PRODUCTIVE WATER ISSUE. 04 | WINTER 2012 The Journal for Irrigators in NSW

Celebrating 100 years

CHANGES TO BULK WATER CHARGES | WHAT’S NEXT FOR THE BASIN PLAN? | SOCIAL MEDIA | UTILISE YOUR FARM ASSETS

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Current projects are supported by the Australian Government’s Water for the Future initiative through the On-Farm Irrigation Efficiency Program. Editorial by Andrew Gregson, CEO of the NSW Irrigators Council Productive Water Welcome to the fourth edition of Productive ISSUE 04 WINTER 2012 Water, the Journal of the NSW Irrigators Council.

We’ve been delighted at the reception this EDITOR Journal has received from Water Access License Andrew Gregson Holders across the State. Your feedback has [email protected] been greatly welcome - and continues to be. Don’t hesitate to be in touch with us. EDITORIAL ASSISTANT Mark Moore Inside this issue you’ll find a range of articles [email protected] that, when seen together, reflect the extremely broad agenda that NSW Irrigators Council is NATIONAL SALES MANAGER faced with. It seems that not a day goes past Matt Elmer [email protected] without another issue falling onto our collective 0418 577 357 desks. Aside from the Basin Plan (which you’ll High-profile lobbyist, Andrew Gregson find further detail on inside), we’ve recently been ADVERTISING has headed up the New South Wales advised that both the NSW Government and Martin Stuart Irrigators’ Council since 2007. During Opposition intend to separately look at Just this time he also served as founding [email protected] CEO of the National Irrigators’ Council. Terms Compensation legislation in this State. 0417 383 799 That’s obviously a big issue for irrigators as we He is a fierce campaigner for the continue to defend water as a property right. NSW IRRIGATORS COUNCIL rights of his members and a daunting Level 9 foe for anyone suggesting their water The Menindee Lakes, sitting between the Upper 15-17 Young Street allocations should be cut. SYDNEY NSW 2000 and Lower Darling and as the linchpin between Gregson has been a prominent the Northern and Southern Basin, have had their [email protected] commentator in the debate over the fair share of attention over the past few years. 02 9251 8466 Draft Murray Darling Basin Plan. It was under the previous Federal Government

A barrister and solicitor with (under Prime Minister Rudd) that first set aside qualifications in economics law, from The $400m to achieve efficiency savings. To date, ALL SUBMISSIONS REMAIN THE PROPERTY OF University of Tasmania and the University nothing has been done to achieve that - but the PRODUCTIVE WATER MAGAZINE. ALL CONTENT IS of New Mexico, Gregson has also worked NSW Office of Water has contributed an article COPYRIGHT TO PRODUCTIVE WATER MAGAZINE as a the chief of staff and state director AND CANNOT BE REPRODUCED IN WHOLE OR in this edition explaining some of the options at of the Tasmanian Liberal Party. PART WITHOUT WRITTEN AUTHORISATION OF the Lakes. THE PUBLISHERS. PRODUCTIVE WATER makes no guarantees, warranties or representations of any kind, whether express or implied, as to the accuracy, In our “View From Here” regular feature, we’ve published an academic view of the reliability, or completeness of the information comparisons between California, Australia and Israel authored by Michael Gilmont provided. PRODUCTIVE WATER will not be liable for from Kings College in London. I first met Michael a few years ago at World Water incorrect use of the information and will assume no responsibility for consequences that may result Week in Stockholm. He’s since visited a range of irrigators and regions in Australia from the use of the information. PRODUCTIVE with us and will likely be one of the global thought leaders over the next couple of WATER is not responsible of any kind arising out of use, reference to, or reliance on such information. decades, so his article is well worth a read. The opinions expressed in PRODUCTIVE WATER and PRODUCTIVE WATER online do not necessarily NSW Farmers Association, a Member of NSW Irrigators Council, is at the forefront reflect those of the editors or publishers. of the current debate over the impact on land and water resources of mining and coal seam gas development. That leadership culminated in a significant rally at Parliament House in Sydney not long ago. Brianna Casey from NSWFA has contributed an article which provides and excellent background on the issue.

As you delve into the pages of our fourth edition, I’d also invite you to take note of our advertisers. Without their support, this publication wouldn’t exist. If you’re in a position to repay that support, I’m sure they’ll be grateful.

Enjoy this edition of the Journal. We’d love to receive your feedback, so please don’t hesitate to be in touch. You can contact our office on 02 9251 8466 or email us at [email protected].

