NATURAL RESOURCES MANAGEMENT (COMMERCIAL FORESTS) AMENDMENT BILL

Committee Stage

In committee.

Clause 1.

The Hon. I.K. HUNTER: At this stage I will put on the record some responses to questions and comments raised by the Hon. Michelle Lensink in the second reading processes. To her first question, I can say that it is important to consider the relative impacts of scale and intensity when comparing the water use of plantation forests and other dryland crops. It is acknowledged that, under dryland pasture, recharge to the aquifer is generally between 10 to 20 per cent of rainfall. Most of this 10 to 20 per cent then recharges underground water and becomes available for consumptive use, including forestry.

Forestry has an impact on the 10 to 20 per cent of rainfall that was destined to recharge the aquifer or flow as run-off into streams and water bodies. It is widely accepted that plantation forests intercept 100 per cent of this recharge and/or run-off. This can significantly impact on the availability of water resources. This can be exacerbated on shallow water tables. A more broad-based system for managing the water resource impacts of land uses is unnecessary as these uses do not affect water resources to the extent that commercial plantation forests do.

If other land uses are found to significantly affect water resources, they can be regulated as water affecting activities under the Natural Resources Management Act. In the specific case of lucerne, trees use more water than grasses or agricultural crops because of their deeper roots, longer growing seasons and greater height and roughness of canopy that tends to increase evaporation.

The Hon. J.M.A. Lensink: Lucerne has got long roots too.

The Hon. I.K. HUNTER: Not as long as trees. To her second question and point, I say that the unique nature of water interception and extraction by forests is reflected in this bill. This bill has been designed to recognise these differences and provides forest water managers with several risk management options that are specific to the forest industry. These include: no premature clear felling as a result of water policy, meaning for the existing plantation rotations; and, the ability for forest water managers to propose a management scheme to the minister to manage forest water impacts.

In addition, the bill also allows for the forest water impacts to be estimated in a way that reflects the longer time frames required to reach a mature crop ready for harvest. The science has shown that, although the absolute volume of water used by forests is lower during low rainfall times, the net impact on water resources can be greater as the forest water use is a higher proportion of the available rainfall. It is important to note that, if licences were applied in a region during dry periods, demand for irrigation water is usually higher and they may present an opportunity for forest water managers to trade surplus water to these users if appropriate.

In response to her third point, I say that both legislative tools provided for by the bill to manage forest water impacts, forest water licences and extended forest permits are required to implement the statewide policy framework 'Managing the water resource impacts of plantation forests'. This framework recommends the creation of both legislative tools so that they can be applied in response to regional conditions where appropriate.

The amendments that relate to the permit system in the bill clarify and simplify the operation of the permit system that can be used to manage the impacts of commercial forestry on water availability. The statewide policy framework does not detail how the permit system should be used to manage forestry. Details of how the permit system may operate in particular circumstances are determined in the natural resources management planning process for each region or water resource. The changes in the bill clarify the flexibility of the permit system to manage the water resource impacts of forestry in different circumstances. The bill does not prescribe or require that an application must be made for a new permit every time a plantation is replanted.

There are two amendments that relate to permits: one identifies commercial forestry as a water-affecting activity in the act, and the second provides that the permit system can operate independently of the development approval process with respect to specific activities. This is subject to a regulation being made. In many circumstances, this may not be necessary; however, there may be some regions where this is required to address a specific issue.

The clauses that relate to the improved forest permit system provide more flexibility to manage water resources through regional natural resources management plans and water allocation plans. In particular, passage of the bill would also allow the permit system adopted in the Kangaroo Island Regional Natural Resources Management Plan to be activated, a region where permits are currently considered to be adequate to manage forest water impacts.

In response to the Hon. Michelle Lensink's fourth point, I say that if forest water licences are applied this policy would be about providing water entitlements to existing forests to underpin the security of the existing forest estate from a water resource perspective. This policy would provide clear and equitable market mechanisms for the forest industry to expand its operations and achieve an economy of scale objective. It is important to note that other agricultural activities have similar aspirations. This bill is about government not picking winners or losers.

