NATURAL RESOURCES MANAGEMENT (COMMERCIAL FORESTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 29 September 2011.)

The Hon. G.A. KANDELAARS (17:07): I rise to speak on the Natural Resources Management (Commercial Forests) Amendment Bill, which is incredibly important to a number of people, businesses, industry and the environment. It has far-reaching social, economic and environmental implications. Essentially this bill seeks to manage the impacts of commercial forest plantations on the security of licensed water users and on the integrity of water resources themselves. It proposes to do this either through an improved forest permit system or a forest water licensing scheme. Both the improved forest permit and the forest water licensing systems can robustly manage forest water impacts to protect the integrity and security of water resources and the environment on an equitable basis. This is essentially the core of this bill—sustainable management of water resources on an equitable basis.

There are two concepts on which I would like to focus: sustainability and equity. Water is fundamental to our health, our way of life, our economy and our environment. The bottom line is that we and future generations need this resource to survive. That is why it is imperative that we manage our water resources in a sustainable manner. That is also why in 2004 the state government signed an agreement with the Australian government and other states and territories, known as the National Water Initiative. This initiative requires governments to implement a series of measures to manage water interception effects of land use change, including large-scale plantation forestry.

By proposing this bill South Australia is acting responsibly through seeking to appropriately manage water resources to ensure that we have a sustainable supply into the future. This bill will also ensure that such sustainable management will also be equitable. Let us use the example of forest water licences. If forest water licences were applied in any part of the state, irrigation and forest industries would be treated in an equitable manner. In an area where forest water licences might apply, a significant water user, including forestry, would receive a water licence which would provide them with a water allocation that is personal property that can be traded when no longer required. At the same time, all licence water holders, including forestry, would be subject to ongoing regulation to ensure that water management is sustainable.

My point is that it is equitable to treat forestry in the same way as other significant water users in areas where access to water is regulated or prescribed. In fact, it would be inequitable for members to oppose this bill which seeks to put all stakeholders on a level playing field so that they all have a sustainable resource that they can continue to rely on in the future.

It is with great respect that I acknowledge the comments of the member for Mount Gambier in the other place. This bill is pivotal to the member for Mount Gambier and many of his constituents in Mount Gambier and the South-East. My colleague has a vast understanding of this bill and his constituents, as he has consulted widely with all stakeholders in his community regarding the management of water resources. I note that in his second reading contribution the member for Mount Gambier stated:

This bill provides the necessary tools for the people of the South-East to enable them to develop long-term regulations, policies and plans to manage the water of the South-East in a sustainable manner for the benefit of all stakeholders, be they dryland farmers, forest growers, irrigators, urban users, businesses or the environment.

His comments relate back to the core of this bill; that is, achieving the use of sustainable water resources through equitable treatment of all users. The government wholeheartedly agrees with the member for Mount Gambier on his views and values his position, especially as the local member in the epicentre of the imperative reform proposed in this bill.

The member for Mount Gambier also commented that 'referring this bill to the Natural Resources Committee is futile and only another time-stalling exercise'. We have moved on since 2009 when the then minister for environment and conservation requested that the Natural Resources Committee consider holding an inquiry into the bill. The committee postponed the decision until after the 2010 election and consequently, after the election, decided not to hold an inquiry. Since this time, a government task force and a stakeholder reference group—

An honourable member interjecting:

The PRESIDENT: Order! Interjections are out of order.

Members interjecting:

The PRESIDENT: He is doing very well. He would do a lot better if he did not have the opposition interjecting.

The Hon. G.A. KANDELAARS: Thank you, Mr President. I will continue. Since this time, a government task force and a task force reference group, which includes representatives from peak industry bodies from the forestry, wine, dairy, potato and dryland farming industries, as well as the South Australian Farmers Federation and the Conservation Council of South Australia, have been convened and have provided significant contributions to this area. Consequently, any referral would be superfluous.

We should not wait until the next drought to act on creating these legislative instruments. This legislation is about creating the tools to manage water resources in a sustainable and equitable manner for the industry and the environment. The minister for environment and conservation and the member for Mount Gambier have urged all those who have empathy to support this bill. I urge you all to do the same.

