Senator RHIANNON: In just sticking with the Commonwealth environmental water, is the government now favouring recovering water through subsidising irrigation upgrades?
Senator Birmingham: This government has always preferred investment in irrigation and infrastructure efficiency as the preferred means to recover water licences to go into the CEWO, whilst minimising social and economic impact, or at least providing some beneficial social and economic impacts.
Senator RHIANNON: Thank you for pointing out that has always been your position. Has it become a more dominant part? Has there been a shift that it is totally it or is it really the same since you came in?
Senator Birmingham: No. The government's position has been consistent.
Senator RHIANNON: Are you finding that means the return of the promised 3,200 gigalitres is then more difficult with that emphasis on infrastructure upgrades?
Senator Birmingham: Officials may like to add to this, but certainly the water recovery strategy of the government outlines a credible pathway to ensure the basin plan is implemented in full and on time and that seeks to maximise potential recovery of water through efficiency measures and infrastructure measures but still has a component of buyback as well.
Senator RHIANNON: Minister, you have spoken about water recovery as a credible strategy so, therefore, are you saying that that strategy can deliver the necessary water for the Lower Murray, the Coorong and other wetlands that are risk?
Senator Birmingham: It can deliver on the basin plan in full and on time.
Senator RHIANNON: Are you confident that it can meet the environmental needs of those areas?
Senator Birmingham: It will provide for the needs of the Lower Murray as provided for in the basin plan, indeed.
Dr de Brouwer : I might just refer back. Yesterday there was a discussion on these issues as well, so if you are reading through that material, what the minister has said was something that officials had also said about being able to bridge the gap with the current budget allocation.
Senator RHIANNON: Have environmental water trading provisions been changed to allow returns to the use for activities other than recovering more environmental water?
Mr Papps : No. There has been a Water Act review and there are recommendations before the government, but there have not been any changes to the Water Act nor to the provisions that relate to my trade.
Senator RHIANNON: Did I understand from your answer that that change is being considered? Is that part of the possible new approach?
Mr Papps : As I understand it, it is a matter of public record that there is a report from the independent expert panel that was commissioned to review the Water Act being considered by government and that some of those recommendations go to the provisions around trade.
Senator RHIANNON: Has the department given a response to that?
Mr Papps : I am not aware of the exact nature of the department's response.
Senator RHIANNON: Has anybody given a response to it?
Senator Birmingham: I think Mr Parker will update that the government has accepted a couple of recommendations and I think the rest are still under consideration.
Mr Parker : Yes. There were two recommendations of the Water Act review that were accepted immediately by the government. One related to a review of the water charge rules. This goes to the regulation by the ACCC of infrastructure pricing arrangements under the Water Act. It is related indirectly to the basin plan but it is not a substantive element of the matters that have been discussed here today.
The other recommendation which was accepted straight away by the government went to the burden of water information reporting to the Bureau of Meteorology and other agencies. Other recommendations are still in the process of being considered by the government and there will be a response to those in due course.
The specific recommendation which was referred to by Mr Papps relating to the water trade arrangements involved a modest relaxation of the rules which apply to trading by the CEWO. Presently, in most circumstances, the CEWO can only trade water, so if we imagine a sell part of the transaction first, it can only trade water if Mr Papps believes that the sale of that water can improve environmental outcomes. Essentially, if he has surplus water he can then buy water with the proceeds of that sale somewhere else or some other time in order to improve the environmental outcomes under the basin plan. There is one very small exception to that and that is if he cannot carry over water and cannot use it productively but the substantive provision with the larger trade, which Mr Papps has already undertaken, has that requirement that he can only use the proceeds to buy back water at some other time at some other place for environmental use purposes.
The recommendation by the Water Act review panel was to change that element of the rule in one small respect, which is to allow the CEWO to use the sales proceeds to achieve environmental outcomes in another way. That might, for example, allow Mr Papps to fund the installation of a culvert or a regulator on water infrastructure-fairly small scale, I imagine-works which would improve the environmental outcomes that could be achieved in a particular place, but there was a quite specific anchor related to the achievement of environmental outcomes.
