Aug 14, 2007

Water Bill 2007 – Second Reading

Water Bill 2007 – Second Reading

14 August 2007

Mr ALBANESE (Grayndler) (12.31 pm)—We all know that the health of our rivers is deteriorating. We all accept that our rivers have been overallocated. Most of us accept that climate change is real and that we will need to get used to even less water in our rivers, and we all agree that something must be done.

That is why Federal Labor has consistently supported greater national leadership in water policy and water reform. Since the 1980s Labor has called for national leadership, and in government we legislated for a greater national role in water policy. It is for that reason that Labor supports the Water Bill 2007. It is not perfect, and more work has to be done, but it is a step in the right direction. The Water Bill is a step towards fixing some of the Murray-Darling Basin’s long-term problems. It gives the Commonwealth greater control over water planning for the Basin and should help deliver greater water security.

The Water Bill provides the framework to enforce the sustainable cap on diversions from the basin and puts in place a planning process to manage the basin into the future so that we can restore the system to health and secure the ongoing prosperity of the communities that rely on the system. Labor supports the Bill because it provides greater Commonwealth leadership in water policy.

In December 2006, I circulated a discussion paper titled Protecting our precious natural environment and water supplies. This was the first Labor Discussion Paper under Kevin Rudd’s leadership. The core of Labor’s approach and the rationale of that discussion paper were to focus natural resource programs on national priorities, streamline decision making and make sure that it is water that flows rather than red tape. Over 2006, Labor made strong, consistent policy statements on climate change and water.

Of course, 2007 is an election year, and in January we saw the Prime Minister act desperately, after ignoring water issues and climate change for over a decade. It took an election year to get any response from the government about the water crisis.

We know that in 2006 the Howard government undertook secret taxpayer funded opinion polling on climate change. We now know that the polling was provided to an advertising agency as part of the brief for the government’s taxpayer funded climate change facelift. The polling showed that 94 per cent of respondents agreed that the climate was changing and that the number of respondents who believed the government had the prime responsibility to act had almost doubled between 2003 and 2006. Of course, that was the same time that the government changed its rhetoric on climate change. It is clear that the only thing the Prime Minister is concerned about is the changing political climate, not climate change itself. The government had to appear to be doing something, so they chose to appear to be doing something on water.

On 25 January the Prime Minister announced his $10 Billion National Plan for Water Security. That was more a headline than a policy. Labor had been calling for greater national leadership in water policy from day one. Therefore, we provided in-principle bipartisan support for the Prime Minister’s plan.

Of course, we raised concerns; many groups did. Farmers, irrigators, environment groups, state governments and commentators all raised concerns. Critics of the lack of detail emerged across the spectrum and included the NFF and the irrigation industry. There was general consensus that the Prime Minister got the direction right in January, but the detail was sorely lacking. Indeed, it was a headline looking for a policy. There were no funding details, no timelines, and no governance arrangements. There was no consultation with the states, the national water commissioners, the Murray-Darling Basin Commission, the National Farmers Federation, irrigators or environment groups. There was no proper scrutiny by the Departments of Treasury or Finance. There was not even consideration by the Cabinet. Since 25 January, I understand there have been more than 62 versions of the legislation. There have been reports of very different approaches to the legislation appearing in drafts and then disappearing just as quickly.

Throughout this period Federal Labor have been constructive in our approach. We have given in-principle support to the national approach whilst recognising it was reasonable and indeed necessary and responsible for all stakeholders to scrutinise the National Plan for Water Security and to ensure the details were correct.

After legislation was drafted and redrafted and many meetings were held, it is unfortunate that negotiations broke down between the Commonwealth and Victorian governments. It would have been better for the Commonwealth government to have worked constructively with the Victorian government to reach an agreement. Over June and July, indeed we were optimistic that the Commonwealth and Victoria would resolve their differences. That was certainly the public message coming out of discussions. For reasons best understood by the Prime Minister, it became politically convenient to establish a line of conflict between the Commonwealth and Victoria and force the issue.

