Private member’s business – water rights
As the birthplace of the Murray River and the home of the Victorian Alps, Indi holds a special place in the story of the Murray-Darling Basin.
The Murray, Mitta, Kiewa, Ovens, King, Broken and Goulburn catchments of Indi supply approximately 50 per cent of the surface water to the whole Murray-Darling Basin. As well as some smaller dams, Indi contains the Murray-Darling Basin’s largest water storages of Dartmouth and Hume dams and Lake Eildon, which amount to 63 per cent of storage capacity in the southern basin and 45 per cent of total storage for the whole Murray-Darling Basin. Indi, therefore, has a significant interest in the Murray-Darling Basin Plan, which is a critical framework for balancing the needs of agriculture, communities and the environment.
According to the Basin Authority, water trading is a mechanism that is maximising the efficiency of water use and contributes to sustainable water management. When water is allocated to an entitlement holder, they themselves can determine whether they use or sell that allocation, creating an incentive for water to be moved to higher-value uses. Moreover, for the farmers who want to leave the land, their water entitlement is an asset like any other that they can sell. However, we’ve heard this morning that water trading is far from perfect. Well, most people have said that, with the exception of the member for Mackellar, who speaks to drought support.
This motion seeks to remedy one of the very many and complex problems that lead to farmers needing drought support. First, water trading inflates the price of water, driving up costs for farmers. Water is not like shares in a company, where you make a bet, take a risk and get rewarded with a dividend. Whether it’s in Sydney, Singapore or Seattle, a company buying water from one farmer to then sell to another farmer for a higher price, in my opinion, is sucking money out of farming communities. When traders add value to the market by making it cheaper or easier for farmers to access water allocations, or by overcoming information or other barriers, fine, but there should be no space for the rent-seekers and ticket-clippers profiteering off drought.
Right now, anyone can buy and sell water in Australia, and 14 per cent of trades are from people who don’t own land. We need to make sure this market is delivering for farmers, not corporate investors. The system is extremely complex. Anyone who tries to simplify water is ‘simple’. In Victoria alone, there are 17 water-trading zones, with the ability to trade water within and across them, specific to each combination of zones. That means there are 272 different zone-to-zone water trading arrangements in Victoria alone. Unregulated water zones are different again.
Meanwhile, moving water across the country requires incredibly sophisticated metering, monitoring and accounting to incorporate loss factors. The recent Keelty review demonstrated some fundamental and unacceptable flaws in the system, including: a failure to consider climate change, which latest projections show could cause a 25 per cent reduction in rainfall in the Ovens-Murray region, which feeds the Murray River; lack of metering in the Northern Basin; and lack of transparency around water ownership. The government clearly recognises this is a serious issue, because last year they announced an ACCC inquiry into water trading, which is set to release its interim report on 30 June.
I support the member for Mayo’s motion and, when the government releases its exposure draft of the new foreign investment scheme, I would like to see three things.
First, they should subject water purchases to the Foreign Investment Review Board. Water is as essential as land or electricity. It is fundamental to our national interests and it should be treated as such.
Second, the government should create a register of ownership for water rights. If there are non-landholders purchasing water in the Basin, that information should be collected so the government can monitor its impact on water availability and prices, and this registry should exist for foreign and domestic water owners alike.
Third, the government should hold off on preparing this legislation until the interim report of the ACCC is published. That inquiry received over 100 submissions from stakeholders all over the Basin, and good governance requires that those views be incorporated into any legislative reform into the water trading scheme. I support the member for Mayo’s motion and am happy to do so today.
[June 15, 2020]