The Hon. M. PARNELL (17:15): The Greens will be supporting the second reading of this bill. It includes a head of power into the Natural Resources Management Act that will enable the government to issue water licences to commercial forestry. We note that there is already a limited power contained in regulations to declare a water-affecting activity and subject commercial forestry to permit but not a water licence, and this bill will enable that to occur.

Why should commercial forestry need a water licence or a permit? The answer is very simple: because commercial forestry uses water in just the same way that irrigators use water. It may be due to interception or it may be due to direct extraction. In relation to interception, we are talking about the situation where water that falls from the sky as rain does not reach the groundwater table because commercial forestry intercepts it. In relation to direct extraction, you can have the situation where commercial forestry planted over shallow aquifers can directly take groundwater from that resource. I said that it is just the same as with irrigators—

The Hon. J.M.A. Lensink interjecting:

The Hon. M. PARNELL: —and the Hon. Michelle Lensink intercepts to say that is rubbish—

The Hon. J.M.A. Lensink: No, I didn't say that. It's just not true.

The Hon. M. PARNELL: Well, she said it's not true. They might not be exactly the same but the effect is exactly the same. Whether a tree takes water by its roots from a shallow aquifer or whether a farmer puts a pump into the ground and pumps water out, the effect is the same. It has the same impact on that water resource. When we look at the South-East of South Australia, about half of the water in many areas is accounted for, and I would say used, by commercial forestry.

There will, no doubt, be a lot of debate around existing use rights but I accept that existing use rights will be taken into account in the water allocation process. What we must not lose sight of is that, when it comes to overallocation of resources, whether it is groundwater or surface water resources, the first step towards fairer allocation is to level the playing field and to make sure that you count everything that needs to be counted before you allocate the resource. In the present case, that means assessing the use of water used or impacted by commercial forestry.

So, maintaining the status quo and pretending that forestry does not have an impact on water, other than in a very limited range of circumstances where a permit is required, is not an option and I do not think it is fair. As with the case of overallocation of surface water, for example in the Murray-Darling Basin, it is a simple fact that you cannot repeat the same behaviour and hope for a different result. If the result we want is protection of the resource and a fairer allocation of the resource, you need to know exactly which industries are impacting on that resource. I think the existing use rights of the forestry industry need to be looked at in that light.

This bill is a sensible progression in natural resources management that recognises that the competition for a renewable but scarce resource needs to be carefully managed. This is not a new issue: it has been around for a long time. According to one of my correspondents, this debate has been a live one since about 1985. Certainly, I became acutely aware of it back in 2007 when we were debating in this place the Penola pulp mill legislation. At that time, I made a number of trips to the South-East and met with a range of water users, including wine grape growers and vegetable growers, and back then they were saying they wanted a more level playing field in the water allocation process.

I acknowledge the valuable assistance that has been provided to me and my office by a number of landholders in the South-East, and I particularly acknowledge Mr Tony Beck, who has continued to provide valuable advice from the South-East from 2007 onwards. More recently, I met with the Chief Executive Officer of the South Australian Dairy Farmers Association, Mr Ken Lyons, and he also urged us to support this bill.

However, I have also carefully considered the information provided by the National Association of Forestry Industries. They put a contrary argument. I met with their CEO, deputy CEO and senior policy analyst. As part of their case NAFI referred to work that was done by the CSIRO on behalf of the Murray-Darling Basin Authority, and whilst it was interesting reading, I am not convinced that the arguments they raised were particularly relevant or valid in the context of the South-East of South Australia.

Much of that work, as I understand it, applies to catchments where the key water resource is surface water rather than groundwater. It does not make sense to me to simply explain away the substantial interception that is caused by forestry and to simply limit our debate to direct extraction or diversion of water. The water cycle is more complicated than that and we need to take everything into account when allocating that resource.

