Damian Drum (Murray, National Party) Share this | Hansard source

I am delighted to be able to contribute to the debate on the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. The whole concept of a water register has enormous importance in my electorate of Murray as it would give so many landholders and irrigators the confidence and the knowledge that they need. There are many purported myths out there floating around. They either have merit or they do not have merit, but what we need is the knowledge. At the moment, that knowledge does not exist. Continually in the debate around water—which is the most contentiously debated issue in my electorate—a whole range of propositions are put forward and we do not know whether they are partially true, totally false or somewhere in between. We understand it is difficult and we understand it was much simpler when water was tied to land, which it was prior to around 2002, when we decoupled water from land. That opened up the opportunity for many irrigators, many primary producers, to on-sell their water and either move into dry farming, dry production, or sell their water, repay debt—which the Millennium Drought was very good at racking up—and then use what at that stage was low-cost temporary water to run their agricultural production.

So that is a backdrop to what we now have. We now have areas, such as the Goulburn-Murray irrigation district, which are operating with much less water than there was initially for that particular region.

The rains that have fallen in this particular year are, in effect, going to mask a range of the issues that are very pertinent to the irrigators of the Murray. But the rains have not fixed the issue that has become a real problem, which is that, in the traditionally strong areas of agriculture around the Goulburn Valley—namely, dairy and horticulture—the input costs associated with water are becoming prohibitive and really are having a significant blocking effect on further development and investment.

So it is critical to bring out into the open some of the myths and theories that are put out there and the fear associated with the question of who actually does own the water within the region. The transparency associated with this bill is going to be critical. People would suggest that the Chicago fire brigade owns a whole heap of water that is in the Victorian Goulburn-Murray system. We always hear stories that Eddie McGuire owns a heap of water. But, whether that is true or not true, we do not know the quantity, we do not know the extent and we do not know the value of that water.

There are quite a lot of farmers who retire from the land, sell their land, and move into town but hang onto the right to their water and use that water to trade each year as their retirement package or their pension. Under the rules at the moment, they have every right to do that. But the extent of that is the issue that is really driving so much of the angst within the industry. Again, this bill has the capacity to take away much of that angst by bringing all of those ownership issues and the quantity of the ownership out into the open. I think that is also what we need to know.

There is a very strong view that we should go back to having only those involved in primary production owning water. That is also not as easy and as clear as it might sound, because we do have a whole raft of smaller landholders who use a certain amount of water for primary production but also have ownership of much larger quantities of water than they could ever use on their properties, and those quantities of water are primarily used for trading purposes in each year.

So there is a range of complexities associated with bringing down hard and fast rules on what people should and should not be able to do with water. There is a whole range of opinions as to trading water outside of the region. We are waiting for the Murray-Darling Basin Plan to be completed and for the consequences of the plan to be felt once and for all and to see how a completed plan is actually going to work for productive agriculture. And there is an opinion that, until that is completed, we should have a temporary ban on water leaving each region. That is a good idea—unless you are looking to retire out of agriculture, retire your debt and move into retirement with the biggest cheque and profit you can get for your assets, which is every person's right. Then, to limit those sales to within your district is going to diminish your returns on a lifetime of work. So, again, these views have merit, but they also have negative effects for a group of people.

There is also a view that people can buy or sell in any given year but people should not be able to buy and sell in any given year, thus moving into the brokerage space where people become speculators with their water. In a given year, many farmers might decide that they are running a bit short and so need to purchase a bit of temporary water, and many of them then do so. Many of them with strong holdings of permanent, secure water realise that, due to some good rains, they are in a position to sell some water. But should we put a ban on those people who are buying and selling water in the same year? That is effectively moving them into that brokerage or trading space, and all that does is to tend to move the price of water up as it becomes a heavily traded commodity. Also, many people buy water at the start of the year so that they have a secure amount of water for their production and then, at the end of the year, if there is opportunity, they may also get rid of some of that water rather than keeping it in carryover. So, again, it is not easy or simple.

But there is also another view that, if you are going to be a water-holder, then you should pay all of the associated charges and costs that go with being a primary producer. At this stage, obviously, if you are a trader, then you do not pay the delivery shares because the delivery shares are locked into your particular farm and the number of outlets through which you bring that water into your farm. But there are other costs. So there is a view that, if people own massive amounts of water simply to make a profit from, then, to put things back on an even playing field, they should pay all the other associated charges that those who are involved in primary production pay. There is some real merit in that.

It is also worth mentioning the impacts of water; we cannot allow water to just go to the highest productive use. At the moment, almonds are the highest productive use. We already know that up around the Robinvale region there is, literally, 40 to 50 kilometres of almond plantations, which you will see as you drive along the area. They are a very profitable commodity at the moment, but the level of employment associated with an acre or a hectare is absolutely minimal. If you want to do a comparison of horticulture or dairy against almonds, you will find that for a similar amount of water, you are likely to have 38 people employed in horticulture. For a similar unit of water you are likely to have about 18 to 19 people employed in dairy, and for a similar unit of water in almonds you are likely to have one person employed.

If we are going to let water just go to the highest use, at the moment you would have all of Victoria covered in almond trees and hardly anybody employed in the production. And all that it is going to take, if we play this out, is for California, in a couple of years, to work out how to produce almonds at a cheaper price. Then, all of a sudden, our industry is taken from underneath us and, in the meantime, we would have absolutely fractured our horticulture and dairy industries because were naive enough to think that letting water go to the highest productive use was a good measure. So, we need to be very mindful of the rest of our communities, the rest of our society, and how important it is that we have an overarching view of the best use of water in our areas.

There is no doubt that the Murray-Darling Basin Plan was necessary to stop the then Labor government from buying water indiscriminately out of the market and returning that water indiscriminately back to the environment. We understand that the Murray-Darling Basin Plan was necessary to put together a plan that was going to give the environment the water that it needed. But, again, we know that there are many in the Labor Party who wanted much more than the 2,750 gigalitres. There were many within the Greens who wanted over 7,000 gigalitres—nearly all of the water in the Murray-Darling Basin to be devoted to the environment. We understand that the balance has, in many people's view, including my own, tipped way too far in favour of the environment. We need to look at ways we can look after our primary producers. We need to look at ways that this 450 gigalitres of 'upwater', which is pencilled in the agreement, can head towards South Australia. We need to look at ways to make everybody understand the social and economic impact that it is going to have on the Goulburn-Murray region. If that water was ever to leave the region, it would have such a negative impact that it does not even bear thinking about.

But, more importantly than all of that, we need to make sure that this bill finds its way through the parliament so that when we are having these debates in the future, we know who it is that owns the water, and we know the comparison between their landholdings and their water holdings. Then, we can see very clearly that they are using the vast majority of their water for productive use, or they are using the vast majority of their water for trading. We know that the more people we have purely in the market for trading, the more it forces the price of water up, which will have another detrimental effect on your standard primary producer.

So, our biggest challenge in the regions at the moment is to become more competitive on a world market. We produce this amazing quality produce. It does not matter what it is; we produce some of the best produce in the world. But we need to be able to do it at a globally competitive price, and one of the biggest input costs in the Goulburn Valley and Murray electorate is the cost of water. If we have people in there who are jacking the price of water up, simply from their trying to trade their way to wealth, then we need to look at bringing that situation out into the open. This bill, with the owner registry, is going to do that. So I welcome this bill. I wish it a speedy passage through both houses. (Time expired)

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