Cheers,

Andrew Gregson

04 PRODUCTIVE WATER WINTER 2012 PRODUCTIVE WATER WINTER 2012 05

WORDS: STEFANIE SCHULTE

Consumptive Water Users in NSW should be concerned about potential changes in bulk water charges from 2014 onwards. The implementation of the Water Charge (Infrastructure) Rules 2010 could see the Australian Consumer and Competition Commission (ACCC) take over the next price determination of State Water Corporation in NSW with the result of higher and more volatile bulk water charges. This issue of Productive Water will discuss the possible changes to bulk water charges in NSW and the widespread effects on the irrigation industry.

Under Part 4 of the Water Act 2007 a pricing determination. According to operate efficiently. (the Act), the ACCC was given the to the ACCC, this is to ensure that responsibility to develop a common the infrastructure operator remains Contrary to the ACCC objective, the framework for regulating water charges financially viable. As outlined in the full cost recovery approach might lead across the Murray Darling Basin Pricing Principles; to an inefficient pricing outcome. (MDB). The framework under which the ACCC could determine regulated State Water’s total forecast revenue Furthermore, should the infrastructure water charges in NSW was given by (from all sources) for the regulatory provider be required to fully recover the Water Charge (Infrastructure) Rules period is reasonably likely to meet its costs within a determination period, (Rules) - implemented in April 2011 the prudent and efficient cost of there will also be a likely change - and the ACCC Pricing Principles. providing infrastructure services in in the tariff structure. The easiest While the objective of the Rules was that regulatory period 1 way to ensure costs are met, is by to facilitate an effective and efficient increasing the fixed charge component use of rural water infrastructure, Whilst the concept of matching cost for bulk water services. The current closer inspection reveals that the and revenue seems to be sensible fixed charge component is 40% in the framework holds many inconsistencies in theory, it does not take into Murray Darling Basin Area. However, and inequities that would diminish consideration the symbiosis between under the ACCC framework we are a decade long reform in water the infrastructure operator and its likely to move to a 90% fixed charge management in NSW. customer. Should a water infrastructure component. According to the ACCC: operator be forced to set bulk water Here are some of the issues that bulk charges to ensure all forecasted (A higher fixed charge component) water users in NSW will be faced with, costs are covered, then this will more closely reflect the water should the ACCC take over the next mean revenue volatility has to be infrastructure’s fixed cost base 2 bulk water price determination under reduced. To reduce revenue volatility, the Water Charge (Infrastructure) Rules an increase its bulk water charges is While it is undeniable that an and the associated Pricing Principles; likely. While customers will be faced infrastructure operator’s cost base with higher charges, the infrastructure is largely fixed, it is incorrect to 1. Full Cost Recovery Principle operator has effectively neutralised any assume that tariffs which are purely 2. No Clear Defined Cost Shares downside revenue volatility by passing set according to cost base of the 3. Consumption Based Price Adjust- on the risk to end consumer. At first infrastructure operator, will result in an ments sight, this appears to be a desirable efficient or equitable outcome for both 4. Inclusion Of Non-Murray Darling outcome for the infrastructure provider. - the infrastructure provider and its Basin Valleys What it ignores however, is that the consumer. To the contrary, a 90% fixed 5. Inequality Between Murray Darling financial viability of the infrastructure charge component will in most case Basin States provider is ultimately dependent on be unsustainable for consumptive water the revenue stream and the liquidity users in NSW, and hence likely lead to position of its customers. If customers insufficient revenue being obtained by Issue 1: Full Cost Recovery Principle are not able to bear these higher the water infrastructure operator. charges then the revenue base for Under the ACCC framework, a water the provider will disappear with the Additionally, the change to a 90% infrastructure operator would be consequence that both customer and fixed charge model will also have a required to match forecasted revenue infrastructure provider will not be able direct effect on the value of water with all fixed and variable costs within PRODUCTIVE WATER WINTER 2012 06