In conclusion, I do not believe that the bill requires substantial amendment and I also do not believe that there is any great value to be obtained in sending the bill off to a committee. This is a very longstanding debate, the range of views is very well known, and the science available is good and improving continuously over time. I think that we do need to grasp the nettle, acknowledge that commercial forestry has an impact on water budgets and that we need to regulate it accordingly—at least take it into consideration when allocating how water resources are to be distributed. With those words, the Greens will be supporting this bill.

The Hon. J.M.A. LENSINK (17:21): I rise to make some remarks on this bill and I am pleased to be able to make some remarks on this bill as it is the first time that it has arrived in this chamber. I would like to respond to the two preceding speakers in this debate and say at the outset that the Liberal Party firmly believes in equitable treatment of all water users, and that is part of the reason why we have reached the position that we have at this stage.

A number of the people who the Hon. Mark Parnell mentioned are people whom I have met with as well and I acknowledge their contribution to this debate. However, I would also like to acknowledge that it is a very complex area and none of us are particularly expert in hydrology or those matters, and that is a very large part of the reason why I think this bill deserves better examination by a committee which is able to look at it in much more detail. These are things that we as legislators can struggle with understanding from time to time and certainly some of the advice that I have had from some stakeholders is that the research work that has been done in the area has not been thorough enough.

The Hon. Mr Kandelaars said that the Natural Resources Committee did not progress the bill. That is not true and I will read into the Hansard a letter that I received from the current environment minster which demonstrates that it was his understanding, at least immediately after the election, that it was going to be the responsibility of the Natural Resources Committee to progress it. However, I think he has, once again, been fooled by his department and established a process which has been used to avoid proper parliamentary examination. Through the interjections of my colleagues I would urge him to read the rubbish that he gets put in front of him before he reads it into the record.

This bill seeks to licence forestry as a water user as part of what the government has told us is its aim to 'achieve ecologically sustainable development of plantation forests while protecting and managing our water resources'. I think a few of us would disagree with that laudable aim. Trees and forests are water users as they intercept rainfall and can reduce recharge and directly extract groundwater through their roots. Volumes vary between tree species and over the life cycle of the tree—which may be over 30 years. This is where I was interjecting with the Hon. Mr Parnell, because the way that they use water is different to irrigated crops and other dryland crops. I think the government would agree that they use water differently because the usage cannot be turned on and off according to the season.

The government has a policy entitled 'Managing the water resource impacts of plantation forests: a statewide policy framework' which was published in June 2009. We have also heard from the preceding speakers, the government has also told us that this measure is important to comply with the National Water Initiative which changes the way water is valued and counted in Australia.

I note that the water allocation plan for the South-East is now some five years late, and the member for MacKillop has questioned whether that is, in fact, legal. This proposal is a national first, and I think that is also important to this debate because we are going ahead of the other states. The proposed new forestry licences are a separate type of licence, which provide an allocation over the lifetime of a forest. A forest's water allocation may be reduced only when the plantation has been harvested, either fully or partially.

The bill provides for existing plantations to be automatically granted forest water licences when an area is declared so that the regime will not affect the current activities of existing forests. The government estimates that this will be in the order of $300 million of tradeable water. However, I do not think that it is as straightforward as trading water is in other areas.

This particular policy has operated under several environment ministers during the Rann-Weatherill governments. Minister Hill, who was environment minister several years ago now, had given assurances to the forestry sector in a ministerial statement on the topic of 'Managing the expansion of forestry's use of the South-East water resources'. This expansion has not materialised and therefore the industry believes that proposals to license continue to be unnecessary. I quote from minister Hill's statement of 17 February 2004, in which he says:

Provision has been made for approximately 59,000 hectares of total expansion to be permitted before any need to secure water allocations to offset the impact of further forest expansion. The provision allows for an increase in the current estate of 135,000 hectares by approximately 45 per cent. By its own assessment this provides the forest industry with significant certainty regarding its opportunities to expand for approximately 10-15 years.

Premier Weatherill (then minister Weatherill), on 18 June 2009, introduced amendments (indeed, this particular bill) to the NRM Act, which would license forestry as a water user. It was agreed that the bill should be referred to the Natural Resources Committee, which was done. On 1 December 2009, minister Weatherill moved that the bill be discharged after he had agreed. He asked the Natural Resources Committee to inquire into it, but this was subsequently withdrawn, I do not think with any communication between the committee and the minister, and that therefore never took place.

