NATIONAL WATER REFORM

Key Points of NIC’s National Water Reform Advocacy

Australia’s national water reform process has required the productive sector to ‘do more with less’. As the irrigated agriculture sector faces the next iteration of national water reform, NIC will not accept an outcome where water entitlement holders are required to solely bear the risk of climate change.

• There must be equitable distribution of the burden in policy responses to climate change, with other water users being subject to the same standards of efficiency as the productive sector.
• Recognise that irrigated agriculture producers bear significant risk as part of their business planning in their respective industries, including accounting for present and future risks, whether industry related, trade market impacts and seasonal and climate related factors.
• Restate and embed a genuine triple bottom line outcome as part of water reform.
• Reiterate the Productivity Commission’s 2017 recommendations regarding recognition that a river environment is more than just flow.
• Recommit to, and embed, complementary waterways management (or non-flow measures) to improve river systems.
• Ensure water property rights are not diminished by planning processes and that the allocation of risk is appropriately spread.
• Recommit to adaptive management, reinforcing its value and importance, and that it be pursued and firmly embedded in a renewed NWI.
• Embed the commitment to the objective of avoiding third party impacts from water reform.
• Support consideration of, and continued research into, impacts of climate change with a view to determining possible actions to equitably ameliorate impacts.
• Oppose water buyback (beyond willing sellers) and support the need to ensure that any analysis of “least cost” includes full assessment of community impact and benefit rather than simple dollar cost.

National Water Reform

Advocacy: NIC highlighted during the Productivity Commission review of National Water Reform, the importance of environmental water managers being able to demonstrate a clear process across the board for the management of environmental water holdings, including where progress has been/is being made on targeted environmental sites.  

Outcome: the Commission provided the following advice in relation to environmental management:

• Adopt best-practice development of environmental objectives and agreed environmental outcomes.
• Integrate management of environmental water and complementary natural resource management.
• Where not in place, establish a formal institutional oversight responsibility for wetland and waterway management.
• Establish clear processes for reviewing progress on environmental outcomes.
• Embed criteria for prioritising environmental watering, and objectives for environmental watering under different climate scenarios.
• Actively pursue public benefit outcomes where they do not compromise environmental outcomes.
• Independently audit the adequacy and use of environmental water entitlements every three years.
• Obligate system managers to use their best endeavours to achieve agreed outcomes.
• Commit to adaptive management.  

MURRAY-DARLING BASIN PLAN

In an interview with The Land newspaper in early 2015, when reflecting on community anger during a meeting about the development of the Murray Darling Basin Plan at Griffith, NSW in 2010, the former Chairman of the Murray Darling Basin Authority, Craig Knowles observed:

‘At a human level, people weren’t being treated with the respect they deserved or being listened to, and ….…….it was a fatal error to ignore the needs and expertise of people living and operating within the river system.’

The trajectory of reform under the Basin Plan is too heavily biased towards water as the only environmental management solution to address environmental decline in our river systems. The Basin Plan was designed to deliver long-term sustainability of agriculture and the environment. Irrigators remain committed to genuine reform, but not at the expense of communities and industries. 

When the Basin Plan was first conceived as part of the Water Act 2007, and in good faith, Basin communities well understood the principle that some water would be returned to the environment for the broader benefit, including to ensure sustainable extraction into the future. The process of water recovery commenced prematurely in 2009, before the Basin Plan had been finalised and established what the valley based sustainable diversion limits or the environmental flow targets would be.

1500 GL cap on water buybacks

Advocacy: NIC advocated in 2015 to Federal and State Government Basin Water Ministers to secure the 1500GL cap on water buybacks.

Outcome: Achieved with the unanimous support of all Basin Water Ministers.

Risk: South Australian Labor’s 2022 State Election policy to remove the cap on voluntary water sales by willing sellers to achieve environmental flows in the Basin Plan.

Risk: Federal Labor’s Federal Election 2022 policy to not rule out buybacks from farmers.

Shifting the focus to complementary waterways management

Advocacy: In keeping with the promise of ‘localism’ and ‘adaptive management’, NIC has long advocated that local knowledge and input must be incorporated into policy decisions and solutions to achieve environmental improvement. The ‘just add water’ approach to meet flow targets is not always the right environmental solution to a complex structure of environmental challenges in the Basin.

NIC supports environmental improvement through complementary, or non-flow, waterways management. This approach was also recommended by: The Productivity Commission and The Sefton Review on the Social and Economic conditions in the Murray Darling Basin.

Outcome: Implementation by Government of:

• Healthy Rivers Program for projects to: Restore native fish habitat; restore riparians zones; improve biodiversity and water quality in river catchments; restore floodplain ecosystems.
• The Northern Basin Toolkit program for projects to: improve water management practices and passage of flow without depending on additional water through initiatives that promote fish movement and habitat through infrastructure works like fishway construction or changing water sharing rules and arrangements to better protect water for the environment; Undertake fish friendly water extraction projects; enhance the flexibility and capability for distributing and managing low flows through river systems.

Northern Basin Review

Advocacy: In 2016, NIC argued that there should be no further high impact ‘’acquisition” of surface water entitlement across the Northern Basin by the Australian Government to meet the water recovery targets set by the Basin Plan.  

