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CORRECTED VERSION RURAL AND REGIONAL COMMITTEE Inquiry into positioning the Wimmera–Mallee pipeline region 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, Grampians–Wimmera–Mallee Water customer committee; and president, Walpeup 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 Patchewollock. 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 Victoria — 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.