But the blame game is not in the national interest; the blame game is a game for losers, and the price is paid by the Australian people, who deserve better. It is a lost opportunity that we have second or third best legislation for the Murray-Darling Basin, because drafters were focused on making sure the legislation survives the High Court and less focused on the survival of the river system itself. Previous federal governments have cleared bigger hurdles than those faced by the minister and the Howard government. I listened closely to the second reading speech by the Minister for the Environment and Water Resources and noted with some surprise that the minister said:

This Water Bill is the first water reform program introduced into this parliament in 106 years.

No, minister, it is not. The legislation you have stewarded into the Parliament has merit, but the Bill is not the Commonwealth’s first water reform program.

Indeed, as far back as 1915 the Commonwealth chaired the negotiations for the River Murray Waters Agreement between the Commonwealth, New South Wales, Victoria and South Australia. Modern national water reform began with the historic Murray-Darling Basin Agreement in June 1992, led by the Keating Labor government, and the landmark Murray-Darling Basin Act 1992. The other parties to the historic bipartisan Murray-Darling Basin Agreement in 1992 were the Fahey Liberal government in New South Wales, the Kennett Liberal government in Victoria, the Brown Liberal government in South Australia, the Goss Labor government in Queensland and the Follett Labor government in the ACT.

If one casts their mind back to the politics and issues of the late 1980s, one has to give credit to the Keating government and the state governments for the work that they did. There was a bipartisan agreement and things moved forward under the leadership of the federal Labor government. The major public debate over salinity in the basin really captured the public attention in the 1980s and the early 1990s. I remember that debate. There was a recognition that the river’s problems extended across state boundaries and that a national approach was needed. Out of discussions the Murray-Darling Basin Agreement was struck and the Murray-Darling Basin Act was passed. But, of course, the hard work did not just stop there. Rather than put the cue in the rack, work kept going and in 1994 the historic COAG agreement on national water reform was struck.

The current water debate can be traced back to the 1980s and 1990s when the Hawke and Keating governments put national water reform on the COAG agenda. After a very long gestation period, this provided the foundation for the 2004 National Water Initiative. I would like to table two documents: one is the COAG communique from February 1994 and the other is the COAG communique from July 2006. I seek leave to table those documents.

There is a striking similarity between these two documents. The problems in the Murray-Darling Basin did not go away but things certainly slowed down under the federal Liberal-National Coalition government. There were 10 long years between the COAG agreement in 1994 and the National Water Initiative in 2004, which of course is why it is so extraordinary that the Minister was prepared to argue that this was the first water reform from the Commonwealth in 106 years.

I also do not think it is fair of the minister to overlook the National Water Initiative and the National Water Commission Bill 2004. That legislation established the National Water Commission and the $2 Billion Australian Water Fund. It was major legislation at the time for the coalition government. But of course we know that, up until very recently and just three years after it was founded, less than half of the $2 Billion was actually committed to much-needed water projects.

More recently, Labor have been critical that in the May budget just one-half of one per cent of the $10 Billion water plan, just $53 million, was allocated for the coming financial year. A mere $15 million was allocated in 2007-08 to deal with the issue of overallocation.

The Commonwealth government should be purchasing overallocated water entitlements, and as the Prime Minister, on 25 January, said:

We could muddle through as has occurred in the past, but frankly, that gets us nowhere. Without decisive action we face the worst of both worlds.

Commonsense tells you that, given the immediate water crisis, funding should be front-end loaded; economic sense tells you that it will cost less to deal with the overallocation of water entitlements sooner rather than later. Labor have noted on many occasions our concern with the lack of funding details for the government’s water announcements. Again, with this Bill, I am surprised there is neither any new detail on appropriations nor more details on how the funding announced in the budget will be put into programs.

The head of the Treasury, Ken Henry, the senior economic adviser to the government, has expressed serious reservations about government policy development in relation to water and climate change. Treasury was excluded from the development of the 25 January $10 Billion national plan for water security, and it appears the Water Bill and programs flowing from it are being kept well and truly away from the Treasury. The lack of funding for programs and the lack of detail for spending show a serious weakness in the Prime Minister’s water plan, and that the government is not really ready to take the urgent action that is required to address the water crisis. Labor believe that the water reform process must continue so that we properly fix the overallocation of water entitlements in the Murray-Darling Basin. We have to ensure harmony between environment and consumptive use and help address the impact of drought and climate change on water supply.

