CORRECTED VERSION

RURAL AND REGIONAL COMMITTEE

Inquiry into positioning the – pipeline to capitalise on new economic development opportunities

Mildura — 2 February 2010

Members

Ms K. Darveniza Mr R. Northe Mr D. Drum Ms G. Tierney Ms W. Lovell Mr J. Vogels Mr D. Nardella

Chair: Mr D. Drum Deputy Chair: Ms G. Tierney

Staff

Executive Officer: Ms L. Topic Research Officer: Mr P. O’Brien

Witness

Mr S. Grigg, farmer; member, –Wimmera–Mallee Water customer committee; and president, Lake committee of management.

2 March 2010 Rural and Regional Committee 15 The CHAIR — Simon, before we get started I need to note a few formalities. The Rural and Regional Committee welcomes you to give evidence to our inquiry into the Wimmera–Mallee pipeline to capitalise on new economic development opportunities that exist with the completion of the pipeline. We are using the experiences of people like yourself with the northern Mallee pipeline to draw analogies with each of the respective pipelines as a result of their similarities. We are looking to see what opportunities may present themselves out of the Wimmera–Mallee pipeline, and obviously that is why we are taking evidence and using your expertise.

All evidence given today is being captured by Hansard and is protected by parliamentary privilege, although any comments repeated outside are not covered by that privilege. Before you start would you kindly state your full name and address and then proceed with your presentation?

Mr GRIGG — My name is Simon Joseph Grigg. I live at [detail removed]. I am a farmer at . I do not know whether ‘own’ is the right word, but I occupy about 4000 hectares of farmland. I am a committee person on the northern Mallee consultative committee of Grampians–Wimmera–Mallee Water, and I am also president of the Walpeup Lake committee of management.

The CHAIR — Thank you. Over to you, Simon.

Mr GRIGG — Initially I will just go through some of the costs that Dean gave you. There were a few little mistakes, but basically on the northern Mallee pipeline we are being charged $700 per megalitre — this is the rural tariff. As well we have a fixed area charge of approximately $1.74 per hectare. That is based on an allowance of 2.5 kilolitres per hectare.

I am saying an average farm in the northern Mallee of around 2000 hectares has about 5000 kilolitres, which is 5 megalitres. On the old channel system we had a much greater entitlement of water; we had around 6 megalitres per block, and now it is 250 times 2.5 kilolitres — whatever that works out to be.

Mr VOGELS — When you say ‘a block’, what is that? The old square mile?

Mr GRIGG — Per 640 acres, which is a block — that is 250 hectares. I have been involved for a long time now, probably nearly 15 years. My whole emphasis has been the northern Mallee has been impacted probably negatively initially because we needed larger acres to make a living. Initially the water charge was always based on area, not on volume usage, and we always pay the same rate as people further south.

If we had, say, 5000 acres and we needed to make a living, the person down towards Horsham perhaps would only need one-fifth of that to make the same or similar income. That means we were paying five times more for water because we were paying for it based on area.

I have worked very hard to get that down, to bring in a volume metric charge, and it is coming in. I think the water authority would have loved to keep it at an area charge, but the ESC and the incentive to conserve water meant that they had to bring in some sort of volume metric charge, which they have. But we are still paying for what amounts to approximately 50 per cent of our charges based on area. That is still a negative impact on the northern Mallee customers as opposed to the high-value land as you go further south. I hope you understand that.

I suppose when the northern Mallee pipeline was built, it was a $50 million project and that saved 50 000 megalitres of water, which was 35 000 for the environment and 15 000 for new water sales, which equates to $1000 per megalitres saved. Every megalitre saved was valued at about $1000 per megalitre.

The Wimmera–Mallee pipeline was a $500 million project, that is approximate, to save 100 000 megalitres. Effectively that makes every megalitre saved around $5000 per megalitre, as opposed to $1000 on the northern Mallee. It was a much more expensive system, but they have much better facilities for growth and as Dean said, for recreation and servicing the communities, which the northern Mallee does not have.