In response to the honourable member's fifth comment, I can say that there is no legal requirement under the Natural Resources Management Act for a natural resources management board or the minister responsible for the act to adopt a new or revised water allocation plan within five years or any set time frame. The legal requirement is for the water allocation plan to be reviewed by the regional natural resources management board. All water allocation plans in the South-East have met this requirement. Provisions of a water allocation plan stand until amended and existing water management principles will continue until a new water allocation plan is adopted by the minister.

In response to the honourable member's sixth point, about it being a national first, I say that South Australia's forest water policy and legislation development has been developed under the NWI, which guides consistency across the states but with enough flexibility to allow each state to design approaches within its own policy and legislating frameworks. The National Water Commission recently highlighted South Australia's progress towards implementing this important reform in its 2011 biennial assessment.

In relation to the Hon. Ms Lensink's seventh point, I advise that currently, under a regulation specific to the South-East, change of land use to forestry requires authorisation, a water-affecting activity permit. In locations where a decline in the resource is identified, a water licence may also be required to offset the water resource impacts over the life of the forest. A key component of the policy associated with this regulation includes an agreement between government and industry in 2004 which allowed 59,000 hectares of additional plantation of forest expansion. This came to be known as the forest threshold expansion opportunity, and approximately 42,000 hectares currently remains.

Two key features of the policy are that the nature of the water right is a land use permit and the threshold is available for uptake in specified management areas where water is available and resource sustainability is not compromised. The government has always maintained the position that the threshold will be maintained as a right to the forest industry in accordance with agreement in 2004. However, given the forest water policy and legislation development in recent years, there is an opportunity for the threshold to be treated in a manner that reflects any new policy directions. Any proposed changes to the threshold will only be considered by government with support from the forest industry.

In relation to the Hon. Michelle Lensink's eighth point, I can advise that in late 2009 the Natural Resources Committee was provided with a copy of the 2009 version of the bill with 10 proposed government amendments. The then minister for the environment and conservation requested that the Natural Resources Committee consider holding an inquiry into the bill. The committee postponed its decision until after the 2010 state election and consequently, after the election, decided not to hold an inquiry.

In response to the Hon. Ms Michelle Lensink's comment No. 9, I can advise that many of the environmental, economic and social implications in relation to the bill relate to its application, not the actual mechanism that is created by this bill. A government task force has been working since early 2010 to support the development of a Lower Limestone Coast water allocation plan, through a review of science, development of policy options and consultation with key stakeholders.

The government task force prepared a draft policy issues discussion paper, designed to serve three broad purposes: first, to provide high-level policy guidance for the Lower Limestone Coast water allocation plan; secondly, to provide policy and operational details on how forest water licences, or an improved permit system, would operate; and, finally, to serve as a starting point for further discussions on how to manage localised areas of overallocation and/or of overuse of water resources in the region.

A stakeholders 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, has met several times since September 2010 and has made a significant contribution to the draft discussion paper developed by the task force. The reference group has met 10 times in Mount Gambier and also has met with the Minister for Sustainability, Environment and Conservation in Adelaide at the beginning of this year.

To inform the discussion paper, the task force has also overseen the development of the following:

The South-East water science review, managed by the University of Adelaide and incorporating scientific input from relevant leading authorities. It is one of the most comprehensive studies undertaken in Australia, and it is focused on the hydrology, hydrogeology, ecology and land-use capability. A groundwater model was development by Aquaterra for the Wattle Range area of the Lower Limestone Coast to predict groundwater responses under various forest management scenarios.

A South-East regional profile, developed by the Department of Primary Industries and Resources SA, that outlines the relative economic contribution of various industry sectors and their likely growth prospects into the future. This assessment did not attempt to quantify the multiplier effects on the region, which has been the focus of other regional assessments for the forestry industry.

The task force, with input from the reference group, is considering feedback received during a four-week public consultation on the discussion paper, which closed on 20 April 2011. During this period, feedback was received from a range of individual landholders, forestry companies, peak industry bodies, unions, environmental organisations and local government councils, through 31 written submissions, as well as 17 targeted briefing sessions held in Adelaide and the South-East.

Once the Minister for Sustainability, Environment and Conservation has adopted the final policy principles, the South-East Natural Resources Management Board will prepare a draft Lower Limestone Coast water allocation plan for statutory and public consultation that is consistent with the final policy principles.