licences in the state. The higher fixed which will result in a disproportional and investment expenditure due to charge component will make water burden for consumer. the increased risk and uncertainty. If licences in NSW significantly less consumers do not know what they attractive to purchase - meaning a Issue 3: Consumption Based Price will have to pay for one of their key lower demand, lower prices and a Adjustments production inputs - water - then their potential decrease in allocation and decisions about future consumption entitlement trades. Part 6 of the Water Act 2007 enables and investment choices will be limited. the ACCC to re-open a previously The full cost recovery approach will closed determination process in case The ACCC consumption based repricing lead to a change in tariff structure - the water infrastructure operator has approach will lead to contradicting higher fixed and lower variable charge incurred a substantial financial loss market outcomes that will constraint component. - i.e. in excess of $15 million. This customer in two ways; higher prices provision creates not only severe and lower revenue. uncertainty among consumers but Issue 2: No Clear Defined Cost Shares also sets a precedence for a highly Issue 4: Inclusion Of Non-Murray Darling inequitable treatment of consumers The ACCC has no clear defined Basin Valleys versus the monopoly operator. mandate to consider equity issues in This provision effectively allows an the context of regulating bulk water While Non-Murray Darling Basin infrastructure operator to shield charges in NSW. To consider equity, Valleys do not currently fall under the itself against downside risk whilst an it would be necessary to look not Water Charge (Infrastructure) Rules, equivalent protection is not available only at the size of the pie (i.e. total it is likely that they will be included for consumers. revenue that has to be obtained into the ACCC pricing framework by the infrastructure operator) but for uniformity reasons. Should this The ACCC furthermore requires also at how the pie is divided (i.e. occur, then the financial viability of infrastructure operator to include a cost shares). On the basis of the active irrigators in these areas will be consumption based price component ACCC Pricing Principles, there will severely threatened, as the increased (i.e. if consumption is lower than no predefined cost shares between costs will make operations prohibitively expected then bulk water prices consumptive water users and the state expensive. Given the absence of cross will increase). In the context of full government. While consumptive water subsidisation, the number of active cost recovery such an approach is user have to hope that the state bulk water users in this area is small completely contradicting normal market government will assist in sharing the in comparison to the amount of water forces and will have severe distorting cost burden, it is ultimately at the infrastructure capital. This means that effects on market outcome. The discretion of the treasury to decide bulk water charges in these regions contradiction lies in the fact that lower on an appropriate contribution. It is are already substantially higher than than expected water consumption easy to imagine that in the absence in other regions of NSW. Any further and associated lower revenue for of clearly defined cost shares, increase to the current pricing scheme the infrastructure operator will trigger the voluntary nature of the state’s is likely to see a large scale collapse an increase in bulk water prices, contributions is unlikely to lessen of the irrigation industries in the area rather than a decrease in prices as the burden for consumer who are by with the effect that already existing standard economic theory dictates. definition the most vulnerable. infrastructure in these valleys will have Assuming that lower than expected to be maintained through state funds. water consumption level was a direct Additionally, there is no sign that the result of drier climate conditions, then ACCC will determine the cost efficiency Should the ACCC Rules apply to non- this increase in bulk water prices will of the MDBA or the accuracy of its Murray Darling Basin valleys then the impact consumers in two ways: charges. While IPART, in its role as a cost burden will lead to a large scale regulator for monopoly services in NSW, collapse of irrigation in the region. 1. Consumers will experience a higher did not have the legislative capacity cost due to the price increase by to address the MDBA’s cost efficiency, the water infrastructure operator. Issue 5: Equality between Basin States such a constraint does not exist for 2. Consumers face a lower revenue the ACCC. In its capacity as a federal stream due to lower water avail- Since the ACCC Water Charge regulator, the ACCC could determine ability and hence lower production. (Infrastructure) Rules only apply or approve charges set by the MDBA, to regulated water charges in the however it has continuously ruled out It bears to question why the ACCC Murray Darling Basin, certain states such actions claiming it may create would effectively dictate that consumer are effectively excluded. For example, potential distortions for the cost recovery whose demand for a service has South Australia is clearly a Murray of the MDBA. While it is possible that decreased should pay more for Darling Basin State, however the inefficiencies could occur, it should not it - such an approach is clearly absence of any regulated bulk water be ignored that real distortions exist not sensible or based on rational charges will place South Australia while no regulation exists. economic theory. outside the ACCC regulatory framework. This is to show that while The ACCC will not determine cost It is furthermore likely that the ACCC decade long reform processes have shares for bulk water between consumption based pricing approach been underway in NSW, other states consumer and the NSW Government, will diminish overall consumption who are lacking any substantial progress in terms of bulk water charging, will be rewarded for their inefficiencies.

Similarly, the NSW counterpart in Victoria - operates under a different set of constraints than NSW, in that the Victorian Government has provided continuous public subsidies to allow water infrastructure provider to bridge financial shortcomings. Overall, such inconsistencies between Murray Darling Basin States should not exist and a sensible pricing framework must be put in place to form the foundation for a Basin wide consistent regulation that applies equally to all Basin states.

The ACCC bulk water pricing framework does not apply equally to all Murray Darling Basin States and will not MIA CENTENARY OF provide the necessary incentives for underperforming states to address their continuous inefficiencies. IRRIGATION

Results

It is evident that the ACCC is aiming for the lowest will celebrate a significant milestone 100 years of common denominator instead of achieving long term consistent Basin wide regulation. In its current form, the ACCC pricing principles will neither provide a common framework for regulating water charges across the Murray community events throughout 2012, which will pay Darling Basin nor allow for an efficient and effective use of homage to the visionaries, engineers, and dam workers water infrastructure capital. Overall, the introduction of the who pioneered the investment in irrigated agriculture, and ACCC framework will likely bring more harm than good for bulk water users in NSW. have made the MIA the success story it is today.