Minister Caica established an interagency reference group to work on the Lower Limestone Coast WAP, and that included PIRSA, DTF, Department for Water, DENR and the South-East NRM board, which established a reference group to consult with key stakeholders. The forestry industry states that both the bill and the WAP were not provided to the reference group beforehand. This bill was introduced to the House of Assembly on 24 November 2010 and is largely the same as the 2009 bill.

I place on the record the correspondence I have had between various ministers on this matter and introduce another issue that occupies the mind particularly of some of the irrigators in the South-East, and that is what is called the Border Committee, which is a rather secretive committee, I think, which oversees a separate irrigation area in that particular region between South Australia and Victoria.

I first wrote to the minister on 4 February 2010, which was before the last election and after the minister had agreed to refer the bill to the Natural Resources Committee. I said:

Dear Minister

I write to you on behalf of a range of South East irrigators and concerns regarding their water allocations.

I do appreciate that the Natural Resources Committee is undertaking an inquiry into the Natural Resources Management (Commercial Forests) Amendment Bill 2009 which will be informative to the Parliament.

Irrigators who operate within the 'border zone' have raised concerns with me about the timing of conversion to volumetric allocations through the SE NRM process. I understand that conversion from area to volumetric licensing is a requirement of the National Water Initiative and is an ongoing process.

These irrigators are also impacted by decisions of the South Australian-Victorian Border Groundwaters Agreement Review Committee (the Border Committee). I have found it extremely difficult to find public information about this committee, including governance arrangements, contact details and the most recent annual report (since 2007-08).

Irrigators are aware that calculations of the permissible annual volume regarding water allocations have been made by the Border Committee which are at variance with the SE NRM WAP Total Available Recharge, but they have not been provided with the data and modelling, nor have they been provided with an opportunity to be consulted. These calculations imply a cut in allocations of up to 37 per cent in some zones (for instance, Hundred of Glenburnie).

I would greatly appreciate your advice on the following.

Will the SE NRM implement a new WAP by June this year or will it be delayed until the Parliament makes a determination regarding commercial forestry?

Is there to be a review of the Border Sharing Agreement and if so, what are the terms and the timing of the review process? Will a review structure include representation from all stakeholders?

How often does the Border Committee meet? Are its agendas and minutes publicly available? Can stakeholders make...submissions to it?

Can the data, modelling and calculations of the Border Committee's permissible annual volume be made publicly available?

The reason I read that into the record is that some people who have made representations to us have concerns that their water allocations will be greatly cut because of the groundwater border agreement. So, it is a related issue and it is important to take that into account in relation to this debate. I received a reply from minister Caica, dated 18 April 2010, which states:

Dear Ms Lensink

Thank you for your recent letter to my predecessor concerning South East water allocation plans and the Border Groundwaters Agreement.

The South East Natural Resources Management Board is currently in the process of preparing the Water Allocation Plan for the Lower Limestone Coast Prescribed Wells Area.

This is the key which shows that the government has been telling fibs about what happened with the Natural Resources Committee:

It is expected that the draft plan will be considered following the Natural Resources Committee of Parliament having considered the Natural Resources Management (Commercial Forests) Amendment Bill 2009.

Well, golly gosh, there it was all the time. The minister signed this letter to me and, surprise, surprise, he says another thing on Hansard recently. It continues:

The South Australian and Victorian Governments have agreed to review the Border Groundwaters Agreement. It is proposed that the review will also consider surface water and groundwater interactions. It is anticipated that this review process will take at least 18 months.

The Border Groundwaters Agreement Review Committee meets at least four times a year, the Committee publishes an annual report, which is tabled in both State Parliaments. A copy of the 2008-09 annual report is enclosed for your information.

And so on. So, that was where that was at 18 months ago. The Green Triangle Regional Plantation Committee put out a media release on 15 March of last year, again pleased that this issue was going to be examined by the parliamentary committee. They said that they were:

...pleased to hear a number of candidates—

this was in the lead-up to the state election—

express support for the water resource to be managed sustainably, allowing the resource to be shared fairly between all and recognising existing rights. This undoubtedly must include the forest industry.