I think something quite interesting has been revealed by the debate over how to resolve the over-allocation of water. It is clear that the real division over water policy in Australia is between the reformers on one side and the blockers in the National Party on the other.

The National Party are the handbrake on national water reform. There is a conflict between the national interest and the interests of the National Party.

The Coalition, by definition, has been incapable of resolving this conflict. Following the script written by narrow sectional interests, the blockers in the National Party have continually undermined the $10 Billion water plan.

Since the announcement in January, the Deputy Prime Minister, Mark Vaile; the Minister for Agriculture, Fisheries and Forestry, Peter McGauran; the member for Maranoa; and Senator Barnaby Joyce have all publicly undermined the plan. National Party members oppose the plan to address water over-allocation and they are resolute that buying back water entitlements should only be done as a last resort.

This directly contradicts the Prime Minister’s commitment made on 25 January, when he said:

We are prepared to invest up to $3 Billion in buying back water entitlements and assisting irrigators in the unviable or inefficient parts of schemes to exit the industry.

The dismal failure of the tender program for water efficiency, which closed on 14 February, highlights the failure of the National Party’s approach. From a budget of up to $200 million, just $765,000 was spent—less than one per cent. The Minister for the Environment and Water Resources stated on 19 June 2006 that the government ‘would not be seeking to acquire more than 200 gigalitres’. Did the tender acquire 100 gigalitres, 50 gigalitres, 10 gigalitres or even one gigalitre? No, it did not. The program acquired just 454 megalitres, or 0.2 per cent of its objective. One wonders why they even bothered. They hardly troubled the scorers. More money was spent on administration than on purchasing water. The government refused to acknowledge that the program was a failure. Perhaps that is because the minister for agriculture is really opposed to dealing in any way with overallocated water entitlements. The National Party are at the core of the water problem, and they are also at the core of the Howard government.

Climate change will directly affect water supply, temperature and the frequency of extreme weather events, and there is no question that areas of Australia will be particularly affected. For Australia, the key climate change impacts on water supply, on our cities and on agriculture will be less rainfall and increased evaporation. Water problems will intensify by 2030 in southern and eastern Australia.

For Labor, water supply issues and climate change are two sides of the same coin, and without a strategy for climate change, you do not really have a strategy for water. As a nation we must take action on water and climate change every year, not just in election years. We will not get climate change solutions from a government full of climate change sceptics—as we saw from the four government members in yesterday’s report—or climate change deniers. No wonder the head of Treasury, Ken Henry, has expressed serious reservations about government policy development on water and climate change.

Labor believes that the Commonwealth’s water Bill is a step towards fixing some of the Murray-Darling Basin’s long-term problems. It is critical that all levels of government work together in the national interest. The Commonwealth’s method has been to implement a basin-wide approach to managing the basin. Labor agrees with this. Under the Bill, the Commonwealth will establish a new, expert Murray-Darling Basin Authority to develop and oversee the implementation of a Basin plan for water management. The plan will include: a new sustainable cap on extractions of surface and groundwater in the MDB, a salinity and water quality plan, an environmental watering plan and trading rules. The Bill sets out processes for accrediting the catchment level water plans prepared by basin states under their existing legislation to ensure that the outcomes of the basin plan are achieved.

I note that the Commonwealth approach is to honour its commitment to existing catchment level water plans for the life of those plans and related instruments, many of which do not expire for several years. Labor supports that approach. We must improve water security and planning while at the same time helping water users to adapt to less water and climate change. Of course, it is possible that the long-term average sustainable water diversion limit or cap for water resource plan will have to be reduced. That means that there will be compulsory water entitlement reductions under clause 77 of this Bill, but it is an open question as to how this will be different from compulsory acquisition. Under clause 77 of the Bill, when that cap is reduced it appears that the water entitlement holder may receive compensation for that reduction. Clause 77 sets out the way in which the liability for that compensation will be distributed. I note that clause 255 of the legislation does not authorise the compulsory acquisition of water entitlements. But doesn’t clause 77 do just that? Clause 77 sets up a mechanism for paying out irrigators for a legislative reduction in their water entitlement. It appears to me that that is a distinction without a real difference.

