Phillip Glyde, Murray Darling Basin Authority
Thanks, David. And thanks, everybody, for coming along. Can I, first of all, say how
fantastic it is to be here at Outlook again. It's much better to come as a speaker than it is to
come as the Executive Director of ABARES. It's always a nerve-racking time, because
people that sit up here often don't turn up on time, like I didn't do today. But secondly, can I
just acknowledge and recognise the Ngunnawal people, who are the traditional owners of the
land on which we meet. And can I also acknowledge the 40 aboriginal nations that comprise
the Murray-Darling Basin and pay my respects to their elders, past and present.
David said I'd started in July in this job. I actually started in January. So I've been in the role
for essentially two months. And rather than give you a really erudite and deep understanding
of what the Basin Plan is about, what I wanted to really do is try and share with you some of
the things I've just learned since picking this up.
And it's more by way of a general introduction, just a bit of a reminder as to why we have the
Plan and why I think it's so important to stick with the Plan. So apologies for those of you
who are wanting detailed explanations of the act in the Plan, and things like that. You'll have
to ask David Parker for that.
But moving right along, he said pressing the button firmly, just to remind you about the
complexity and the size of what we're dealing with-- 4 states; 1 territory; 2 million people;
provides water for over 3 million people; 40 aboriginal nations; 30,000 wetlands; more than
35 endangered bird species; more than 16 endangered mammals; 49% of Australia's irrigated
farms; $18.6 billion worth of agricultural production, of which $7.1 billion is from irrigation.
It's a really iconic part of our history. It's an iconic part of the country. It's a large part of the
country.
So why do we need a plan? Simply because successive governments, over a long period of
time, have overallocated water entitlements in relation to the Murray-Darling itself. And the
industries and the communities that are supported by the Murray-Darling Basin Plan don't
have a sustainable future, unless we were to address that overallocation.
The expectation is, of course, that our storages and inflow into the Basin is going to reduce
over time. So confronted by those two things, essentially, I guess the way I'd look at it is that
the people that live, work, in the Basin, enjoy playing in the Basin and living in it there,
loving it to death, and we can’t accommodate the growth in a sustainable way. So successive
governments-- whoops, I went too far-- successive governments have been trying to reform
water, not just in the Basin but across the country. And there's been this long history. There's
a lot of reform fatigue that comes from that.
But this is simply just to run you through. There's been 1994, COAG, agreed a cap on water
diversions; National Water Initiative in 2004; Water Act in 2007. And a Basin Plan that tries
to establish a sustainable future for all of the players was introduced in 2012. It does lots of
things, the Basin Plan, most of which, unfortunately, has been written into legislation, so it
makes it very hard to change. And the Murray-Darling Basin Authority gets blamed for a lot
of that.
But one of the things that I've struggled with in trying to explain to the people I've met so far
is that the triple bottom line nature of the Plan itself, there's been a lot of accusation that the
governments and the authority don't take a triple bottom line approach. Essentially, where
we've landed in terms of setting a sustainable extraction out of the Basin was based on
making a triple bottom line judgement.
There's lots and lots of reports written. There was 22, specifically, written in relation to the
potential costs and benefits of the Basin Plan. They aren't perfect, those studies. Some of
them were done by ABARES, so they would have to be good, of course. But others were
done by people with a wider range of expertise than existed in ABARES at the time. I guess
the point is, it was the best available information that was around, and it did cover social,
economic, and environmental aspects.
At the same time as the Plan was put in place, there was also a commitment to recover the
water. And so this is not a role for the MDBA. We get blamed for taking water away from
people. But ultimately, it is a government role. And the Australian government, recognising
the scale of the structural adjustment that was occurring, put in place some fairly significant
investments, some of which are listed on the slide here.
But there is, since 2007 and 2008, there's been $5.3 billion invested in a combination of
infrastructure and buybacks, $3 billion in infrastructure, and $2.3 billion in buybacks. The
government has capped the amount that will be bought back, and there's been funds also set
aside for so-called supply measures, which are trying to improve the way in which we're
using the water. So that if you put in a weir and you flood a particular environmental site in a
targeted way, you don't have to use as much water. You don't, therefore, need as much water
in order to be able to achieve the environmental outcomes.