In relation to the 10^th point raised by the Hon. Ms Lensink, the bill is not inconsistent with and does not affect requirements under the Groundwater (Border Agreement) Act 1985 because that legislation and agreement are relevant only to taking water through wells. Appropriate interim arrangements are currently being considered whilst the border groundwaters agreement is being reviewed. As this is a separate issue to this bill, a separate briefing can be provided.

In relation to the Hon. Ms Lensink's 11^th point, I can advise that the bill defines the 'forest manager' as a person or company with effective control of a forest vegetation. I am advised that this means the entity with legal authority to control or direct the planting, growing and harvesting of trees and, consequently, the water impacts of the forest. As with most other property rights owned by a large commercial enterprise, the business and investment structures of a particular company will determine the person or company with effective legal control of the plantation forest.

To the final point, I can say that I have been advised that the Treasurer has indicated that the water, land and carbon rights will all remain the property of the South Australian government. The sale tender documents will make these arrangements clear to any potential buyer. The contract between the South Australian government and a potential buyer will make it clear who bears this risk.

Any reductions in water allocation could be offset by purchasing additional water within the management area or by proposing a forest water management scheme. Furthermore, as a prescribed wells area is not overallocated, any reductions are for that management area only and that water right could be transferred to another management area, and hence there would be no reductions in the overall forestry footprint at the prescribed wells area level. That completes my answers to the questions put during the second reading process.

Clause passed.

Clause 2.

The Hon. R.L. BROKENSHIRE: With your concurrence, Mr Chairman, and that of the council, given that I had an important matter that I had to attend to during the second reading explanation, if I could spend a couple of minutes making some brief comments with respect to clause 2 and the bill generally for the benefit of colleagues and for the public record.

This has been an issue that has been hotly debated for several years with respect to the matter of whether or not forestry comes under a water allocation plan in the South-East. In fact, going right back through to my days with the Liberal Party, I had quite detailed and sometimes fairly diametrically opposed debate with some of my colleagues. I felt that forestry should be going into a water allocation plan and some of my former colleagues did not necessarily agree with that.

I place that on the record because this goes back years and years. The point I am on about is that there has been a lot of debate, a lot of discussion and a lot of consideration about this bill. I will put it up-front that it is the decision of Family First to support the government on this bill, as indeed it was the decision of Family First (after a lot of deliberation) to support the government opposing this going into a committee for further discussion and investigation.

I spoke to local forestry people about this matter when I was down in the South-East. It is no surprise that I have serious concerns about the privatisation of forestry, but I also have concerns about the sustainability of water availability, both for irrigators and the environment and sustainable water supply in the South-East. I spoke to some people involved in the forestry industry when I was down there and they indicated to me that they realised that sooner or later there was merit in the government of the day bringing in a bill which allowed for forestry to be considered as part of the water allocation plan.

Out of Canberra, I had several meetings with people from the peak forestry group who came to see me. In fact, I made quite a lot of time available to them. I understand, from discussions in my office as recently as this morning, that they believe I was going to recommend to Family First that I would support a committee. I never made an absolute commitment (from my notes and memory) to support a committee. In fact, in discussion with those people, I said that there was some merit and I understood that merit, based on my assessment as a chair of another committee, and I could understand the reasons why some might want to put it to a committee and that I would look at it.

I did not make a categorical commitment to support a motion to put it before a committee. In fact, from my recollection I do not believe that at that stage there was any absolute commitment to an amendment to put it to a committee. I think I am right in saying that the first absolute indication of a committee—that is, referral to the Natural Resources Committee—that I knew about was last week when the honourable Deputy Leader of the Opposition emailed us saying that she intended to move that it be referred to a committee. So, I want to put that on the public record.

Notwithstanding that, I also want to say that when I spoke to other key stakeholder groups, initially they were talking about the merits of putting this to a committee. In fact, as recently as a few weeks ago, some of those key stakeholder groups thought that it should go to a committee. However, as is always the case when you get to the pointy end of a bill and you get to the stage where we are today, you consider as an individual member of parliament the merits, the positives and the negatives, with respect to what you are going to do in your voting on the floor. That is a democratic right. In fact, I think it is fair and reasonable to say that there are many times when members of parliament finally make their mind up just before they go to vote.