The Bill will establish a Commonwealth environmental water holder to manage environmental outcomes for the new water holdings purchased by the Commonwealth under the new funding programs of the national plan. Through the Bureau of Meteorology, the level and quality of information on water will improve. This will help our understanding and our ability to manage water resources on a sustainable basis.

Labor is concerned that, because of the haste to develop and pass legislation in an election year, the Water Bill 2007 represents a second-best solution on national water reform.

That has been agreed by the government, including by the minister. The representative of the Victorian Farmers Federation said the following at the Senate hearing last Friday:

We have some concerns about the creation of the bureaucracy under this Bill. We have the Murray-Darling Basin Authority. We still have the Murray-Darling Basin Commission. We have two ministerial councils, a community consultative council and an officials committee.

He continued:

There is the National Water Commission. I am concerned that, at the end of the day, somebody pays for all that bureaucracy and it may well be irrigators who wear a fair bit of that cost.

Labor wants water, not red tape, to flow in the Murray-Darling Basin. The overlapping and unclear decision-making structures are a symptom of a rushed piece of legislation in an election year. Labor deplores the government’s failure to consult in good faith with state governments and other stakeholders over the Bill and, most importantly, the related intergovernmental agreement. A key element of the national plan remains for basin states and the ACT to sign an intergovernmental agreement committing them to refer powers for an eventual basin-wide management structure and to work cooperatively to implement all aspects of the Commonwealth’s Water Bill. The development of the IGA is critical to the effectiveness of the basin plan.

Labor is very concerned that the IGA was not provided to the Senate committee inquiry into this Bill and that it has not been given to state governments, to stakeholders in the basin or to members of the House of Representatives who are expected to vote on this Bill. The yet-to-be-released IGA will govern federal and state relations, guide investment and ensure water plans function properly.

I agree with the National Farmers Federation statement last week:

The principal outcomes of the Prime Minister’s National Plan for Water Security cannot be effectively delivered unless Federal and State Governments can agree on the strings attached to federal funding.

Federal Labor is worried that, as a result of unilateral changes foreshadowed by the Howard government regarding the operation of the IGA, the effectiveness of the basin plan and future water management in the basin may be unnecessarily affected.

While the Bill is a step forward, there is confusion and doubts about several key issues.

Why do we have both a Murray-Darling Basin Authority and a Murray-Darling Basin Commission?

How will compulsory water entitlement reductions under section 77 work, and how are they different from compulsory acquisition?

When will the government circulate the all important intergovernmental agreement?

What will the risk sharing arrangements be with the states, and why should the states carry more risk than was agreed to with the Prime Minister in early July? Those issues of risk sharing and compensation have been major issues raised by the New South Wales and Queensland governments. Premier Iemma has written to the Prime Minister suggesting that he honour the agreement that was given by some of the state governments early on to this national plan. It would appear that this Bill is written deliberately to place pressure on all of the states to sign up to the original referral of powers; otherwise funding will be held back. It is not an appropriate way to punish states that were prepared to refer their powers and engage in a truly national plan which Queensland, South Australia, New South Wales and the ACT were prepared to do.

The other concern is: why are the water needs for towns and cities in the basin and the other downstream consequences of water planning not dealt with in the Bill?

I am proud that, when Kevin Rudd talks about a national water plan, he talks about a water plan for all Australians. In order to promote sustainable water use, Australia needs clear targets and benchmarks for environmental performance. Water in Australia is overallocated, undervalued and misdirected. The National Water Initiative must be the foundation of water policy implementation. This is the case for the Murray-Darling and it is also the case for the rest of Australia. Water for urban areas, where 18 million Australians live, must be high on the Commonwealth government’s agenda. Australia needs a national perspective to water issues. Labor supports the Bill, but we see a whole lot more that needs to be done. There is a critical role for the Commonwealth in developing urban infrastructure, which includes urban water supplies.

Past Commonwealth governments were critical in delivering water infrastructure through pipes and sewerage to our outer suburbs. It is time to renew the Commonwealth’s engagement in our cities. Australians want real solutions to our water crisis. We need this legislation for the Murray-Darling Basin, but we need to develop it further and we also need a national urban water strategy which is comprehensive and supports major infrastructure and individual household measures.