And so that's pretty important. That remains a focus, and there's some fund set aside for that.
There's funds set aside for constraints measures to, again, try to make it easier to water
environmental sites with less water. And particularly, $1.5 billion dedicated to so-called
efficiency measures, which are about lining-- things like lining irrigation channels, so that
you reduce your losses, and some of that water can be returned to the environment. And it
doesn't necessarily impact on the economic performance of the people who are using that
water for consumptive uses.
I guess the point I'm trying to make here is that there's been a triple bottom line adjustment,
and there's been assistance provided. You can argue whether that's enough and whether it's
been directed in the right way. But it was there.
I think the other thing-- and this is a really busy slide, and I'm not expecting anyone to be
able to read it in great detail. But really, the message I'm trying to get across here is, if you
start on the left-hand side, at 2012, you have the Plan introduced. And if you go to the right,
you've got up to 2024. And there's a series of things that we have to do that are required
under the Act, or the Plan. And there's a whole framework of other stuff in there that goes
beyond just setting the diversion limits. It goes to things like environment watering strategies,
market trading, et cetera. There's a whole lot of stuff in there which I won't go into.
But the point I really want to try and make is that in making this change, making this huge
structural adjustment, for the irrigation industry, for the farming sector, and for the
communities that depend on it, the governments have deliberately planned in a long period of
time to adjust. And that's a good thing, because adjustment over short periods of time is really
quite expensive and difficult for the people who are going through it. At the same time, it's a
difficult thing, because what it does is continue that long reform process. There's a lot of
fatigue in relation to that reform, but we are making steady progress.
I guess the other thing I want to stress about this chart is-- again, it's a bit hard to read. But
there's specific things planned in here to review how we're going and to change things as we
move along. It's an adaptive Plan, because the information that was the Plan was based on in
2012 is as good as it was at the time. As time goes on, we learn more. We learn by doing, and
there's more research being done, at the same time. It's an adaptive Plan.
And so for example, in 2016, we have the opportunity to go and have a look at the northern
part of the Basin and make some adjustments if the science and the economics suggest that
we should. And also in 2016, we're considering how best to deal with those sustainable
diversion limit adjustment measures, the infrastructure work that might be able to reduce the
socio-economic impact of taking water away from productive uses. And I guess that's what
I'm really trying to stress with this slide, is that it's a long period of time before things bite.
Really, the sustainable diversion limits come into effect in 2019. Nevertheless, the pain of the
structural adjustment, the pain of the change, whether or not you're selling water or you're
putting in new infrastructure on your farm, that is significant. The pain of what happens in a
town that is dependent upon expenditure from the farm sector is significant, and is enduring
and started from the start.
So if you've got the philosophy that this is an adaptive Plan, that it's a triple bottom line
starting point, monitoring, evaluation and reporting on how it's going is critical. We need to
make sure that we understand, because we don't have complete knowledge. No one has
complete knowledge. And so we want to know what the impacts have been and will be. And
do we need to change?
We have a process of annual reporting. There's the Basin Plan Annual Report. And I'm
waving it around here, because I left it on the table over there. But we put that out a couple of
weeks ago. It didn't go down well in some communities. And in fact, I think some of the
residents of Menindee were pretty keen to burn it, because they are very unhappy with how
things are going at the moment. But the point is there's an annual report that comes out.
There's also a report that we're obliged to do every five years. And that's due next year, where
we do a triple bottom line report on how it's going; what have we learned? And one of our
challenges is to tease apart what are the impacts of the Plan from the what else is going on in
the rural economy.
So what I'm trying to do for the remainder of my time, David, is just share a little bit about
what we had in our annual report and a little bit about what we've learned to date. And you'll
see, in going through this, that we're just touching the tip of the iceberg, in terms of what we
have. And there's more to come, but just to give you a flavour and try and convey the
message that we're making gradual progress.
In terms of water recovery, the big message there is that-- on the left-hand side of the slide,
there's a number, which might be a bit hard to read. But it says, we've got 1,951 gigalitres of
the 2,750 gigalitres that are required in order to get to a sustainable level of diversion. The
Commonwealth government and the state governments actually are responsible for
recovering this water. We're responsible for trying to report on it and understand the impacts
of that.
