Victoria’s Water minister Lisa Neville has warned against using the Council of Australian Governments (COAG) to solve issues around the Murray Darling Basin Plan.
Ms Neville meets with her New South Wales counterpart Niall Blair, in Albury today, to finalise a joint position, to take to the next ministerial council meeting, in fortnight’s time
She released a state government report on the socio-economic effects of the Murray Darling Basin plan at a Victorian Farmers Federation (VFF) water forum, in Echuca.
“It’s saying, as we get more dry periods, it’ll get tougher, and if you take out more productive water, it will get really tough,” Ms Neville said.
“We are at that tipping point and that is why this report is so critical.”
Ms Neville said she hoped to present the report to all water ministers.
“What is clear in the legislation is the 450GL can only be delivered in a scenario where there is a better or neutral economic outcome,” Ms Neville said.
“What our report is saying is that is pretty hard to do.
“Our position to the Commonwealth is you should not buy back, and we will continue to put the pressure on them to make sure that is not the case.
“There was intervention out of the last Ministerial council, that happened with the Prime Minister and getting COAG involved, and that was partly being driven by (Independent Senator) Nick Xenophon and the Adelaide interests, so it has made a bit of a complication as to how we work through this,” Ms Neville said.
“Federal water minister Barnaby Joyce is doing the right thing, Prime Minister Turnbull, less so – but don’t use the COAG as a mechanism, to deliver to South Australia.
“Doing that is going to have an impact on us.”
Ms Neville said she wanted to make sure “Barnaby’s views win the day, rather than Malcolm’s views.”
Ms Neville said the report told government the impact of the Basin Plan was greater than predicted.
“The climate change overlay is part of that, there is no question about that, we have a 24 per cent reduction in rainfall since 1997,” Ms Neville said.
“You are taking water out, through the Murray Darling Basin Plan, but you are also seeing declines in your storage levels, which weren’t really factored in when doing the plan.
“And that will get worse; there is no question about that – all the predictions say that will get worse, over the next 30 years.”
Ms Neville said water availability was made worse through the buy-backs, and they way they were done.
“There was a 75pc increase in farmers selling high reliability water shares, and some used it as a mechanism to pay back debt, people thought they could come back into the market, when they needed to.
“But, in the end, if you have less water in the market than was predicted, it’s going to cost you much more, and be harder to buy back.
“I think some of those predictions were incorrect, at the time.”
Ms Neville said irrigators who sold water in the buy-backs were increasingly reliant on purchasing water on the allocation market.
“In 2007-08, we had ranging from 0-12pc of people relying on the allocation market, we are now at 52pc,” she said.
The dairy industry, which sold more entitlements to the Commonwealth than any other industry, was now more exposed to higher water prices and heavily reliant on the allocation market.
She said the socio-economic study had shown without the Basin Plan milk production would be 30pc higher, with 78pc of farmers unable to pay more than $200/megalitres for water.
“Dairy is now more exposed and very heavily reliant on the allocation market,” Ms Neville said.
“Everyone knew there would be some impact from the Basin Plan, but it is probably bigger than people probably imagined.”
As more water was taken out of production, horticulture was also being affected.
The horticulture sector owned more than 40 per cent of high reliability water shares and would also be more vulnerable if there was more demand on the water system.
The report identified the Murray Darling Basin Authority (MDBA) needed to do a more comprehensive evaluation of the real socio-economic impact of implementing the Basin Plan.
The Victorian and NSW governments had appointed an independent expert panel to review the offsets mechanism in the Plan.
The review would inform both governments on how to deliver real environmental outcomes, without short-changing Basin communities.
The socio-economic study and outcomes from the expert panel process would inform discussions at the next Ministerial Council meeting to be held later this month.