Turning on the Water ceremony followed by a Gala Dinner which will be held on the 13th and 14th of July. All welcome. TURNING ON THE WATER RE-ENACTMENT Friday 13 July, at 12.30pm, Yanco Canal Regulator

re-enact the event that began

buses will run between the Yanco Ex-Serviceman’s Club and the Yanco regulator from 12pm.

References: GALA DINNER Saturday 14 July, 6.30pm Australian Competition and Consumer Commission, Pricing Principles for price approvals and determinations under the Water Charge (Infrastructure) Rules 2010 , http://www.accc.gov.au/ With special guest Dr Karl content/item.phtml?itemId=967534&nodeId=18b613006035400088ac96 02a01b19ba&fn=Water%20charge%20rules%20-%20infrastructure%20 pay tribute to our pioneers and -%20pricing%20principles.pdf (accessed 14/05/12) showcase the fine foods of our region. Tickets are $75 and are on Australian Competition and Consumer Commission, sale from 4 June. Water Charge (Infrastructure) Rule) , Phone Fay (02) 6962 9662. http://www.accc.gov.au/content/index.phtml/itemId/862695 (accessed 14/05/12) For a full program of events visit PRODUCTIVE WATER WINTER 2012 08

WORDS: MICHAEL GILMONT EBBS AND FLOWS A GLOBAL TREND IN This quarter's "View From Here" article comes from Michael Gilmont, WATERa PhD Researcher in the Department of Geography at Kings REFORM College in London. He has toured Australia's Murray-Darling Basin extensively (with the support and assistance of NSWIC) as well as irrigation areas in California and Israel. Productive Water asked Michael to contribute to this edition of the Journal a comparative analysis of the three regions from an external perspective.

Global trends in water resource management in semi-arid competing priorities. regions can be seen to be highly dynamic. Across different cases, water scarcity and responsive reform is seen to The result of these changes has been a transition away generate intense and politically conflictual behaviour . Three from an era of resource maximisation towards the cases show that water policy reform takes place in phases reallocation of water away from traditional productive and evolves via a number of distinct attempts determined practices. In general this re-allocation process is not a mainly by local political and climatological events. It will smooth one. It is a very politically contentious process, be shown that the pattern of change in the Murray Darling however recent re-allocations have resulted in levels of is broadly comparable to ongoing shifts in Israel and water use at levels below, or at least not above, their California. While drought, environmental conditions, climate historic maximum abstraction. change, and social and livelihood pressures are all drivers of change, there is a shift from shock-induced, stop- Reform is characteristically subject to fits and starts, as start reform, towards a proactive policy development and well as changes in direction, as different priorities contest stakeholder engagement. The following discussion presents their domination of policy over time. The policy priority a brief overview of water resource development and the of providing water for agriculture is first challenged by challenges associated with reform. environmental concerns and then the deployment of economic instruments to reallocate and maximise returns on water use. Over time this rivalry can be seen to Policy reform give way to attempts to cooperate and deploy multiple management instruments. Cooperation involves compromise The age of vast water resource mobilisation in advanced on all fronts in attempting to move towards politically economies is over. For much of the 20th century, sustainable outcomes instead of conflict. traditional water resource development, mobilising water for productive use, was allied to national economic and social development priorities. Complex systems of rules and Comparative experiences organisational structures were created, geared to meeting these developmental goals. Instances of policy reform are strongly influenced by the politics and environment contexts in which they occurs. Towards the end of the 20th century, the drive for This analysis of three semi-arid economies, Australia, volumetric water development ended. This change can be California and Israel – in their encounter with water scarcity regarded as a result of diminishing avenues for further shows, however, that the overall trends, patterns and pace resource expansion in conjunction with the emergence of reform appear independent of their detailed context. of other conditions. Firstly, the priorities of society are Rather the general direction and timing of change would changing as more citizens and consumers become aware appear more to be a function of the forces associated with of the importance of ecosystem services; secondly, major neoliberal political economies and democratic traditions. water users such as farmers have demonstrated their ability to gain higher returns to water by changing what they Australia’s reform is comparable in both direction and produce and how they produce it; thirdly the governance timing with ongoing changes in Israel and California. Over of water resources reacting to emerging challenges the past 30 years, all three have followed a comparable have become increasingly aware of the need to balance trajectory of ‘peaking’ water use followed by stabilised or PRODUCTIVE WATER WINTER 2012 09