Senator RHIANNON: Thank you. That was very useful. Mr Papps, are you the person who determines if the trade will improve those environmental outcomes? I am just interested in the process of how that decision has been made. That answer was very useful.
Mr Papps : Yes, I am the decision maker in that regard under the provisions of the Water Act.
Senator RHIANNON: It sounds like a huge job. Whom do you draw advice from?
Mr Papps : Principally, there are two sources of advice. Firstly, from the staff who work for the Commonwealth Environmental Water Office, who are experienced professional staff that have had a lot to do with water trading over the years in terms of developing a frame for it, work for example, and who are familiar with what is happening in the market and, secondly, we commission independent private consultants who, again, are experts in this field to provide us with advice.
Senator RHIANNON: Are they people in the field or is this done by assessing price, et cetera? I am trying to understand how it actually works.
Mr Papps : A lot of the independent advice we get goes to the current state of the market that we are interested in. If we go back one step. Mr Parker's explanation was complete and comprehensive, so that very first test about having temporarily surplus water because environmental needs have been met takes me to the market if I am going to be selling water. It tells me where I am going to be selling water. It is where I have got the temporary surplus, the example being, from the last set of trades, the Gwydir. We then seek advice from consultants and from my staff around the market conditions in the Gwydir and related areas because we are interested in things like the volume of water that we would release to the market.
You would recall from the answer I gave to Senator Ruston about our good neighbour policy, even in making decisions around trade, we do not want to significantly disturb the water market so we would, for example, seek advice on what would be reasonable volumes of water to put on the market.
Senator RHIANNON: Mr Parker, you said in your response that the changes are still being considered. When will this be finalised?
Mr Parker : I do not think that there is a specific time line envisaged at this point. It is, again, under consideration by the government.
Senator RHIANNON: Minister, can you elaborate on that? I was just interested if there is still opportunity for any public engagement or is it now within the cabinet or within your department? Where is this up to?
Senator Birmingham: The decision making process is now one for government. Obviously the Water Act review panel went through a process of receiving public submissions and engaging in public commentary and produced a draft report before preparing a final report, so that process was quite engaging. The government will now go through its usual process with any of these types of reports and internally consider the policy merits, pros and cons and cost implications and anything else of the recommendations and will ultimately prepare a response to that that will either accept, accept in part or reject the various recommendations. Of course they are recommendations for changes to the Water Act so if the government accepts them then those changes will come before the parliament and no doubt will be subject to all of the public engagement and scrutiny that comes with the parliamentary process.
Senator RHIANNON: When? Can you give us a detailed time line or somewhat of a time line?
Senator Birmingham: Not really.
Senator RHIANNON: Not at all?
Senator Birmingham: No, sorry.
Senator RHIANNON: That is unfortunate. Just moving onto expenses for the Commonwealth Environmental Water Office. I understand that they are due to drop from about $41 million in 2015-16 to about $5 million in 2017-18. That sounds like an enormous drop, so what has changed?
Mr Papps : This is the same matter that has been raised previously, both yesterday and earlier in this session.
Senator RHIANNON: I apologise.
Mr Papps : It relates specifically to the Environmental Water Holding Special Account and the expiration of the appropriation. Therefore, it is a matter for the government to deal with that in the next budget process.
Senator RHIANNON: I will have a look at that in detail and come back to it. I might just ask one more thing. I have been trying to understand how the Commonwealth Environmental water holder will cover the costs of delivering the water? How does that process work?
Mr Papps : Again, as I indicated in a previous answer, the costs associated with that relate to two principal areas. One is staffing, which is a departmental cost. The other is fees and charges for the storage and use of environmental water as well as the monitoring, evaluation and other incidental costs like pumping which are drawn from the Environmental Water Holding Special Account.
Senator RHIANNON: Thank you.