The point I'd make, though, if you think about that number, that's 20% less water than was
being taken out of the system on average at the start, or before the Plan; 20%. Now, whether
that's bought or whether that's saved through the infrastructure measures I mentioned early
on, that is a significant adjustment, in anyone's terms. It means a change from current
practise. And it's very understandable that a lot of industry and communities are going
through that change.
We're 71% of the way there, and the slide really just shows that 1,163 gigalitres have been
purchased. 577 gigalitres of infrastructure projects have returned water to the environment.
And on it goes. And we'll continue to report about that.
We've seen some early signs on the environmental side. The Murray-Darling Basin Authority
is responsible for setting a Basin-wide environmental watering strategy, in collaboration with
the Basin states and the experts. It's the responsibility of people like David, perhaps, the
Commonwealth environment water holder, and the state water holders to actually implement
it. But we're beginning to see some good signs and some good outcomes as we learn how to
go about watering.
This happens to be a picture of some Moira Grass growing in the Barmah Forest and
following a watering event in 2014. That part of the forest was actually supported by some
watering that occurred earlier, prior to the Basin Plan. But the fact that it's there demonstrates
that putting in place watering regimes at the right place, at the right time, can make a
difference.
Similarly, in terms of water birds, birds generally, it's been able to maintain-- some of the
watering we've done, that has been done, has maintained core wetland habitat for thousands
of birds, and including 20 species in the Gwydir Wetlands, the Macquarie Marshes, the
Lower Lachlan, and the Hattah lakes. And this is really important, because this goes to some
of the other values in the Plan, so that this sort of event and these sort of protections underpin
tourism, underpin recreation, and underpin the industries in the Basin that participate there,
underpin the enjoyment that people get in the Basin, both indigenous and others, in terms of
enjoying the benefits of the river. And it's really important that we continue to maintain those
values, as well.
Similarly on fish, a nice photo of a cod, I think, but we're seeing some really good breeding
outcomes for native fish, Murray cod, golden perch, and silver perch. And in addition to
recovering water, we've also seen the completion of fish waste from the Hume to the Murray
mouth. And that's also showing-- that's another way of making sure that we're improving the
environmental health of the river.
On the economic side-- I'm going to have to get better at this. So one of the key reasons and
one of the rationales for the agriculture industry supporting the Plan and supporting the-- and
joining with government in the bipartisan support across all of the Basin governments in the
Plan is that there is the promise it will provide investment certainty. And if you've got
certainty, then you've got a sustainable industry.
And with all of the reforms that have been going on, there wasn't that much certainty. So one
of the key objectives behind the Plan is to provide that certainty, know that, sure, things are
going to change in the future, but it will be done in a measured and well-informed and
scientifically-based way.
So what we're seeing is some-- thanks, David-- some significant investment in the cotton
industry in the Murrumbidgee. Maybe that's due to the Plan, maybe it's not. I don't know. But
I guess what we're trying to do is tease out some of these effects; evaluating investment in the
rice and dairy industries, similarly in fruit and dairy processing.
We're seeing a growth in almond plantations in the Murrumbidgee and the Lachlan. We've
seen other investment, other parts of the economy, investing. So private hospitals in Griffith,
freight lines, et cetera. Are they-- because of the Plan or not, these are some of the things
we're trying to tease out for our report next year. But they are also signs that there are some
confidence that populations are growing in some parts of the community. And of course,
there's the actual pulse of investment that governments have made, that I've already talked
about.
In our annual report, we have this photo of this gentleman, Joe Ventra, who grows lemons
near Cobram in Victoria. He received a grant of $126,000 to upgrade his farm's irrigation
system and move from overhead sprinklers to dual line drippers, with auto valves and
moisture sensors. I wish I knew more about that. But it's just an example and it's just an
anecdote that there is investment happening in the Basin.
But of course, as I've already said, with every adjustment, positive or negative, there's going
to be pressures. So this is a photo from our annual report of Deniliquin, I think. And we've
got a couple of case studies in there about the towns that are struggling, that were struggling
before the introduction of the Basin Plan, a lot that continue to struggle. And as I said before,
taking 20% of the water away is a significant impact, no matter how it's done.