My argument has always been that the northern Mallee now is part of the Wimmera Mallee, we are all as one, so effectively we are paying one rate and we are helping to pay for the better system, while we live on the poorer system. I feel a little aggrieved about that because I do not believe our services are up to standard in comparison to what the system down south has got.

2 March 2010 Rural and Regional Committee 16 The negatives of the northern Mallee pipeline: the capacity is small, it was not designed to have huge capacity so growth through water sales is minimal, in my view. Examples of that are Iluka where they wanted to use the pipeline but were not allowed to because it impacted to greatly on surrounding farmers, the original users. So there is not much capacity there. I think trucks were getting water out of the pipeline towards Galah. They too were told to stop because it impacted too much on farmers and other users. So for the northern Mallee, yes, there is the limitation of growth.

The other thing is, a lot of bureaucrats, industry leaders and government ministers et cetera say there are going to be huge benefits for future growth but we have to look at supply and demand. We have had water from the northern Mallee pipeline now for 10 to 15 years; everyone got into feed-lotting lambs but that played into the buyers’ hands and the prices did not go up. If there is money in it, people will try it, but if there is no money, there is no point in doing something if everyone is doing the same thing, it is not economical, it becomes unviable. People have done the same thing with growing and watering trees, horticulture et cetera on small scales. The water is too dear. It is $700 a megalitre, that is without an area charge.

New water industries would have to be subsidised somewhere to make it viable. Common sense says if you can get water out of the river for $20 a megalitre, you are not going to bring an industry into the northern Mallee if you have to pay $700 a megalitre, and that is what we are up against, it is competition.

If you go to Pinnaroo where they grow spuds under irrigation, they buy water for $7 a megalitre. It is basically an emergency supply in the northern Mallee. There is very little capacity to do much because the cost is so great.

One of the other negatives is the Walpeup Lake, for which I fought very hard, but they disregarded it, although they said was overlooked. It was not overlooked because there was a consultancy firm commissioned to do an impact study. AWT water services had a contract for a significant amount of money. They were there for 6 to 12 months doing the study and said it was a very important part of the area.

But the concept back in those days — the mid-1990s — was that we must save every drop of water, that was the thinking. The mental thought process was that it must be a closed system entirely, no surface water should be used whatsoever. That was the mindset back in those days.

I have fought very hard to get through to them. There is a quote from a board member who quite blatantly said, ‘We have no community-service obligation’ at a public meeting. We were banging our heads against a brick wall. It was only then, when our southern neighbour’s got the drift, the pipeline was going to continue, and the local people realised how important recreational water, water for sporting grounds, social service water et cetera was to the viability of those communities. They kicked up a huge storm and they won some rights. You only have to go through Hopetoun now to see that.

The water authorities have changed completely. Now they realise how important community and recreational water, at a viable cost, is for the communities. People talk about needing to create new industries with the new water but they forget that we should keep the industries that are already there — farming is one of the strongest industries in rural — and the communities there first, and then try to grow them.

People will come to communities if they see a lifestyle for their children and themselves that is similar or comparable to somewhere else that they have come from. That is just common sense, people like a little bit of water, there is just something about having it, do not ask me what.

The only other thing before questions is the cost of that social water which is huge. It is having a huge impact on small communities. We only have to look at the small towns like and where they have bigger communities, and they have a little bit of water, but you go into Victoria to Torrita, Walpeup, Patchewollock, Tempy where once they did have a football oval, tennis courts or a little bit of green around, but now they cannot afford to have any green. The mental impact on those communities is huge.

We are trying to grow the area but the cost impact of having some water for the communities is huge and that is closing the smaller communities down, every day. I do not think people realise how important the social aspect of ‘community water’ is to the development.

2 March 2010 Rural and Regional Committee 17 If industry comes in, it will come in on an economic basis, but first they will look at the value of the lifestyle of their families. You can see it in Iluka. The bosses are coming to to live, rather than living in Ouyen and that is the thing. Industry will come if they see a lifestyle which is suitable and pleasant for their families. That is the first thing we get on board before we start looking at working in the other areas.

