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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2015-11-17 Daily Xml
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Water Levies

The Hon. R.L. BROKENSHIRE (15:03): I seek leave to make a brief explanation before asking the Minister for Water and the River Murray a question about water levies in the South-East.

Leave granted.

The Hon. R.L. BROKENSHIRE: Recently, The Border Watch newspaper reported that South-East-based ratepayers are set to see an increase of 300 per cent in their NRM water levy which would raise an extra $5 million to help fund the activities of the South East NRM Board for this financial year and also replace the $100,000 that the minister ripped out of that to have a so-called citizens' jury look at the South-East drainage scheme whose recommendations he then just dismissed.

This tax grab will not only affect farmers but it will also affect forestry businesses, commercial industries and residential property owners. Everyday mums and dads could be paying up to $120 more in taxes because of this hike, and already struggling farmers will have to find another $2,000 or more when their notices begin arriving in the mail. I also remind my colleagues that this levy increase is in addition to the already very hefty hike to the ESL which was thrust upon the public this year. My questions are:

1. Is this report true and is this government planning to raise the water levy component of the NRM levies in the South-East by 300 per cent? If not, what is the exact figure the government plans to increase the levy by?

2. How much money has the government cut from the budget of the South East NRM Board over this year and next year to take into DEWNR's general revenue?

3. Could the minister explain what type of activities the board is currently undertaking that could possibly justify a tax hike of this magnitude?

4. This is a very important question. Is this a smoke and mirrors way of the government ripping more money from farmers to maintain the South-East drainage scheme annual maintenance?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (15:05): I thank the honourable member for his most important questions most sincerely, because it gives me an opportunity to put on the record the facts around this issue. I would just say to the honourable member that in his preamble and his explanation before he asked the questions, in fact the entire basis of his questions, is wrong and false. I will take him through the information, and it is very important that he has that, so I am very grateful that he does rise to ask it.

As I have said in this place before, the government's position in terms of cost recovery comes directly from the National Water Initiative. It is a national initiative, obviously, which states and territories and the commonwealth government have all agreed to. The 2010-11 state budget established significant cost recovery targets for water planning and management activities from 2011-12 onwards.

I reminded the chamber, I think last sitting week, when the Hon. Mr Ridgway exclaimed on this topic because he heard about it in the paper, that of course he was only five years late, because again it was set in the 2010-11 state budget. Since 2011, the Department of Environment, Water and Natural Resources has negotiated temporary budget relief against the cost recovery target, as I said, set down by the National Water Initiative in terms of beneficiary pays, and has negotiated that temporary budget relief, but from 2015-16 this relief will no longer be provided.

The honourable member's questions and explanations talking about hikes and cuts, etc. are all false. They are all wrong. What we have actually been doing is shielding people down in the South-East—and elsewhere, of course—from this National Water Initiative beneficiary pays budget recovery, and doing that for five years, with the knowledge that this would no longer be in place from 2015-16.

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

Abiding by user pays principles—or beneficiary pays—is seen as the fairest way to recover the costs of these activities. I will come to what those activities are in a moment. Even with these principles, we are only still recovering a very small portion of these costs from users. I will also come back to a point I made at another stage, to compare what we recover in relation to other states to show the honourable member that in fact other states have not been shielded to the extent that South Australians have.

In South Australia, these costs include supporting the water management requirements of the Natural Resources Management Act 2004, which includes water licensing; compliance activities; science to support the development and management of water resources; the development, review and amendment of water allocation plans; and, of course, debt recovery activities. 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 and sustained into the future.

I have some examples of specific programs which may help the honourable member. We have a water monitoring network of 1,500 observation wells and 240 surface gauging stations, which are measured at least quarterly to provide an annual report on the state and condition of the water resources in the South-East. Our levy funding will also support 10 monitoring sites across the Adelaide Mount Lofty Ranges. These will collect ecological, water quality and hydrological data.

The information gathered provides a basis for 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.

There is another water science project in the AMLR region that is supported by levy funds, which is interesting to note. This project provides 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 service water use and demand, and the connections between surface water and ground water. I could go on with dozens and dozens of more very important examples of why this science and this monitoring are so vital to the sustainable use of the resource into the future.

Let me turn now to how we compare with other jurisdictions. The NRM boards have considered the options, which is their role, 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 are commencing community consultation on their individual regional NRM plans in the next two to three months. If the NRM boards determine that the costs will be entirely passed on to water users, I believe we need to put our current water levy rates in perspective, especially when compared with other states.

The current water levy rate in the South-East in 2015-16 is $2.67 per megalitre. An obvious comparison point is groundwater charges in New South Wales, I am advised. The majority of these New South Wales charges range from $5.92 per megalitre to $6.95 per megalitre. We should remind ourselves that the South-East charge for 2015-16 is $2.67, compared with $5.92 or $6.95 per megalitre in New South Wales. Moreover, water levies in the South-East will remain well below these New South Wales levels, I am advised, even if proposed increases in cost recovery—even if proposed increases in cost recovery—from the South East NRM Board are passed on in full to water users. That is a decision for the board.

Similarly, the current water levy of $5.63 per megalitre for the SAMDB NRM region is well below the equivalent charges in New South Wales and Victoria. In the New South Wales Murray the equivalent charge is around $10.51 per megalitre, assuming full use of entitlements, and for the Victorian Murray the lowest equivalent charge is around $11.05 per megalitre. In South Australia in the SAMDB it is $5.63.

Water levies in the South Australian MDB region will also remain below those of interstate levels, I am advised, even if proposed increases in cost recovery from the SAMDB NRM are passed on in full to water users. Recognising that NRM boards have a limited ability to meet the additional costs from existing revenue sources in 2015-16, given that 2015-16 business planning processes have been finalised, for 2015-16 only DEWNR has negotiated a range of once-off measures to reduce the amount to be recovered from the NRM water levy revenue, which Treasury has accepted in lieu of direct cost recovery.

In 2015-16 this means a total of $3.5 million to be recovered from NRM boards, with $6.8 million to be recovered in 2016-17, indexed thereon. This amounts to only a partial recovery of the full cost borne by the government in relation to water planning and management activities. In 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.

These changes, we understand, will have significant impacts on NRM board programs, particularly in 2015-16, hence the one-off measure that I announced earlier that Treasury has accepted again to shield the boards from those increases. I have said previously that I am open to the NRM boards resubmitting their 2015-16 business plans for my consideration once the spending profile has been adjusted, and the timing and communication of these decisions will 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 those costs going forward.

In terms of the transparency and fairness, I remain committed to these values, which is why the government has followed the National Water Initiative and the principles in making the water planning and management cost recovery budget decision. This is also why I sought and accepted the advice of the 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, whilst also considering where the water planning and management costs are incurred and where the beneficiaries to sustainable water management reside, using the proportion of the state's population in each NRM region as an indicator.

Under this apportionment of water planning and management costs, the South-East, South Australian Murray-Darling Basin and Adelaide and Mount Lofty Ranges will recover up to one-third of the water planning and management costs each, with the remainder spread across five other NRM boards.

It is important that the honourable member understands these issues. I encourage him to cogitate on what I have just said. The values in terms of the levies are incredibly less than what would be faced by similar water catchment areas in other states, and we intend that to be the situation into the future. The honourable member comes in here and grandstands about how everything should be free.

The Hon. R.L. Brokenshire interjecting:

The PRESIDENT: Order!

The Hon. I.K. HUNTER: That goes directly against the National Water Initiative principles and directly against beneficiary pays principles and will not support sustainable water use across this state and into the future. It will in fact do just the opposite and mean that we would be back to square one within a very short period of time, if the honourable member got his way.

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