INDEPENDENT MP Tony Windsor has raised three interim findings from his House of Representatives Murray Darling Basin inquiry, highlighting the potentially detrimental impacts of the “Swiss cheese effect” of water buy backs on irrigation districts.
Mr Windsor, as Chairman of the Regional Australia Committee, which is conducting the inquiry, has written to Water Minister Tony Burke and Regional Australia Minister Simon Crean raising the Committee’s concerns.
In doing so, the Committee has asked that more strategic buy back arrangements be considered as a matter of urgency.
As well as highlighting the “Swiss cheese effect”, the Committee has also raised unanimous concerns about the impact of the current taxation arrangements on irrigators, resulting from water reform such as grants for investments in water efficiency.
Concerns have also been raised about implications of the Murray Darling Basin Authority’s consideration of overbank flows in their modelling of water requirements on environmental icon sites and in consultation with stakeholders, opportunities for engineering alternatives.
Mr Windsor’s report is due to be tabled in May 2011.
The National Irrigators’ Council said it was pleased Mr Windsor’s Committee had listened to the problems outlined by Basin communities and provided early advice to the Commonwealth.
NIC CEO Danny O’Brien said a more strategic approach to water buybacks, addressing taxation issues that were hampering efforts to improve the efficiency of irrigation infrastructure and better solutions than simply overbank flows, were all an important part of getting a balanced Basin Plan.
Mr O’Brien said the Committee should also be making recommendations to the Government about the Water Act and its capacity to deliver a Basin Plan that balances environmental, economic and social factors.
He said the Act had been raised by many in the community at hearings so far and must be addressed.
“We look forward to the Committee making recommendations on legislative change when its final report is handed down,” he said.
Mr Windsor’s Committee is investigating the socio economic impacts of the MDBA’s plan and other relevant issues, including potential water efficiency alternatives.
The Committee has cross representation of Liberal, Labor, National and Independent members.
Mr Windsor said the Committee spent ten days in the southern part of the catchment last month holding various meetings, sight inspections and taking evidence from groups concerned about the MDBA’s Guide to a draft Basin Plan.
He said the government’s water buyback strategy was, in the committee’s view, having a detrimental effect in some of those irrigation districts.
“Its been indicated to us that there is great concern about what’s called the Swiss cheese effect of government buybacks in terms of the irrigation districts where you can actually end up with stranded assets, what they call stranded assets, and as such you end up with the integrity, in particular in relation to the fixed costs of the operation of those irrigation districts, being potentially impacted on,” he said.
“We’ve suggested to the Ministers, that with some degree of urgency, that they consider a more strategic arrangement in terms of the buybacks.
“The second issue we have picked up on and seems to come up in a number of places is the impact of current taxation arrangements, on irrigators as a result of water reform, such as grants for investment in water efficiency.
“One of the things we are all trying to encourage, particularly in the Murray Darling, is greater water efficiency on farm.
“But there are some implications there in terms of the taxation system that needs to be looked at, so we’ve advised the Ministers.
“These aren’t demands of the Ministers but we thought these three issues were coming up so often, and they will proceed to come up as we carry out our further deliberations, that we thought it was appropriate that we advise them that we see these three issues as being in some way an interim report I guess, of some of the concerns that are being expressed.”
Mr Windsor said the Committee was not suggesting buybacks should be dumped.
“If you understand the workings of irrigation districts, if you start to take the eyes out of bits and pieces of it, you weaken the integrity of the operation of those districts,” he said.
“We are not saying people should not have the right to buy and sell their water; they do.
“But where the government is involved in the buyback arrangements at the moment, we are suggesting that is having an impact and the Minister may determine that’s a good impact.
“We are just relaying the message of the people.”
Speaking during question time in the House last week, Mr Burke said the advice from Mr Windsor’s Committee matched what he was receiving in his consultations with irrigation communities and he was hoping to make some announcements in the near future.
“I should inform the House that the concept that has been referred to me from the Committee about trying to improve the management of environmental assets is a very real possibility in trying to minimise the adjustment required for individual communities,” he said.
“I am currently looking at ways of formalising a process with stakeholders to come up with the best projects that might be able to deal with that.
“Similarly, issues have been put to me from the Committee about wanting to maximise the opportunity for strategic purchases, and that is very much linked with the recommendation that has come from them regarding taxation issues.
“The Minister for Regional Australia, Regional Development and Local Government and the Treasurer have been working with me on trying to find a way of maximising the tax effectiveness of those strategic purchases, and we are certainly very hopeful that we will be able to make an announcement on that soon which I think will very much meet the wishes of the Committee.”
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