one more year due to the combination of record low inflows over the past three months, low storage levels and bleak rainfall outlook for the next three months over the southern basin. Indeed, inflows for the first three months of this year were the lowest in 117 years, and the current water year could prove to be the sixth driest on record. Members may recall that 2006 was the driest on record. So, the situation is critical, and a drought update summarises the position, as follows:

Autumn is a critical time for wetting of the catchment prior to winter rainfall, and there needs to be a sustained period of above average rainfall during the remainder of autumn, and throughout winter, for inflows to recover towards the long-term average. However, the latest rain outlook…shows a moderate to strong shift in the odds favouring drier than normal conditions across the southern half of the Basin for the next three months…the chances of any significant improvement in the Murray system inflows for the remainder of the 2008/09 water year are very low.

It concludes:

It may be that delivery of all carryover cannot be assured until the volume of water to meet system operating requirements is available. Similar to the last two years, the prospects for irrigation allocations in 2009/10 will be highly dependent on future rainfall and system inflows. Overall, the outlook for the beginning of the 2009/10 water year is poor.

This is the context of the bill we consider today. The draft legislation before us puts in place frameworks for the irrigation of properties in both government and private irrigation districts in our rural areas. In the recent past, services in this sector have been provided by private trusts, and this service provision has been augmented with significant investment by government and irrigation infrastructure.

Through the legislation we are currently considering, compliance will be assured with commonwealth policy initiatives, including the national COAG water reform of 1994, the National Water Initiative of 2004 and the Intergovernmental Agreement on Murray-Darling Basin Reform of 2008. The bill also provides for consistency with the commonwealth Water Act 2007, with particular reference to charging and freeing-up of permanent trade in water, to which I will refer shortly.

As my colleague the Minister for the River Murray and the Minister for Water Security said recently in her second reading speech in another place, the Irrigation Bill 2009 also provides flexibility in the management of water licences, so that a trust can choose, by resolution, to devolve its water licence to all members of the trust; flexibility for individual members, enabling them to apply to the trust to transform their irrigation right into a water licence under the Natural Resources Management Act 2004; and flexibility for existing trusts to continue that management of collectively owned irrigation infrastructure and/or drainage networks, and for new trusts to be established or amalgamated in the future.

In addition, it removes the concept of an irrigation district so that the operations and functions of an irrigation trust are based on service provision, rather than land tenure. It emphasises the power of an irrigation trust to enter into individual service agreements or contracts for the delivery of water or drainage services. It makes explicit that an irrigation trust must not restrict permanent trade of water out of its irrigation network and that it must facilitate trade both within and out of the trust network at the request of its members and in accordance with the rules under the Water Act 2007.

It will provide that the fees and charges for water, drainage and other services provided by a trust reflect the cost of providing, maintaining, managing and operating irrigation and drainage infrastructure subject to the rules under the Water Act 2007. It will provide that an individual's entitlement to vote at a trust meeting is determined by an individual's connection to a trust's supply and/or drainage infrastructure as a member of the trust unless otherwise contractually specified between the parties. The bill also brings various anomalies with regard to terminology up to date, ensures a minor amendment to the National Resources Management Act 2004 and brings penalties up to date.

I now return to the issue of freeing up permanent trade in water. The provisions of the bill will enable those irrigators electing to leave the industry to trade their water. This will make it easier for those so electing to gain access to the federal government's small block irrigators exit grants packages, which will remain available until 30 June this year.

Consultation on both this bill and the Renmark Irrigation Trust Bill have been extensive, and all key stakeholders have agreed that the changes they encapsulate are both necessary and timely. The legislation will ensure that South Australia can meet challenges in the future; challenges which we know will come and which we cannot evade. With these few remarks I commend the bill.

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (16:11): I thank honourable members for their indication of support for this bill and also their comments, where relevant, on the Renmark Irrigation Trust Bill, which we will deal with next.

I suppose the context in which this bill is being debated is important. We had a question in question time today about the recent statements from the Murray-Darling Basin Authority which indicated that just 140 gigalitres of water flowed into the river storages in the first quarter of this year from January to March, and that is slightly lower than a previous record low in early 2007, which was the smallest volume since records began 117 years ago. So, the fact that we have had two years straight and in this first quarter we have had the lowest ever inflows shows the conditions facing our water storages at present.

I should make some comments particularly in relation to the speech of the Hon. Mr Brokenshire who, in referring to the debate that we had in 2008, basically suggested that the effort we went through with that legislation effectively had no value at all. That is just a nonsense. No-one was suggesting that that legislation that we passed here in 2008 would be an instant fix for the river. Certainly, no government speakers suggested that. Rather, of course, that legislation was all about implementing the COAG agreement in particular and establishing an independent authority which would then be responsible for developing a management plan for the Murray-Darling Basin.

It was never suggested that, somehow or other, overnight, once the bill was proclaimed, that would suddenly put more water into the Murray-Darling Basin storage. The fact that since that bill was passed for the second or third year in a row we again had these unprecedentedly low inflows shows the dire situation that we are facing in relation to the supply of water to this state. Of course, the irrigation industry in this state almost entirely depends on inflows from the Murray River.

I should make that point at the outset, and the Premier has addressed this issue publicly, and I will not go over it again other than to reinforce the fact that no-one was suggesting that that bill would be an instant fix; however, we believe that in the longer term it will address many of the issues of over-allocation. However, without a return to average inflows within the basin, obviously, no management or governmental system will fix the fact that we have had these unprecedentedly low inflows for consecutive years.

The Hon. Mr Brokenshire also asked a number of questions and, in particular, he asked about South Australia's role in relation to this legislation. I point out that, with this Irrigation Bill, we are updating our legislation and, in the process, complying with commonwealth legislation. It is important to understand that New South Wales and Victoria operate their corporations and trusts, as the case might be, in very different ways.

For example, in Victoria, all irrigators within the irrigation trusts or corporations already have their own water licences, and this is not currently the case in South Australia. The bill will address this matter. The Hon. Mr Brokenshire also spoke about speculation in the water market. This government believes that markets are the appropriate way to allocate scarce resources. These bills give effect to the national water initiative frameworks on the water trade. I think we have to have faith in that system.

The Hon. Mr Brokenshire also questioned how much trade has occurred by water coming into South Australia. The fact that water has come into this state, I think, shows that the water market is working, and that water is coming to where it can be optimally used. If he wants specific details, we obviously do not have those here, but perhaps we can come to that matter in the committee stage. In any case, I suggest that it is not really relevant to the content of the particular bill before us.

The honourable member also asked what the government was doing to help farmers. I just point out that, notwithstanding the dire conditions about which I have just spoken, in September last year the government introduced an allocation of water to ensure that permanent plantings in the Riverland could be preserved. In fact, 60 gigalitres of water was made available at that time to ensure that those permanent plantings could be secured. So, the government has taken action within, of course, incredible constraints.

Water inflow is as low as something like 140 gigalitres in three months. When you think that previously, in an average year, the state's minimum allocation was 1,850 gigalitres under the old Murray-Darling Basin system, you can see that you are getting less than 10 per cent of that, even if it is over the summer months. That is the inflow into the entire basin storages, which puts in perspective the situation that we are facing.

If there are any specific questions, we can address those during the committee stage, but I think it was important to put on the record the government's position in relation to the general picture of the River Murray. I also think it is important to understand that the bill that was passed back in 2008 is intended to address issues within the Murray-Darling Basin in the medium to longer term. I again thank members for their contributions and indications of support for this bill, and I commend it to the council.

Bill read a second time and taken through its remaining stages.