The CHAIR — Thank you very much, Simon. Do you think that the people who have designed the Wimmera–Mallee pipeline have learnt sufficiently from what has happened in the last six months in relation to getting water into Lake Lascelles at Hopetoun and Chum? Have they learnt enough to maybe try to do something, if there is time, on the Wimmera–Mallee pipeline to see if they can maximise the opportunities for recreational water? Is there anything that can be done?

Mr GRIGG — Do you mean for the Walpeup Lake — or you said Chum and Lake Lascelles; they are on the Wimmera–Mallee pipeline?

The CHAIR — Yes, but are there other options available for them? Are there other options where they can actually maximise the opportunities — —

Mr GRIGG — For further industry growth?

The CHAIR — For further recreational growth?

Mr GRIGG — I am also on the Grampians-Wimmera-Mallee Water recreational users committee, which was only formed 12 months ago. At the moment the whole Wimmera–Mallee, northern Mallee, has a 3000 megalitre entitlement for 11 lakes within its jurisdiction, so it is a small amount of water in real terms.

The CHAIR — Effectively, they really have to fill naturally. You have really only got enough water there to top up.

Mr GRIGG — These are pretty much — and we are probably not talking about the natural lakes and rivers further south, we are looking at the lakes, as you said, like Chum, Green Lake, Lake Lascelles, the weir pools at Warrac., Beulah, , Brim — the smaller areas, the more dryland areas are probably where they are emphasising that entitlement.

Already, they have a charge at the moment of $40 per megalitre, which is a subsidised charge, but that is in place for three years. After three years it has to be renegotiated and that will have continuing huge issues on who pays? You asked the question before, who pays for that water?

The CHAIR — It was put to us that maybe the whole catchment should pay as opposed to just the people of Hopetoun, for Lake Lascelles water. It should be spread because the people who come to use that water, come from all over the Wimmera and Mallee.

Mr GRIGG — And I believe very strongly, exactly that. It should be spread across the area, there is no question about it.

The CHAIR — I can hear some grumbling?

Mr NARDELLA — I was just saying: good luck in selling that.

The CHAIR — That is fine. It is an opinion.

Mr NARDELLA — Yes, that is right.

Ms DARVENIZA — Simon, you said that you believe the Wimmera Mallee pipeline had better facilities for growth and also better facilities for recreational reserves and recreational water. Would that be for sporting use?

Mr GRIGG — Yes.

Ms DARVENIZA — How do you think it is better? In what way is it better?

2 March 2010 Rural and Regional Committee 18 Mr GRIGG — Capacity, being able to deliver water. At Lake Lascelles, Hopetoun the pipeline has the capacity to deliver 50 Litres per second. At the Walpeup Lake, as an afterthought they put a little hose in; it has the capacity of 15 to 20 litres per minute. It is like holding a hose and you wonder if the thing is ever going to fill up — 20 megalitres of water.

Mr VOGELS — Evaporating as it comes in?

Mr GRIGG — Exactly.

Ms DARVENIZA — What about for either the growth of the existing farming enterprises or growth in terms of diversification? How do you think the two systems — the north and the south — —

Mr GRIGG — I think there are much greater possibilities in the south because the northern Mallee is a small-capacity system. It has already been tried and the water is just not there at capacity. If someone takes out a large amount of water, the whole system fails, and that was built into it. They have high capacity. If someone wants to come in with industry, certainly the pipes are there and the capacity is there to minimise impacts elsewhere as well as provide that water.

Ms DARVENIZA — When the northern pipeline was built how much expectation was there apart from what a great thing it was going to be that you had some continuity of water and that it would be of a high quality? How great were the expectations that there was going to be an ability to diversify and try new enterprises and new industries? Was it high, was it medium or was it low?

Mr GRIGG — It depends who you talk to. Do you believe the spin or not? Realistically I do not think people believed there was going to be huge industrial growth because of the new pipeline. We had water before. Why was there not industry growth then? What is the difference between when we had all channel-filled dams and now?

Ms DARVENIZA — You are talking about when we had good rainfall — when the dams were full and the water quality was good?