reduced abstraction. They are commonly held up as being accounting, and manage environmental stress and develop at the global forefront in coping with water scarcity, with a cross-government commitment to new policy priorities. aspects of best practice commonly cited from all three. All A further package of reform was initiated in 2007 with a illustrate the dynamic and contentious change in priorities, ten-point plan for the basin, requiring the allocation of with periods of progress and stagnation. over $10bn (Australian) investment. This reform, while being imposed by central government, was designed to foster a more resilient transformation of the basin, utilising federal Murray Darling powers to reduce the perceived intransigence of a multi- state, consensus based, policy process which had existed The main principles for development of the Murray Darling up to that point. Basin water resources, prioritising agricultural development, was instigated at the 1902 Corowa conference, spurred by During the course of implementation of this programme, the Federation drought (ending in 1902). The organisational from 2008 a new federal Basin Authority was charged framework for basin development was cemented by the with running the basin. The ongoing implementation and 1915 Murray Waters agreement. Volumetrically, most of planning process, against a backdrop of severe drought the hydrological development occurred after 1945 through and dramatically reduced productive water, is proving to numerous storage be very contentious. projects instigated by Though negotiation and the individual basin Smoothed Murray Darling Basin Water Use 1930 - 2009 political confrontation, states. Between the (with projected long term cap at c.9500GL) the ongoing process early 1950s and peak appears to be cementing abstraction in 1997, 14000 changes and gradually volumes of water 12000 negotiating a sustainable mobilised increased 10000 way forward. Painful almost 3.5 times, as compromises are illustrated in Figure 1. 8000 required and being 6000 Water Use (GL) Water made on all fronts in Ecosystem service 4000 the process of defining concerns inhibited ‘sustainable’ futures, the construction of 2000 which will both recognise additional large storages 0 and be responsive to in southeast Australia 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 present and future form the early 1980s. In social, environmental response to increased Figure 1 Murray Darling Basin Water Use, all sectors 1930-2009, all uses and scientific salinity levels in the (raw data source: MDBA) imperatives. basin, managers were faced with implementing major, basin-wide salinity drainage systems, or implementing California more localised means of salinity management. The later was adopted in conjunction with growing attempts to The water development of California has been effectively manage the basin in a more holistic matter. discussed by Mike Wade in the Winter 2011 issue of this journal. The water history of the State is characterised In order to develop these new management priorities by large-scale mobilisation of water from the early – managing degradation and coordinating basin-wide 20th century, with diversions from the Colorado River approaches – the Murray Darling Basin Commission for agriculture in the South, and transfer of water from was created in 1988. At its core was a commitment to Northern California to growing agriculture and urban implement an ‘economically, socially and environmentally consumption in the Centre and South of the State. The acceptable package of measures’ to address previous upward trend in water mobilisation is shown in figure 2, failures in basin management. This echoes the present with statewide record keeping only commencing from 1960. day central idea of a ‘triple bottom line’ – environment, economy, society – in basin management. The large-scale mobilisation of resources halted from the early 1980s, with the failure of a ballot to approve From the early 1990s economic instruments and rationale funding of a conveyance for water across the Sacramento has dominated basin policies. Trade in water licenses was San-Joaquin Delta. This development was opposed by an facilitated by the 1994 Council of Australian Governments alliance of environmentalists and regional water users reform. A finite pool for trade was created through a concerned about the environmental impact and loss of rainfall-dependent cap on abstractions in 1995. The water resources in the region. There then followed a motivation behind the cap and trade system was to period of infrastructural and policy stagnation, with no real encourage higher productive returns on water, while alternative to a conveyance proposed, and no concerted avoiding environmental and economic decline in the basin. effort to pursue other forms of resource optimisation.

