Malcolm Turnbull (Wentworth, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Hansard source

This budget, acclaimed as Peter Costello’s greatest budget, is the product of a strong economy, itself the consequence of 10 years of sound economic management. It has seen a record surplus, and all of the Labor Party’s debt finally repaid. Who would have imagined that Australia would become a debt-free nation, that the Commonwealth would be debt free? Taxation has been reduced. Income taxation has been reduced. Tax on superannuation has also been reduced dramatically and, just as importantly, simplified. In my capacity as Parliamentary Secretary to the Prime Minister with a responsibility for water policy, I was especially pleased to see the commitment of $500 million in the budget to the Murray-Darling Basin Commission.

The Prime Minister has often said that water is our greatest environmental challenge, and so it is. It is not only our greatest environmental challenge but also the one environmental challenge for which the solutions and answers are entirely in our own hands. But the Prime Minister does not just talk about these great challenges; he acts—and not just in this budget. In 2004 he led the governments of Australia into the National Water Initiative. All Australian governments today are committed to unprecedented reforms, which are the envy of the world, to secure our water future. He established the Australian government water fund, which has $2 billion over five years to fund water infrastructure. The fund will support large-scale projects like the piping project in the Wimmera-Mallee, where thousands of kilometres of open channels will be piped, saving more than 100 gigalitres of water which had hitherto been lost to evaporation and seepage. The fund will support large iconic projects like that one, as well as small community water grants for schools and local councils, where water conservation is taught in a practical way at the grassroots.

To date, 33 water conservation projects have been funded from the WaterSmart Australia fund, which is the largest part of the Australian government water fund, with $1,600 million committed to it. Those 33 water conservation projects involve $416 million of Commonwealth money, and more than $1 billion in resources—mostly from the public sector but with some contributions from the private sector—have been mobilised to support the conservation and more efficient management of our water. And now in the budget $500 million is committed, in one hit, to the Murray-Darling Basin Commission. This is five times their annual expenditure in recent years. It is the biggest single financial commitment ever made to our most important river system.

Why is the Murray so important, and what will that $500 million do? The Murray-Darling Basin has only six per cent of Australia’s run-off, over a vast area covering Queensland, New South Wales, Victoria and South Australia. It is the lifeblood of many communities, large and small—including communities as large as Adelaide, all the towns on the Murray and all the communities on the Darling and its tributaries. Seventy-five per cent of our irrigated agriculture is in this one basin alone, and it produces 40 per cent of all of our agricultural output. The Murray-Darling Basin is an indispensable part of our economy, our history and our community, but it has been heavily taxed by the claims of agriculture. The ancient river and its tributaries have been regulated and dammed, both for irrigation and, originally, for navigation, and they are now regulated working rivers. These practices have had impacts on the quantity of water in the river, the timing of its availability, and the environment has, generally speaking, suffered due to what now appear to have been overallocations to the agricultural sector.

In 2005 there was a commitment in the Living Murray Business Plan to recover 500 gigalitres of water for the river. This was the first step of the Living Murray initiative, the aim of which is to restore and protect six iconic ecological sites, including the Barmah-Millewah red gum forests, the Hattah Lakes and the Murray mouth itself. Until recently, progress had been slow. The initial focus was on funding large infrastructure projects to save water which would otherwise have been lost to inefficiencies, and the water saved was to be placed on the environmental account. But it appeared only a few months ago that there was no prospect of meeting the 500-gigalitre target which the governments had agreed to reach by 2009. Only Victoria looked like meeting its target. The other two states were a long way off.

But in the last few months there have been some major changes in water policy and in the climate for water reform generally. Most importantly, the commitment of $500 million delivered in the Treasurer’s budget is a signal of the importance that the Howard government places on water conservation and water management. It will be split, with roughly $300 million going to works and measures along the river which had been postponed and put back due to lack of funds. This work is needed to repair infrastructure vital for the operation of the river and the environment which depends on it. That will now be done and done quickly. In addition, $200 million will be committed to supporting the Living Murray initiative and the acquisition of water.

But how are we going to acquire the water for the Living Murray target? There have been considerable concerns in rural communities about governments buying water. There are concerns about water being traded, indeed. The concern is that, if the government or governments buy water for the environment, it will reduce the pool of productive water in a community and, while the vendor of the water may get a financial return, all of the other businesses and interests that depend on the productivity of the agricultural sector in that community will suffer.

In Adelaide, in April, I proposed, on behalf of the Commonwealth, a new policy to acquire water for the Living Murray initiative—a new approach. Ten days ago that was endorsed by the Murray-Darling Basin Ministerial Council. There will be a tender to purchase water from willing sellers, but it will be a tender with a difference: the water purchased will be water which has been made available from water efficiencies. The aim is to achieve two goals: to increase the amount of water that is available for the environmental objectives of the Living Murray initiative but at the same time ensure that we are promoting the more efficient use of water. Whether you subscribe to all of the forecasts of the scientists or not, very few people in rural Australia do not agree that we are heading into a hotter and drier future and that it is more likely that we will have less water in our future than more. So the efficient use and management of water will become more important over time, and, the sooner we can make those investments to use water efficiently, the better.

There are enormous inefficiencies in our use of water, and of course they are not just in rural Australia. Goulburn-Murray Water, who are one of the biggest water utilities in the Murray-Darling Basin, told me recently they estimated their losses from inefficient infrastructure to be as high as 30 per cent. That is about 900 gigalitres, which is around twice as much as Melbourne consumes in a year. The losses can be even greater where water is distributed through long, open channels. A grazier I know on the Lachlan River recently piped 180 kilometres of open channels and discovered that he had, through that old, seeping system, been losing 90 per cent of his water. He now has 2,000 megalitres he did not have before.