Mr GRIGG — Yes, when we had good rainfall and all the dams were full and water cost virtually nothing. If you wanted to build a dam, they would fill it up for you and it cost virtually nothing. Industry did not happen then. That was the spin to get it off the ground and to get it going. As water tightened and tightened, it was about, ‘Let us get this bloody thing in so we can save our sheep’. It was an emergency. I do not think there was a lot of thought to 10 years, 20 years or 30 years down the track when we were looking to diversify — —

Ms DARVENIZA — It was also about saving towns too, not just the sheep.

Mr GRIGG — There is no question about that. It is a good system. Sheep drink virtually no water. The gardens use the water; the sheep use virtually no water. It is a very good system. It is good for spraying, so from a farmer’s point of view it is a good system. We do not do much yabbying any more, but from a management point of view and a farming point of view, even though there was a high cost — probably $30 000 for an average farm to be able to connect to it; that was expensive. But after that the costs are similar and it is a good system.

I think most people probably thought, ‘Yes, it will do a job’. When you talk about whether the community is big enough, we have sheep sales for six months of the year, so is the capacity of the industry big enough regardless of the water?

Ms DARVENIZA — There were not really high expectations.

Mr GRIGG — I do not believe so, not realistically.

Ms DARVENIZA — Thank you, and thank you for your submission.

Mr VOGELS — Simon, I heard you say before that you got the worst system out of the two, but you had to help pay for the Wimmera–Mallee pipeline project as well. At the moment no-one knows what the price of a megalitre of water is going to be in the Wimmera–Mallee system. We have heard all sorts of guesses — —

2 March 2010 Rural and Regional Committee 19 The CHAIR — Estimations.

Mr VOGELS — Estimations. But basically about double what you are paying are the estimations we have been given. Does that mean — —

Mr GRIGG — Can I just say that I am not quite sure about the price of a megalitre of water. Is this to buy an entitlement of water?

The CHAIR — No, it is actually to have it delivered.

Mr GRIGG — This is for new industry?

The CHAIR — No, it is for the existing industry.

Mr GRIGG — Currently.

The CHAIR — No-one is exactly sure as to what the actual cost of water will be that will come through the Wimmera–Mallee pipeline.

Ms DARVENIZA — And it will not be until the system is completed. It is not completed yet. Whilst there is water being delivered and people are getting water and paying for water and doing all sorts of things with the water, it is not completed; it has not been finalised yet.

Mr GRIGG — Okay, now I’m with you.

The CHAIR — Estimates are from $1000 to $1400 — —

Ms DARVENIZA — It will be soon.

Mr VOGELS — Basically when we were there two weeks ago Grampians–Wimmera–Mallee was saying the project was going to be around $680 million. At the end of the day we heard it could cost from $1000 to $1400 a megalitre. Does that mean yours is going to go up to the same price?

Mr GRIGG — Yes. There is no question about it. We are one system.

Mr VOGELS — Your water price could double next year?

Mr GRIGG — Yes. The rural tariff will be exactly the same across the board. If that system goes up to whatever you are suggesting — —

Mr VOGELS — I am only telling you what we heard.

Mr GRIGG — Or what they are saying?

Mr VOGELS — Yes.

Mr GRIGG — We will pay exactly the same rate.

Mr VOGELS — Thank you for that, because I think that is an important point.

Mr GRIGG — Very much so. At times when you negotiate you use a little bit of pressure, and at times we have said, ‘All our water comes from the . Why are we not being run by Lower Murray Water?’. That is a completely separate system. But they realise how important we are to help them pay for their system. My personal view is that I am happy with that so long as we get some of the same benefits. We have no recreational water within 100 kilometres, and they have.

Ms DARVENIZA — And that is the benefit you would like to see?

Mr GRIGG — It would be a huge benefit, yes. There is no question about it.

The CHAIR — Simon, thanks very much for coming along to present your evidence. It has been a fantastic opportunity to hear from you. We will make a copy of the transcript available to you in a couple of weeks time.

2 March 2010 Rural and Regional Committee 20 Mr GRIGG — No worries.

Witness withdrew.

2 March 2010 Rural and Regional Committee 21