Further institutional reform was carried out in 2004 From the late 1980s a limited suite of economic tools were through the National Water Initiative (NWI). The NWI aimed introduced. A ‘water bank’ was created in 1991 enabling to further strengthen trade and pricing, improve water transfer of water to mitigate local drought impacts. There was also a limited development of water trade through the Although limited trade in water from agricultural to urban revision of irrigation governance in the Central Valley area users has occurred, there is recognition by urban water users through the Central Valley Improvement Act. that existing supplies will not grow and may indeed shrink and that alternative A major attempt at approaches will be institutional reform needed to achieve Smoothed California Water Use 1960 - 2005 occurred in the mid urban water security. 1990s with a wide- 60000 These alternative growth ranging joint State and pathways include Federal programme, 50000 conservation and demand CALFED to improve the management, wastewater 40000 water supply reliability reuse and desalination. and health of the delta. 30000 At the present time, In perusing this, the state bureaucracy and Water Use (GL) Water programme recognised 20000 management authorities the need to consider are working through 10000 the wider water system the long process of and water economy of 0 setting up structures the state. The process 1950 1960 1970 1980 1990 2000 2010 and data monitoring and incorporated a range evaluation to implement of stakeholders and Figure 2 California Water Use 1960-2005, all sectors (raw data source: what has been agreed. competing priorities with Department of Water Resources) For the time being, the aim of fostering attempts to gain voter collaborative rather approval for the funding than conflictual policy. The programme is viewed in a package have stalled due to the poor financial health of the number of quarters as a failure in that it did not bring State of California. the desired swift returns. But a lack of consistent support and especially the withdrawal of federal funding by the George W Bush administration in 2000 undermined the Israel process. However, the programme did appear to have changed political mood, and subsequent state water The institutions for water development in Israel pre-dated plans recognised the need to ensure both water supply the creation of the state in 1948, being rooted within and environmental health. In addition, many of the core agriculture settlement during the 1920s and 1930s. From elements of CALFED including the science programme have the early 1950s significant national effort was invested in evolved and continue to inform the next generation of resource mobilisation through groundwater pumping and policies that intensify the use of water in sustainable ways. the construction of a major surface-water transfer from the relatively wet north, to promote agriculture in the centre The approach initiated by CALFED, having faltered after and in the Negev Desert in the south of the country.The 2000, evolved in response to another drought into phase water development trajectory is shown in figure 3. of further progressive reform. The idea of ‘co-equal goals’ of water supply and environmental improvement of Environmental concern emerged from the early 1970s, water were adopted. New agencies for delta management centred on the declining conditions of the Sea of Galilee, were also organised along these lines. This philosophy which had become the major storage in Israel’s engineered is directly comparable to the Triple Bottom Line in the surface water system. Over time these problems generated Murray Darling. Failure to make sufficient progress meant broader concern over the health of the surface water that towards the end of the decade, court orders based system. Issues of public health and declining supply security on battles over endangered species legislation were also started to emerge over the condition of groundwater. heavily influencing water allocation from the Delta, rather Combined with these physical limits of supply, agricultural than being abstraction being determined by a robust water growth was focused on dramatic increases in water policy. productivity, following the development of water efficient irrigation technology and crop varieties from the early 1970s. Major institutional reform was achieved in November 2009 with a package of bills designed to facilitate a more With water allocations being an annual state controlled resilient management of the State’s water system. The process, rather than being vested in ‘water rights’, no legislation spanned Delta issues, declining groundwater scope exists for water trade. However during the mid levels, State-wide water conservation priorities, and 1980s increasing attention was paid to water pricing and funding. A further element of the legislation (subject to cost recovery. Until 2000, economic rationalism was an approval in a State ballot) will raise 11bn (US) to fund important controlling force in water management, with water infrastructure, water supply and the protection of attempts to maximise returns from water through water water ecosystems in the State. The package has not pricing and recycling, rather than supply augmentation. been universally welcomed, in part because of the way it The economic argument that ‘it is cheaper to save water was approved through political bargaining at the end of than to supply new water’ kept desalination off the agenda a senate session, with the result that some stakeholder until 2001. The resistance to desalination was maintained elements felt disenfranchised. in spite of the pressure for additional supply following the

010 PRODUCTIVE WATER WINTER 2012 contentious and severe cuts to allocation in all sectors continued adaptation is executed through tough political during drought in 1991. priorities, environmental constraints and realties and management capacities. Each element of reform delivers an In 2002, a parliamentary increment of progress. enquiry was A solid triple bottom commissioned into line policy can only Smoothed Israel Fresh Water Use 1960 - 2009 the water sector, in be developed after the face of diminished 2500 other changes have surface and groundwater commenced. These storage levels due 2000 include major political to a further deep institutional reform drought. The impacts 1500 of long-entrenched were compounded by behaviors. Even when an absence of long 1000 the intended outcome term planning. At the Use (GL) Water is a more inclusive same time a ten-point 500 policy system, the actual interim master plan was change to this system drawn up incorporating often requires execution 0 commitment to 1950 1960 1970 1980 1990 2000 2010 via a top down process. simultaneously increasing Even after major supply reliability and Figure 3 Israel Fresh Water Use 1960-2009, all sectors. This graph excludes institutional reforms have environmental health. As significant ‘top up’ from recycled and desalinated water from 2000 been achieved, the next with California and the up to c.550GL (raw data source: Israel Central Bureau of Statistics). stage of the process Murray Darling Basin, involves operationalising this demonstrated a clear dual institutional commitment to these changes, a further stage of change. ‘Reform fatigue’ both supply and to the protection of water ecosystems. therefore may be considered an inherent unavoidable side effect of this transition. To address these changed priorities, the country’s water law, little changed from ites creation 1959, was amended Drought has historically acted as a trigger for change or an in 2006 to create a politically independent water authority. impetus to re-boot stalled reform processes. This rebooting Previously Office of the Water Commission was an arm appears to involve a certain amount of ‘reinventing of the of either the Agriculture or Infrastructure Ministries. The wheel’, rebuilding institutional structures that are deemed principle of defining allocations of water to the environment to have failed, and rewriting rules. Inherently painful was introduced. Achieving these legal changes was not changes face those who are impacted by the reforms. It is easy because they entailed a shift of power away from noticeable that increasingly over the past decade, reform politicians, especially in the control of water prices. momentum has started to be generated independently of Complex political and parliamentary manoeuvring was drought. Israel, while failing to fully adopt its 2002 master therefore required to achieve the change. plan, made sustained progress to reduce the pressure on its water resource base throughout the 2000s. As such a Despite significant progress, including the growing use of significant momentum existed during the wet years from treated effluent in agriculture, deficits were found to remain 2002 to 2006 to react to drought from 2007, although when drought recurred from 2007. A 2010 parliamentary weaknesses remained in the system, identified by the 2010 enquiry highlighted ongoing systematic weaknesses and parliamentary enquiry. Similarly, California continues to push reinforced the need to implement the intentions outlined in ahead with Delta reforms, and a revised basin planning the planning process in 2002. Despite criticisms, significant process perpetuates in Australia. retrenchment has been achieved during drought to protect depleted storages (identifiable in the reduced supply in figure While the ending of drought may appear to reduce the 3); growth in recycled water and desalination supply have urgency to re-evaluate water reform, care should be taken moderated the impact of freshwater cuts to agricultural users. to ensure that this does not turn into a delaying process. Reducing reform momentum will, based on past experience, result in increased pain come the next drought, as panicked Key areas of comparative insight political response have to be implemented. The three cases highlighted in this piece show that, in areas where water In all three cases there has been an identifiable move scarcity is an ongoing reality, political attention to water away from supply expansion from the early 1980s. At the policy reform can be sustained, drought or no drought. same time, environmental constrains have been increasingly It is therefore the responsibility of all stakeholders in the recognised. This new approach appears to be committed to water field to maintain the pressure to deliver politically delivering growth through ‘doing more with less’. sustainable reform and on-the-ground progress.