I remind readers that this is the industry itself saying that it must be included and everybody must be treated fairly. It continues:

In 2009 the South East Natural Resource Management Board proposed a draft Water Allocation Plan which will discriminate against the region's plantation growers...

Licensed water use by irrigators is governed by a number of guiding policy principles:

fair recognition of historic use,

equitable sharing of the resource between licensed irrigators,

access to both temporary and permanent water trading to manage changes in allocations,

legally secure water property rights separate from land property rights...

And so forth. Continuing:

These are reasonable principles—

said Mr Phil Lloyd, the chairman—

but these principles have not been applied to forest owners under SENRMB's licensing proposals. For example, SENRMB does not accept the scientific principle that the amount of rainfall intercepted by a forest reduces as the amount of rainfall reduces.

I say that, and I again refer back to my interjection to the Hon. Mark Parnell, in that I would have thought that it was indeed self-evident that if there is less rain then trees are not going to be able to intercept as much water.

I have a range of questions which I will not table at this stage. We will see whether or not the Legislative Council accepts the referral to the Natural Resources Committee. I have asked for submissions regarding consultation on this bill, which would be considerable. I have since had to FOI them because I have not received them, so I look forward to those in due course. I might have to have an arm wrestle with the department to get hold of them.

The industry has said to us that it believes that there is a fair amount of deception going on within the government about this particular piece of legislation. I think it is worth bearing in mind for anyone who has taken an interest in this issue the Natural Resources Committee's examination of the Deep Creek Conservation Park, where the department said that native vegetation has no impact on water. Indeed, I remember the Hon. Sandra Kanck, who is a great conservationist, being pretty cross with the department about the way it behaved in relation to that particular issue.

This is a major change to legislation, and South Australia is going ahead. We are told that other states will be watching with interest. No doubt they will be, given that this will quite possibly be a major penalty on the local industry, and particularly given what is happening with the government's decision in relation to the forward sale of forests in the South-East. I do not know why we would be pursuing this at this particular time. In fact, the water licensing sale is a question in itself, because the issue of the definition of 'forest manager' is not resolved in this legislation, and the government will freely tell us that it will be waiting for that to be resolved if those issues are brought into court. Again, I think that is some reason for us to be alarmed.

The ForestrySA licences, we are told, will not be allowed to be sold, and I wonder whether it would then be a question for the ACCC to be involved. The government will tell you that this issue has been well examined by the Stakeholder Reference Group. We are told that the group has not met very much and certainly not for three or four months. It has not been given the task of reviewing the government's policy, but the policy is a given, and a lot of information—the hydrology reports that the government is relying on—is not being made available to the forestry industry. Under those conditions, I think this issue at least deserves to be looked at and all stakeholders should be asked to come in and give evidence.

The Natural Resources Committee, as far as its reputation is concerned, is a very effective committee. Unfortunately, the Environment, Resources and Development Committee is not anywhere near as effective as it used to be, but that is a discussion for another day. I think the NRC has done a lot of good work in the past. It takes its terms of reference seriously and does a good job. I move to amend the motion as follows:

Leave out all words after 'that' and insert the words, 'the bill be withdrawn and referred to the Natural Resources Committee for inquiry and report.'

The Hon. I.K. HUNTER (Minister for Communities and Social Inclusion, Minister for Social Housing, Minister for Disabilities, Minister for Youth, Minister for Volunteers) (17:39): I rise to close the debate and, in doing so, I thank honourable members for participating in the second reading stage. It is clear from the science that plantation forests impact on the availability of water resources. I think we all agree that the sustainability of water resources that support that environment—industries, communities and regional centres across South Australia—is important, and that is why the government has introduced this bill.

The bill is about moving towards a water planning and management system that treats all water users that have the potential to have a significant impact on water resources in a consistent and equitable manner. The government released the statewide policy framework, 'Managing the water resources of plantation forests', in June 2009 to provide clear and consistent policy guidelines on how to best manage the issue across the state.

