Question Time

Natural Resources Management Levy

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:27): I seek leave to make a brief explanation prior to asking the Minister for Sustainability, Environment and Conservation a question about NRM levies.

Leave granted.

The Hon. D.W. RIDGWAY: My colleague the Hon. Michelle Lensink and others have been raising for some time in this place questions around the steep increases proposed in the NRM fees. In particular I was pleased to note that in The Advertiser on Monday this has finally made the mainstream media, in an article written by Nigel Austin under the headline, 'End the torture on fees, landowners plead'. The article goes on. I think we should also understand that at this time the South-East of the state has just recorded its driest 18 months on record. So, there are particularly difficult farming times down there, something we have not seen since European settlement. The article goes on to say:

Regional ratepayers are facing higher water planning and management fees and are fed up with the ever increasing government charges, and a revolt is brewing over the $6 million-plus burden.

It goes on to say:

Through increases in the NRM levy, the State Government will charge ratepayers a combined $6 million-plus a year in higher water planning and management fees and a new corporate services charge to cover the rising cost of its bureaucracy.

I think it was captured very nicely in the editorial in the same paper, under the headline, 'Troubling tax grab', which stated:

Struggling farmers are set to cop another hit in the hip pocket from the State Government. Following recent steep emergency services levy rises, it is no surprise that landowners are furious about the increased water planning and management fees.

It goes on to say:

Reducing the cost of doing business for farmers should be a priority, not making it more expensive to bolster an already top-heavy bureaucracy.

Further, it says:

The cost of doing business in SA is simply too high. Major industries such as manufacturing and mining are already in trouble and job losses have hit the state hard. Growing the agricultural sector will help bolster the economy and create jobs. Until the State Government changes its attitudes to the South Australian primary producers the situation is unlikely to change.

My questions to the minister are:

1. When will the government realise it can't tax its way out of the troubles we're in at the moment?

2. What will be funded by the new corporate services charge?

3. Given the food sector is one of the possible saviours of the South Australian economy, when will the government reduce the cost of doing business for South Australian farmers?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (14:30): I thank the honourable member for his most important questions. In line with the government's commitment to beneficiary pays principles in accordance with the South Australian commitments under the National Water Initiative, the 2010-11 state budget established significant cost-recovery targets for water planning and management activities from 2011 onwards.

I congratulate the Hon. Mr Ridgway for being on the ball as usual. This matter was first raised in 2010-11, and it's only taken them four or five years to actually come up with a question on these matters in this place. That's the usual time lag that we expect from the Liberal Party opposite. They're not out there talking to their communities; they're waiting for an article in The Advertiser before they get up and ask a question in this place. That's how much in touch they are with their community; that's how much in touch they are. The 2010-11 state budget introduced this; not a peep out of the Hon. Mr Ridgway; nothing at all. He does not even interact with his local communities until it is on the front page of The Advertiser and then he stands up and asks a question.

As I say, that's what we expect from those opposite. Since 2011, the Department of Environment, Water and Natural Resources has negotiated temporary budget relief against that cost-recovery target, but from 2015-16 this relief will no longer be provided. Again, it is not mentioned by the Hon. Mr Ridgway that the department has provided recovery and relief against this cost-recovery target in the 2010-11 budget; not a word of that. Not a word of that, because he simply doesn't know or doesn't understand.

The state government currently pays $40 million for water planning and management activities. Only a very small portion of this overall amount is going to be recovered from NRM boards. In 2015-16, this means a total of $3.5 million is to be recovered from NRM boards, with $6.8 million to be recovered in 2016-17, thereafter indexed.

Abiding by user pays principles or beneficiary pays principles is seen as the fairest way to recover the costs of these activities. Even so, we are only recovering, as I said, a very small portion of these costs from users. What do these costs include? The honourable member asked me these questions. In South Australia, these costs include supporting the water management requirements of the Natural Resources Management Act 2004, including: water licensing; compliance activities; science to support the development and management of water resources; development review and amendment of water allocation plans; and debt recovery.

These activities are central to sustainable water resources management in our state and, as such, supporting our state's priority to be recognised for premium food and wine produced in our clean environment and exported to the world. Some examples of some specific programs that the Hon. Mr Ridgway can get his head around include:

A water monitoring network of 1,500 observation wells and 240 surface gauging stations measured at least quarterly to provide an annual report on the state and condition of the water resources in the South-East.

Levy funding will also support 10 monitoring sites across the Adelaide Mount Lofty Ranges region which collect ecological water quality and hydrological data. This information provides the basis of validating the science in existing water allocation plans. This data is collected manually or through automated telemetered stations depending on the site. The initiative involves a number of stakeholders, including the South Australian Research and Development Institute, the Environment Protection Authority, Hydro Tasmania and community landholders, all working together on this scientific endeavour.