A series of sequential reforms appear to have been Michael Gilmont is a PhD researcher at King’s College necessary to shift water management policies towards London, UK, carrying out research into the politics of water these new approaches. The reform process is not linear, reform. His ongoing analysis draws on extensive interview- nor can change be achieved in one step, or over a short based fieldwork with participants in the water policy time period. Insights from the three cases demonstrate that process, in Southeast Australia, California and Israel.

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MANAGEMENT OF MENINDEE LAKES BENEFITS ALL STATES WORDS: DAVID HARISS, NSW WATER COMMISSIONER

It seems some days that everyone who The Menindee Lakes scheme is has ever heard of the Menindee Lakes When full, the storage scheme stores owned and maintained by the NSW has an opinion of how they should 1,731,000 megalitres and has a government, and is managed under be managed, what their benefit is to surface area of 453 square kilometres. section 131 of the Murray-Darling securing water resources or how water Basin Agreement, for which the within the lakes should be reduced. It is also one of only two storage Murray-Darling Basin Authority pays systems in NSW that can be surcharged the NSW government an agreed sum The Menindee Lakes storage is a during floods, although levels must be per annum and three-quarters of the series of nine natural lakes, part of reduced to full supply level after the costs of operations and maintenance. the Travellers Lake System adjacent to peak of the flood has passed. the Darling River in far-west NSW. The Menindee Lakes water storage The initial purpose of the storage scheme is a complex system of In the early 1950s and 1960s, the scheme was to secure water supply natural lakes in a semi-arid and flat NSW government constructed the for Broken Hill and to foster economic environment. Most water storages in Menindee Lakes Water Storage Scheme development in far-west NSW through upstream catchments consist of a by connecting the natural lakes and irrigation. The lakes have subsequently dam across a river that simply stores Darling River by a series of weirs, been used to contribute water supply inflows that are subsequently released regulators, inter-connecting channels to Victoria and South Australia. for downstream use. and levees. PRODUCTIVE WATER WINTER 2012 013

The Menindee main weir raises So, not only is the management of the level of the Darling River by the lakes scheme complex in its own The value of the Menindee Lakes as a 14 metres which inundates the right, but it is also part of the equally vital water storage for all three states floodplain upstream of the main complex water sharing arrangements of will only increase under the CSIRO weir and connects the smaller lakes, the Murray-Darling Basin Agreement. climate change predictions that show Malta, Balaka, Bijiji and Tandure with increased dry periods and reduced the Darling River. The floodplain is These complexities and the need to water availability in the south of the confined on the eastern side by a consider a range of values make the Murray-Darling Basin. constructed levee. management of the Menindee Lakes both interesting and difficult. It also Some suggestions that water from Collectively, the inundated floodplain leads to various and diverse opinions the north of the Murray-Darling Basin and connected lakes is called Lake in how the lakes should be managed never finds its way past the Menindee Wetherell. differently to meet different outcomes. Lakes is just ridiculous.