This statewide policy framework recognises that, based on the scientific evidence, both forest water licences and permits are appropriate legislative tools to manage the water resource impacts of plantation forests. This bill is required to fully implement the statewide policy framework, and deliberately creates two legislative tools. This is because the water resource impacts of plantation forests vary across the state. Put simply, a one-size-fits-all approach would not be appropriate.

The community will have a say on how they want forest water impacts to be managed through regional natural resources management boards and their consultation on water allocation plans. We must not allow ourselves to be confused here. As the Hon. Mr Kandelaars said, we must remember that this bill is about providing the tools to manage water resources. It is the regional planning processes that will determine the most appropriate ones to be used.

Sir, if I might have your indulgence to quote a couple of people—from an open letter from the South Australian Dairyfarmers' Association, signed by Mr Graeme Hamilton—because these quotes are pertinent to our debate tonight:

We are not advocating reform that could cripple a valuable industry to the state economy. We are simply saying that all water-using industries should operate with the same responsibilities and privileges, with the acknowledgment that forest water use is diffuse rather than point sources like most others.

It goes on to say:

We do not think that referring the issue now to another parliamentary committee is going to turn over any more stones than have already been polished smooth by the many people who have been involved in this lengthy process.

Also from the South Australian Dairyfarmers' Association is this quote from their briefing notes:

Remember the amendment to the NRM Act going to the Upper House simply seeks to have Plantation Forestry included as a 'water taking activity'. There should be little argument with this and therefore the change to the act should be passed.

In closing, it is important that any new mechanism to manage forest water impacts is designed to operate alongside existing mechanisms for managing other water uses under the Natural Resources Management Act 2004. By creating both legislative tools (forest water licences and permits), the best and most appropriate mechanism to manage water resources in a particular region can be adopted in consultation with the local community. I urge honourable members to reject the amendment moved by the Hon. Ms Lensink, and to support the second reading.

The council divided on the amendment:

Majority of 3 for the noes.

Amendment thus negatived; bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. J.M.A. LENSINK: I have some questions that the government may wish to take on notice. First, why is the government not regulating other dryland crops which also intercept water? For instance, there are highly modified pastures which are more extensive in the region than plantations and use almost as much water per hectare, such as lucerne, which I think is often cited as having fairly deep roots and is quite a thirsty pasture.

Secondly, is the government prepared to acknowledge the fundamental difference between forest plantation and irrigation water use in that trees automatically self-regulate water in line with seasonal variations in climate; that is, if it rains less they use less water, whereas irrigation uses more water when it rains less, such as in times of drought? Does the government believe that it is treating these sorts of crops differently and inequitably?

Thirdly, why is the government seeking to extend the current permit system beyond what is stated in the statewide policy framework? The proposed extended permit requires a new permit application each time a plantation is replanted. Is this inequitable compared with other land uses? Does the government acknowledge that plantations are dryland crops which need to be replanted when cleared similar to any other dryland crop? Does the government agree that the bill ignores other dryland cropping and pasture activities which operate on much larger scales and are very significant interceptors of water? (That may be covered in my first question.)

Fourthly, in the SA forest industry strategy, substrategy 2.3 aims to 'expand plantation area and increase wood supplies to improve economies of scale'. How is this consistent with a water policy that not only aims to constrain the growth of the industry but also threatens the current industry with cutbacks? Can the government explain how its strategy of seeking to manage water interception only by commercial forestry and not any other water intercepting activities supports industry and the forest industry strategy? I put those questions to the minister.

The Hon. I.K. HUNTER: In the spirit of cooperation, civility and openness that will be the hallmark of the new Weatherill government, I indicate that I will not seek to push the process through any longer tonight and that I will move that we report progress and come back on the next day of sitting to complete the committee stage.

The Hon. J.M.A. Lensink: Let's hope this is a trend that will continue.

The Hon. I.K. HUNTER: Indeed.

Progress reported; committee to sit again.

At 17:54 the council adjourned until Wednesday 9 November 2011 at 14:15.