Another water science project in the AMLR region supported by levy funds is to provide hydro-ecological studies to better understand the distribution of environmental assets in the region and their responses to changes in water flows. These investigations provide a strong understanding of the distribution of environmental assets and risks, the current level of surface water use and demand, and the connections between surface water and groundwater.

Just to give the honourable member some point of comparison with charges that are made interstate for comparable zones, it is of course important that we understand that NRM boards themselves determine how this small portion of water planning and management costs is to be funded. However, even if the boards determine that the cost will be entirely passed on to water users, we need to put these current water levy rates into perspective, comparing them, as I said, to other states, other jurisdictions.

The current water levy rate in the South-East in 2015-16, I am told, is $2.67 per megalitre. An obvious comparison point is groundwater charges in New South Wales. The majority of these New South Wales charges range from $5.92 per megalitre to $6.95 per megalitre. Remember, the charge in the South-East is $2.67. In New South Wales, they range from $5.92 per megalitre to $6.95. Moreover, water levies in the South-East will remain well below those New South Wales levels, even if proposed increases in cost recovery from the South East NRM Board are passed on in full to water users.

Similarly, the current water levy of $5.63 per megalitre in the South Australian Murray-Darling Basin NRM region is well below equivalent charges in New South Wales and Victoria. In the New South Wales Murray, the equivalent charge is $10.51 per megalitre, assuming the use of the full entitlement, and in the Victorian Murray, the lowest equivalent charge is around $11.05 per megalitre, compared to $5.63 here in South Australia for the Murray-Darling Basin.

Water levies in the SA Murray-Darling Basin NRM region will also remain below these interstate levels, even if proposed increases in cost recovery from the SA MDB NRM are passed on in full to water users. That is a matter for the NRM board to determine, and they are discussing that right now.

The NRM boards have a limited ability to meet the additional costs from existing revenue sources in the year 2015-16, given that the 2015-16 business planning processes are finalised for that year only. So, for that year only, DEWNR has negotiated a range of once-off measures to reduce the amount to be recovered from the NRM water levy revenue. In 2015-16, this means a total of $3.5 million is to be recovered from NRM boards, with $6.8 million to be recovered in 2016-17, indexed, and that's across the state.

This amounts to only a partial recovery of the full costs borne by the government in relation to water planning and management activities. In addition, the government has made a decision that $1 million of costs associated with the operations and maintenance of the Patawalonga Lake system will be recovered from the Adelaide and Mount Lofty Ranges NRM Board from 2015-16 ongoing.

This measure will not be funded from water levies. Contrary to the view that is being peddled around this state by members of the opposition, particularly from the lower house, that funding will not be funded from water levies, and I want to make that absolutely clear, as I have done to the members who were making those inaccurate claims in the past.

In 2015-16, $0.3 million of costs associated with administering the NRM land levy and outside council area levies will also be collected ongoing from NRM boards. This cost recovery measure applies across all boards to cover the substantial administrative support that DEWNR undertakes as part of the NRM levy adoption process, the review of NRM board business plans and the collection of the outside council areas levy.

As from 2016-17, $0.6 million of costs will be recovered by extending the NRM water levy to the extraction of co-produced water by the gas and petroleum industry in the Far North Prescribed Wells Area in the South Australian Arid Lands NRM region. To date, they haven't been charged any costs associated with that. We think it's appropriate to cost recover from that industry as well.

I understand these changes will have significant impacts on NRM board programs, particularly in 2015-16 when, as I said, additional revenue won't be easily sourced. I have made it very plain to NRM boards that I am open to them resubmitting their 2015-16 business plans for my consideration, once the spending profile has been adjusted, and respective to each individual area.

The timing and the communication of these decisions enable NRM boards to begin consulting on their 2016-17 business plans as per previous years, as boards are now fully informed of the impacts of allocating costs going forward. It was important to give them that advance warning.

In terms of trust, transparency and fairness, I remain committed to these values, which is why the government has followed the National Water Initiative principles in making the water planning and management cost recovery a budget decision as we have done. This is also why I sought and accepted the advice of NRM board presiding members on a way to fairly apportion these costs across the state.

I have agreed with NRM board presiding members that water planning and management costs be apportioned for both 2015-16 and 2016-17 and beyond in accordance with National Water Initiative principles, while also considering where the water planning and management costs are incurred and where the beneficiaries of sustainable water management reside.

With those few points, I want to correct the honourable member and also remind him that all jurisdictions around the country are doing just this. All jurisdictions, through our agreement on the National Water Initiative—be they Labor states or Liberal states, or former Liberal states that are now Labor states or former Labor states that are now Liberal states—are passing on the costs of water management to those beneficiaries who absolutely benefit from water management and planning.