And so we're making this change, when there's a lot else happening in the agricultural
economy. Balance sheets are still recovering from the Millennium drought. We've got
movements in exchange rate; movements in commodity prices; lots and lots of substitution;
and movement courtesy of the water market, which is an efficient way of allocating a scarce
resource. That's changing the nature of agriculture in the Basin.
We've got to try and figure out what you can claim or what's the responsibility of the Plan
and what's not. And we're making our reports. But I think it's safe to say that people are going
through some pretty tough times at the moment. And there's expectations of tough times to
come.
Here's some just agricultural employment trying to sort out what's happening with that. How
much of the decline in employment, within the Murray-Darling Basin in agriculture, how
much of that's due to the Plan? How much is due to anything else happening? How much of
it's due to the productivity gains that farmers are making by removing high costs such as
wage costs out of their business plan?
This simply shows that from about 2001-02, employment's falling, probably part of the
Millennium drought. The first little flag there is a green flag, is when water recovery began,
which is pre-Basin Plan. And the second green flag is when the Basin Plan started. There's
been decline. What's that from? You would expect that removing water from the agriculture
economy would be contributing to that, but there's other things going on, as well.
There's been a lot of chat and a lot of debate about temporary water prices. And they've been
particularly high in recent times, not as high as they were during the drought. But this plot
shows on the bottom, it's got the percentage allocation of water that's been announced by the
various governments as of January. And so it goes zero to 100%. And then above the vertical
axis is the average price.
And what you can see is that different, strange enough, as a lapsed economist, Steve and I
know that when supply is short, price goes up. And so what we're showing here is that if you
look at 2014-15, the prices at that time-- we've got about a 50% allocation. They're a little bit
higher than roughly similar levels of allocation in the past. So there's possibly been a
contribution as a result of the recovery of water to date, as a result of that. But again, we're
going to try and figure that out for our reporting.
Some other changes that we're trying to track, as well, this is a bit complicated, but it shows
rises in yearly steps, the movement in price, water prices, over time. And you can see in the
two years, 2010, 2011, as people are coming out of the Millennium drought, that the price
starts up high and then falls, over time. What you see post-2012, you see that that signal is
reversed, and you see that the price ramps up in the early part of the year and then falls off.
And we think that is because farmers have changed behaviour as a result of the market being
in existence and as a result of their experience with the Millennium drought. They seem to
want to manage their risk in a different way than they did in the past, preferring to buy water
earlier in the year.
So that's a snapshot of some of the things that are in the Plan. I've tried to articulate the
purpose of it. Our role, having created and advised governments on the Plan, and then
governments having taken a separate decision and added things to and from the Plan as a
result of our analysis, our role over the next few years is changing from the proponents of the
Plan and advising government in relation to the Plan, into monitoring, measuring, and in
some senses, regulating what's happening in the Basin.
As we move towards that more stable circumstance, we're going to be certainly focused on
this year and things like the Northern Basin review, the SDL adjustment measure that has to
kick in, continuing on with environmental watering, monitoring and evaluation, and working
with the states and territory to accredit their water resource plans. So I think we're moving
from advisor to government, more into that regulatory review space, because this is an
adaptive plan.
So if you've fallen asleep because of the monotony of my presentation, just walk away with
these messages, which is what I was trying to say, that water reform's tough. People are really
hurting, when you go and talk to some of the irrigation-dependent communities. It's
nevertheless worthwhile. We can't go back to where we were prior to having a plan.
I've not met a person yet who said, let's get rid of our Plan. They might argue about the
incidence of the pain. They might argue about elements of it. But I haven't heard anyone as
yet say that we should go back to where we started. Because it's a long-term plan, because
there's time for adjustment, it's important that we stay the course. And that's hard when there's
structure reform of the scale we're talking about. And we're possibly heading into quite a dry
period.
The other message I wanted to leave you is that collectively-- and it's not just the MurrayDarling Basin Authority, because we're really reporting on behalf of the governments. We are
meeting the milestones. We are getting there. And whilst we might be able to get there in a
more consultative and informed way, we can always improve there. It's still worthwhile
staying the course. Thanks very much for listening.
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