National Water Initiative

The Hon. J.S. LEE (14:49): I seek leave to make a brief explanation before asking the Minister for Water and the River Murray questions about water planning and management costs.

Leave granted.

The Hon. J.S. LEE: Last year the government announced measures to recover a portion of the state government's water planning and management costs, recovering about $6.7 million in 2016-17, which the government has stated is part of their commitment to the National Water Initiative (NWI) to recover costs on an impactor pays basis. This decision will hit South Australian food producers hard with natural resources management boards forced to pass on significant levy increases.

This decision was made by the government despite a number of SA farmers experiencing drought-like conditions. The Department of Environment, Water and Natural Resources has stated that it has spent about $43 million every year in water management services and that the government has been shielding consumers from water management costs for the past five years, and the time has come to start charging consumers. My questions are:

1. Can the minister provide a breakdown of how the $43 million in water planning and management services was spent every year?

2. Can the minister explain why the government has waited until now to pass on this cost to our farmers? Was this decision made purely to top up the government's budget mismanagement?

3. What relief will the government provide to our farmers experiencing drought conditions as they battle with increased water levies?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (14:51): I thank the honourable member for her most important question. Indeed, in part of her preamble she answered her own question, but I will take the opportunity to repeat some of that, if I might. I have said in this place before that water planning and management costs the state government approximately $40 million statewide per annum. The government is only seeking to recover $3.5 million from NRM boards in 2015-16, $6.8 million in 2016-17, with indexing going on thereafter.

Water planning and management takes in anything agreed to by the Council of Australian Governments commitment to user-pays principles under the National Water Initiative (NWI). Essentially, the National Water Initiative is a blueprint for water reform in Australia and represents a shared commitment by governments to increase the efficiency and the sustainability of water use in the nation.

The NWI pricing principles require Australian governments to identify their water planning and management activities and costs, have these activities independently tested for cost-effectiveness, allocate these costs including associated corporate cost on a user beneficiary pays basis, recover the costs from users and beneficiaries on the basis of catchment or water source where practicable, and exclude water policy and ministerial services from any resultant water charges.

Under the NWI, governments have made the commitment to prepare comprehensive water plans, to achieve sustainable water use in overallocated or stressed water systems, to introduce registers of water rights and standards for water accounting, to expand trade and water rights, to improve pricing for water storage and delivery, and to better manage urban water demands. So, the amount to be recovered from the NRM levies relates to water management activities required under the Natural Resources Management Act 2004, including water licensing, compliance activities, science to support the development and management of water resources, development and review and amendment of water allocation plans, and of course debt recovery where necessary.

In line with the NWI principles, the regions where most irrigation takes place are the South-East, the Murray-Darling Basin and the Adelaide Mount Lofty Ranges. Of course, those impacted areas will cover about 95 per cent of those costs. Abiding by user-pays principles set out in the NWI is the fairest way to recover the costs of these activities. Even with these principles we are still only recovering a very small portion of the costs from users, and NRM water and land-based levies play a very crucial role in enabling the NRM boards to fulfil their statutory responsibilities and support community participation through increased knowledge and capacity to sustainably manage their region's natural resources and to deliver on the outcomes of their regional NRM plans.

It should be emphasised that under the act the NRM boards are required to assess the potential social impacts of imposing NRM levies. As part of the NRM boards' business planning review process, the majority of NRM boards engaged an independent company to provide a social impact assessment report, assessing the levy options to inform their decisions.

The honourable member asks what these costs include. In South Australia, these costs provide for support of the water management requirements of the Natural Resources Management Act, which includes water licensing; compliance; science; and the development, review and amendment of water allocation. These activities are central to sustainable water resource management and support our priority for South Australia to be recognised for its premium food and wine produced in our clean environment and exported to the world.

There are a number of important projects that the water planning and management activities support. I have some examples of specific programs from across our state which may inform the chamber. NRM levy funding will support 10 monitoring sites across the Adelaide and Mount Lofty Ranges region. These will collect ecological water quality hydrological data. The information gathered provides a basis for validating the science in existing water allocations.

The 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 (SARDI), the Environment Protection Authority, Hydro Tasmania and community landholders.