There are enormous savings from efficiencies but, just as there are savings at the level of big projects, which is what the Living Murray initiative has been targeting to date, so there are savings that can be achieved at the farm level. So we are aiming to get the money down to the farm level and encourage anyone who believes they can save water through efficient practices, better infrastructure, more efficient farming practices, to then have an opportunity to sell that water back for the environment through this tender.

At the same time, both South Australia and New South Wales, in particular, have shown a new energy to meet their obligations under the Living Murray initiative. South Australia, at the Murray-Darling Basin Ministerial Council, presented proposals to acquire 35 gigalitres, thereby meeting its share, assuming that that water is placed on the eligible measures register, and New South Wales has proposed new water saving initiatives, including water purchases. There is, consequently, a new optimism that the Living Murray initiative target of 500 gigalitres by 2009 can be met. If it is met, it will in very large measure be due to the leadership shown by the Prime Minister and the Treasurer by making these funds available in this budget, because it showed a commitment, a determination and a preparedness to invest now for a more secure and sustainable water future.

Another key objective of the National Water Initiative is interstate water trading. The scheme of the National Water Initiative is elaborate, but in a simple way it can be seen as involving the restructuring of water entitlements so that the balance between consumption, mostly agricultural, and the environment is set at a sustainable level—granting those water entitlements property rights and then enabling those water rights to trade. This has the support of all Australian governments, both Labor and Liberal. But this is not at all a pious genuflection to the memory of Adam Smith; it is a vital tool to ensure that water is allocated to its highest and best use. To those who say, and many do, that we should not be growing rice or cotton in Australia, the answer is very simple: farmers themselves struggle to pick the right crops; do we really imagine governments could do any better? The answer is to give secure title to water, let it trade and allow the market to make the right choices. That is the scheme of the National Water Initiative and the policy of all Australian governments.

Until recently, there had been a failure to achieve a key water-trading objective of the National Water Initiative, and that was the enabling of interstate trade of permanent water entitlements across the borders of New South Wales, South Australia and Victoria. The National Water Initiative and the various governments had committed to achieving that by July 2005. Because of the failure to achieve that milestone, competition payments were suspended. There was a great deal of unhappiness and much finger pointing across the Murray. But now, only 10 days ago at the Murray-Darling Basin Ministerial Council, the three states—New South Wales, Victoria and South Australia—which had been working together with support and leadership from the Commonwealth government through the COAG water trading group, have announced that they are committed to the commencement of trade under an interim tagged trading regime. The National Water Commission will be reviewing their progress towards a permanent trading arrangement by January 2007, which is the next milestone. The aim is that, if it can be achieved by then, the suspension of the competition payments would be reviewed.

There are many hurdles, not least of which is the vexed question of exit payments, which are the charges that irrigation cooperatives and irrigation companies place on the sale of water that is being sold out of their area. Do those exit payments reflect a reasonable estimate of the pro rata share of maintaining the infrastructure over the years ahead, or are they excessive? Are they a barrier to trade? Views differ, naturally enough. It is a controversial issue, and the states have requested the ACCC to investigate and form a view.

In summary, on the Murray in the course of this year, we have seen, thanks to the leadership of the federal government and the support from the budget, a massive injection of cash into the Murray-Darling Basin Commission to fund essential works and measures—the single biggest one-off commitment of funds to support our most important river system. We have seen the water acquisition program for the Living Murray initiative get back on track, with new funds and new policies endorsed by all governments. Interstate trading in water in the southern Murray-Darling Basin is not yet as concrete a reality as we would hope it will be shortly, but it is on the verge of happening. Having met with the state water ministers at the ministerial council in Melbourne recently, there seems to be a sense of common purpose to achieve this. All of that will ensure that our water future is more secure and sustainable.

There are many more challenges in the realm of water. At the core of them is the realisation that water is a national issue. It is perceived as a national issue by most Australians but every community and every locality is different. The water solutions for one town are very different to another because of differences in climate and differences in topography, geography and geology. It is national, but it is very local. Nonetheless, there is more that we can do to manage water on a national basis and to support each other in managing our water future. The policies and the directions are all there in the National Water Initiative. We need to continue to work towards uniform, standard methods of registering and recording water entitlements. We need to sweep away the barriers to trade, be they in the form of exit fees that are too high or, often, Dickensian bureaucratic processes for the transfer of the water entitlements.

We need to recognise in our cities that our water shortages are not a function of drought alone but a function of poor management and poor planning. We can afford to have, in our big cities especially, as much water as we wish to pay for. Even if you take the view that there are no more good dam sites, recycling and desalination offer unlimited potential for augmenting our water supplies in our cities. Urban water in our large cities is therefore not a finite resource in the way we used to imagine it was. Water can be manufactured. Shortages are more a consequence of planning errors than they are of climactic changes or water shortages.

But the days of cheap water are over—they are over in the cities; they are over in the country. The efficient use of water, the better management of water and the conservation of water will be increasingly the focus of all Australians committed to a secure and sustainable future for our country. Great civilisations and great empires have been built on the management of water. Consider the aqueducts of ancient Rome—11 aqueducts delivered 1,000 litres of water per person into Rome 2,000 years ago. When they were broken the city fell. Australia’s prosperity has been built on the management of water and our future prosperity will be sustained on its wise and efficient management in the future.

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