Outcome: Following a four-year Northern Basin review conducted by MDBA and extensive analysis, it was found that 70GL less water recovery would save around 200 jobs in local irrigated agriculture dependent communities, while still delivering the environmental benefits identified under the Basin Plan. Hundreds of community members including environmental, Aboriginal, industry and community stakeholders contributed to the evidence base for the amendment to the water recovery target in the Northern Basin, to be reduced from 390GL to 320GL

ACCC inquiry into water markets in the Murray Darling Basin

Advocacy: NIC highlighted to the Federal Water Minister the importance of irrigation industry representatives to be included on the Government advisory panel appointed to oversee the 2021 ACCC report on water markets

Outcome: Significant irrigation industry representation included on the advisory panel.

Removal of the Limited Merits Review

Advocacy: to the federal Government for the removal of the Limited Merits Review

Outcome: In 2017 the federal Government passed an Act which removed the right of Network Service Providers (NSPs) to apply for Limited Merits Review (LMR) of most of the decisions on electricity pricing determinations of the Australian Energy Regulator (AER).

ENERGY MATTERS

Energy Policy

Advocacy: In September 2014, a group of Australia’s peak agriculture organisations met to work in partnership to advocate for action to reform Australia’s energy sector, with a key focus on electricity prices and the unsustainable high cost of the network charges passed on to consumers, imposing a highly distorting effect on the energy market in regional Australia.

Action 1: Established the Agriculture Energy Taskforce, September 2014

• Unanimous agreement reached to call on federal and state governments to take action to reform network charging regimes.
• Around 40 submissions provided by NIC and the Ag Energy Taskforce to energy related reviews / inquiries over seven years on the high costs of energy.

Action 2: Partnership between the Ag Energy Taskforce and The Energy Charter with the objective to progress more a streamlined approach to consultation on issues relating to the transition of the energy market, including issues impacting on Australia’s agriculture sector.

Bi-annual Strategic Roundtable

Advocacy: for a bi-annual strategic roundtable between the agriculture and energy sectors

• To discuss emerging issues, identify what’s working and areas for continuous improvement
• To alert the ag sector on issues which may impact the competitive capacity of the sector

Action: continued engagement through The Energy Charter and its members, to build:

• Alignment between the agriculture and energy sectors relating to energy transition, exploring opportunities and shared benefits.
• Consensus and a shared way forward on potentially contentious issues
• A more informed and constructive partnership between the agriculture and energy sectors.

A Senior Ag Energy Taskforce Representative

Advocacy: for a dedicated senior Ag Energy Taskforce representative to provide and coordinate engagement between Ag Energy Taskforce members and energy decision making bodies (ie state and Federal Governments, Australian Energy Market Operator, Australian Energy Regulator, Australian Energy Market Commission, the Energy Security Board)

Action: continued engagement through The Energy Charter and its members, to build:

• Alignment between the agriculture and energy sectors relating to energy transition, exploring opportunities and shared benefits.
• Consensus and a shared way forward on potentially contentious issues
• A more informed and constructive partnership between the agriculture and energy sectors.

National Food and Fibre Tariff

Advocacy: for a national food and fibre tariff to deliver a long term price capped at 8 cents per kilowatt-hour for the electrons (R) and a similar ceiling of 8 cents per kilowatt-hour for the network (N).

Outcome: Food fibre tariff now realised in many regional areas in Queensland

• The Federal Energy Minister also referencing this target price
• The former Chief Scientist, Dr Alan Finkel indicated the 8 cents and 8 cents target set by the Ag Energy Taskforce appeared to be a reasonable cost, suggesting that on average during the year, industries might be able to achieve that.
• The Energy Security Board (ESB) proposed a suite of tariff reforms as part of the Post 2025 Market Design work, to meet the needs of transition
  • Energy Ministers have endorsed these reforms and tasked ESB with their delivery.
  • The ESB now establishing a program of work to deliver these reforms, in consultation with consumer and industry representatives.
  • The suite of reforms is designed to fix immediate problems; design now what needs to happen next; and set up pathways forward so everyone has clarity and confidence about what must be done.

Regulatory Asset Base (RAB) write-down

Advocacy: on the need for a revaluation of the regulatory asset base (RAB) of energy companies to remove the impact of historic over investment from the underlying cost base

Outcome: The ACCC report titled Restoring Electricity Affordability and Australia’s Competitive Advantage (June 2018) noted the significant over-investment in state-owned networks in NSW, Queensland and Tasmania, driven primarily by excessive reliability standards and a regulatory regime tilted in favour of network owners at the expense of electricity users. The ACCC noted this has enabled networks to recoup billions of dollars of extra revenue from consumers. 

The ACCC recommended (rec 11) State governments should write down network assets. The governments of Queensland, NSW and Tasmania to take steps to remedy the past over-investment of their network businesses in order to improve affordability of the network and with assistance from the Australian Government, and recommended how this might be done:

• in Queensland, Tasmania and for Essential Energy in NSW, through a voluntary government write-down of the regulatory asset base
• in NSW, where the assets have since been fully or partially privatised, through the use of rebates on network charges (paid to the distribution company to be passed on to consumers) that offset the impact of over-investment in those states. Such write-downs would enhance economic efficiency by reducing current distorting price signals. The amount of the write-downs and rebates should be made by reference to the estimates of overinvestment by the Grattan Institute and should result in at least $100 a year in savings for average residential customers in those states.

Outcome: there has been no progress on the RAB write-down.

Regional and rural implications statement

Advocacy: for a regional and rural implications statement – a requirement that regulatory proposals put forward by infrastructure owners to the AER (Australian Energy Regulator) provide a 2-3 page ‘regional and rural implications statement’, detailing the likely impact of the proposal or reform, drawing stakeholder attention to issues that would have regional and rural impacts.

Action:

• NIC and Ag Energy Taskforce submissions to Government including this recommendation
• NIC Federal Election 2022 platform on Energy