Irrigators down there have very serious concerns about the amount of water that forestry is using. In fact, advice that I have says that up to possibly 30 per cent of all the water harvesting in the South-East is utilised by forestry. Other advice that I have says that, at best, there is about 2 per cent of unallocated water availability in the South-East. If you could get as definitive as 2 per cent—the fact of the matter is that you cannot quite scientifically get to that point—what it says is that it is fully subscribed.

I also have the understanding that there is no retrospectivity in this. The minister can correct me on this, and I would appreciate an answer when I finish on clause 2, but my understanding is that there is no intention of the government in any development of a new water allocation plan to see retrospectivity with respect to purchasing of water licences for forestry. Rather, it would say that for further expansion in forestry they would have to go through the same processes as the further expansion of an irrigator if they need more water. That is my understanding, and I seek a response from the minister on that.

I also understand that the local member has for some years had issues around the rights of dryland non-irrigated farmers and where they may want to utilise water in the future. I understand that they have what are called holding licences in the South-East. To my knowledge, the South-East is the only area in the state where there are holding licences, that is, that people have a holding licence for potential water usage in an area where they are not utilising that water.

This has been an ongoing ideological debate for probably as long as I have been in this parliament. Both the former government and this current government—and it is not only this state, it is in other states—particularly until climate change issues came to be debated, have always said that what they needed to do was to free up what water was available for irrigators to grow economic opportunity in regions. Of course, we went overboard with the River Murray and now we have overallocation that has to be addressed. However, both governments, I believe, have always wanted to try to get economic growth out of the water availability.

I personally see a huge bonus in those holding licences for people who have the potential, or have had the potential, for water for irrigation but have not used it. I do not believe any other region of the state has that. I am not aware of any. Some farmers also said that they had concerns because, as agri-foresters, they had up to 10 per cent of their property as agri-forestry at the moment and that they would like the right to grow that to 20 per cent without having to purchase further water.

I looked into all of these matters. I listened to all the people who made representation. SAFF wanted to see the water allocation plan include forestry. The South Australian Dairyfarmers' Association—and I declare that I am a member of that association—for several years has been advocating that forestry should come into the water allocation plan.

In conclusion, I listened to the debate, as I always do. There was intense representation across the sectors. Some of the sectors were still making up their mind only in the last week or two as to whether or not they wanted to go to committee or to support the government's bill. At the end of the day, having democratically listened to all the representation, ultimately we have to make a decision. That is what we are elected for. Some people will like the decision and some people will not like the decision. That is how democracy works.

I want to reinforce that there was a lot of consideration and deliberation. I also want to say that, from my understanding of this bill, all this bill simply does—and the minister can correct me again if I am wrong on this point—is ensure at law that forestry comes into the water allocation plan. The water allocation plan then has to be drafted. There has to be consultation on that. That water allocation plan, when it is put out for the community to consider, then comes back to the minister to sign off.

So, when it comes to a situation where forestry wants to argy-bargy or agri-forestry farmers want to argue about whether they should be entitled to 20 per cent before they have to purchase water rights, rather than the 10 per cent that I understand it is at the moment, that will all be part of the water allocation plan and no different to any other water allocation plan. This, as I understand it, is not the water allocation plan. This is simply a conduit to ensure that in future water allocation plans developed in the South-East forestry will come into that plan.

There is still a lot of democratic process there for forestry, for agri-forestry and for others to make representation at that time, just as is the case at the moment with the eastern and the western Mount Lofty Ranges where deliberations and submissions go on. With those comments, I thank you again for your tolerance, Mr Chair. With respect to clause 2, I seek a response from the minister on the two points I have raised.

The CHAIR: Does the honourable minister want to respond?

The Hon. I.K. HUNTER: I will, sir, although there is not much need for me to do so. The Hon. Mr Brokenshire asked the questions and then answered them, I am advised, correctly. All this bill does is that it applies to forestry exactly the same processes as other industries whereby existing water use is respected.

The other matter is not a matter for the bill. The bill just creates the head powers, as the Hon. Mr Brokenshire said. The water allocation plan will be developed regionally and will be consulted on locally.

Clause passed.

Remaining clauses (3 to 24) and title passed.

Bill reported without amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Communities and Social Inclusion, Minister for Social Housing, Minister for Disabilities, Minister for Youth, Minister for Volunteers) (12:07): I move:

That this bill be now read a third time.

Bill read a third time and passed.