Labor has a plan for major new projects, a plan to fix existing infrastructure such as leaky pipes, and a plan for households. We must ensure security of water supply for all Australians regardless of where they live in our rural and regional communities or our towns and cities. Labor has a 30 per cent waste water recycling target by 2015. We will provide the support and investment to help achieve that target. Tackling the nation’s water shortages is all about securing Australia’s economic future and prosperity. Across Australia in rural and urban areas water has been overallocated, undervalued and misdirected. This Bill is a positive step towards addressing part of the national water problem, but more needs to be done.

I will conclude with a reflection about the Bill and about the national water policy debate. It is just over two years since I was appointed Shadow Minister for Water in June 2005. This was an innovative appointment given that, at the time, I had no-one to shadow as there was no Minister for Water.

A journalist questioned the decision and declared it a strange appointment. The journalist asked me, ‘Why do you need a federal spokesperson for water? Isn’t that a state government responsibility?’

Two years on it is incomprehensible that any government in the future will not have a Minister for Water sitting in the cabinet room, and any Opposition will not have a Shadow Minister for Water.

The rise to prominence of water as a national political issue has been aided by human activity on two fronts. On the negative side human activity has significantly contributed to climate change. On the positive side human intellectual activity will provide the policy response and solutions as we more forward. Nature itself has been reminding us of its innate power. Climate change has reminded all of us, with the exception of the sceptics in the Howard government, that we survive by the grace of nature and that our very short presence on earth is minuscule compared with the power of our natural resources and, in particular, water.

When water is in trouble we are all in trouble. Our absolute dependence on fresh water to survive should never be taken for granted. This is important legislation before this parliament.

Labor, in spite of some of the reservations that we have had since the announcement on 25 January, have been constructive and will continue to be so during the conduct of this debate in the House of Representatives and the Senate. But we are concerned about the continuing issues which remain outstanding. We are concerned with the haste in which this Bill has been finalised and the haste of its public debate, where it was introduced into the parliament only last week and will be voted on in both the House of Representatives and the Senate. That truncated process has allowed very limited input from the public and from community interests. Of course the government would argue that because an election is around the corner there is a need to do this quickly; I would argue that it should not have taken an election year to have legislation such as this before the House.

I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the Bill a second reading, the House:

(1) notes that modern national water reform began with Murray Darling Basin Act in 1992 and the historic COAG Agreement on water reform in 1994 led by the Keating Labor Government;

(2) regrets that, despite clear warning signals about the health of the river system, it has taken 13 more years to see the next stage of Commonwealth action to address the problems of the Murray Darling Basin,

(3) is concerned that the legislation before the House represents a second best solution on national water reform;

(4) deplores the Government’s failure to consult in good faith with State Governments and other stakeholders over the Water Bill 2007 and the related Intergovernmental Agreement;

(5) believes the water reform process must continue so we properly fix the over-allocation of water licences in the Murray Darling Basin, ensure harmony between the environment and consumptive use, and help address the impact of drought and climate change on water supply;

(6) notes that climate change will have a significant impact on water supply generally and the health of the Murray Darling Basin in particular;

(7) notes that the CSIRO will provide an important report in late 2007 on the hydrology of the Basin and what the sustainable extraction levels are for the Basin; and

(8) notes that the following is needed for national water reform:

(a) a cooperative and constructive approach with State Governments to assist water reform and investment in urban and rural water infrastructure;

(b) full implementation of the National Water Initiative principles agreed to in 2004;

(c) fixing of the over-allocation of water licences once and for all, and the establishment of coherent, streamlined rules which ensure the problem of over-allocation never recurs;

(d) recognition that economic instruments including water trading are necessary to address the fact that water has been over-allocated, undervalued and misdirected;

(e) proper consultation with key stakeholders in the Murray Darling Basin, including all water users, farmers, water scientists, environment groups and the broader community to ensure the adoption and consistent use of efficient agricultural practices;

(f) returning sufficient water to the rivers in the Murray Darling Basin to ensure the long term health of all rivers, wetlands and all connected groundwater systems in the Basin and, as a result, ensure the health of the communities and businesses that rely on the health of those rivers; and

(g) measures to ensure industrial and urban water users adapt to maximise water efficiency”.

The DEPUTY SPEAKER (Hon. IR Causley)—Is the amendment seconded?

Ms Kate Ellis—I second the amendment and reserve my right to speak.