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

In the arid lands region, the SAAL NRM Board has directed that the NRM water levy be used to support sustainable water management in the driest part of the state. One of these activities is funding an audit of 289 artesian bores in the Far North Prescribed Wells Area to establish a comprehensive picture of their condition and the state. This will give those industries that rely on Great Artesian Basin water the ability to sustainably manage this water source into the future.

In the Murray-Darling Basin region, the SAMDB NRM Board and DEWNR are working with the community and industry partners to update the River Murray allocation plan. Some of the water levy in this region is being used to work through a review of existing policies, with a view to developing new policies for managing the River Murray, including the management of the river during dry times.

The levy on Eyre Peninsula is being used in part to educate and raise awareness within the community of the impacts of water-affecting activities throughout the peninsula and implement compliance with the Natural Resources Management Act to ensure an equitable and sustainable sharing of the water and its usage into the future. In the South-East, levy moneys fund a water monitoring network of 1,500 observation wells and 240 surface gauging stations, which are measured at least quarterly, I am advised, to provide an annual report on the state and condition of the water resource.

Water levy moneys also fund the Regional Water Licensing Unit in the South-East region, which employs, I am told, approximately 10 people, manages 4,130 water licences, issues wells permits across the state and ensures compliance with water management and use regulations, manages the largest allocation of water in South Australia (which is approximately 1,300 gigalitres) and, of course, it provides for policy and legal advice on the South-East water allocation plans, as well as professional support and training in water management. So, water science is interpreted and applied in the South-East context, and the region receives advice on appropriate science to support its planning decision-making into the future.

It is important to understand how we compare with other jurisdictions. The honourable member said that this state will be unfairly done by. It is very important that we understand that in fact the reverse is the case. The NRM boards have considered the options on the fair and equitable apportionment of water planning and management cost recovery. The costs have been included in the regional NRM business plan revision process, and most NRM boards have completed (or are close to completing, I am advised) their community consultations on their individual regional plans.

The boards are in the process of considering the submissions made by their communities to inform their business plans before continuing with the process. When all water-related charges are taken into account, the NRM water levy rates paid by irrigators in our major food and wine producing areas—the South-East, the Murray-Darling Basin and the Mount Lofty Ranges—are still low when compared with our interstate competitors.

For example (and I have used these figures before as an example), the $6.30 per megalitre water levy rate proposed in the SA Murray-Darling Basin for 2016-17 is well below equivalent charges in New South Wales and Victoria. For the New South Wales Murray, the equivalent charge has been around $10.51 per megalitre, assuming full use of the entitlement, and in the Victorian Murray I am advised that the lowest equivalent charge has been around $11.05 per megalitre. All this is set out, I understand, in the ACCC's most recent Water Monitoring Report. It is compelling reading, and I recommend it to the honourable member for her information. So, remember: South Australia is $6.30, comparable with $10.51 in New South Wales and $11.05 per megalitre in Victoria.

Similarly, I am advised that the $2.58 per megalitre water levy rate proposed in the South-East for 2016-17 is less than most of the comparable groundwater charges in both New South Wales and Victoria. In this respect, Victorian groundwater users attract charges of between $2.53 and $5.72 per megalitre and New South Wales groundwater use attracts charges of between $3.53 and $6.95 per megalitre, compared again to $2.58 per megalitre in South Australia.

Recognising that the boards have a limited ability to meet the additional costs from existing revenue sources in 2015-16, DEWNR has negotiated a range of once-off measures to reduce the amount even further to be recovered from the NRM levy revenue which Treasury have accepted in lieu of direct cost recovery. In 2015-16, this means a total of $3.5 million was recovered from NRM boards, with $6.8 million to be recovered in 2016-17. This amounts to only a partial recovery, as I said at the beginning of my remarks, of full costs borne by the government in relation to water planning and management activities.

I can go on and on—I have more information for the honourable member which I am sure she would be thoroughly interested in—but again it is important to understand that these levy amounts are used by the boards to do the work that their communities have asked them to do. It is to sustain water use in those regions for the future, to make sure that there is water to be used in the years to come, and of course when you compare it to comparable rates interstate we are still by far the cheapest of them all.