Water from Lake Wetherell can be MDBA chairman Craig Knowles was Between October 2010 and May released directly to the Darling River quoted earlier this year in the South 2011 over 4.7 million megalitres was via an outlet regulator through the Australian Stock Journal saying that released from the Menindee Lakes to Main Weir or water can be diverted by “…too much water is stopped from the Lower Darling River and the Great gravity through an inlet regulator into flowing to South Australia by the Anabranch. This contributed to over Lake Pamamaroo. Menindee Lakes.” While not aware of 15.1 million megalitres that passed the context of this quote, across the border into South Australia Water from Lake Pamamaroo can then this reflects a simple outcome of during 2010-2011. be released back to the Darling River getting more water down to South through an outlet regulator or passed Australia by reducing the water With Menindee Lakes again currently into Lake Menindee via a constructed conservation capacity of the lakes , being operated under flood interconnecting channel. it fails to recognise the other values management procedures, high flows provided by the lakes, including in the River Murray and some of the Water from Lake Menindee will pass securing water supply to downstream biggest flood flows in decades in the naturally into Lake Cawndilla when the users not just in New South Wales, but Murrumbidgee River, it is likely that a level exceeds the natural sill between in Victorian and South Australia. significantly higher volume will pass the two lakes. Water from Lake into South Australia this year. Menindee can also be diverted to the When water availability was reduced Darling River. in the Murray Valley during drought, In 2010, the Commonwealth and New the Menindee Lakes provided valuable South Wales Governments entered Water from Lake Cawndilla can be reserves that were used to supply into a ‘Memorandum of Understanding diverted back to the Darling River water users along the Murray River, (MoU) for the cooperative investigation through Lake Menindee when the level including South Australia. and subsequent implementation of key exceeds the natural sill level between water reform initiatives in New South the lakes, or can be directed through In addition to this, in 2009-2010 the Wales, including Broken Hill’s urban an outlet regulator and channel to NSW government agreed to allow water supply and Menindee Lakes Tandou Creek and subsequently onto over 580,000 megalitres to pass operational arrangements.’ the Great Anabranch. through Menindee Lakes to meet the immediate environmental needs of the The MoU followed investigation Flows in the Darling River are amongst Lower Lakes in South Australia. undertaken in the joint NSW- the most variable of any river in the Commonwealth Darling River Water world, and at the Menindee Lakes the This water could have been stored Savings Studies, which identified cycles from drought to flood are more in the Menindee Lakes to increase a number of potential options for distinct than any other part of New water availability to NSW and infrastructure and changed operations South Wales. Victorian irrigators. at the Lakes.

Located in a semi-arid environment In most years, water from the The investigations proposed by the subject to highly variable flows, it Menindee Lakes provides a significant Commonwealth Government under the is subject to high evaporation rates. proportion of South Australia’s MoU only focussed on one of the On-average, 425,000 megalitres is entitlement flow when it is either potential options. This option involved lost from the Menindee Lakes through diverted for storage in Lake Victoria or effectively decommissioning two of the evaporation each year. This compares diverted directly into South Australia. lakes, Menindee and Cawndilla. to 745,000 megalitres which is lost from the Lower Lakes in South This is necessary as natural Within the MoU, New South Wales Australia through evaporation each constraints on the Murray River, identified three specific requirements that year. including the Barmah Choke near needed to be met in the investigations. Echuca, limit the amount of water able The Menindee Lakes also has high to be delivered to meet peak daily After 18 months of work, it became environmental and cultural values. demands in NSW, Victoria and South clear that the Commonwealth’s Australia during summer. preferred option didn’t meet the NSW PRODUCTIVE WATER WINTER 2012 014

requirements stipulated in the MoU, and system, including the floodplain of the for the improved management of the the NSW government withdrew from the Darling River that connects the four Menindee Lakes. However, whatever Memorandum of Understanding. smaller lakes. option is agreed must meet the NSW requirements under the MoU. The first requirement was that there This floodplain provides the habitat would be no reduction in the reliability for the enormous biodiversity found The Darling River Water Savings of water availability to downstream at the Menindee Lakes and extended Studies have previously identified other users. This includes users in NSW, inundation would destroy this habitat. potential infrastructure works and Victoria and South Australia. changes to existing operating rules

The investigations showed there There have been more bird species that would generate more modest, but would be significant impacts on water identified at the Menindee Lakes than still significant, water savings while availability to downstream users in at Kakadu National Park, and NSW is protecting the values of the Menindee sequences of dry years. not prepared to threaten these unique Lakes. environmental values, which provide a This is hardly rocket science. If you huge tourist drawcard and contribute The NSW government will continue start a dry sequence with only two to the economy of the area. to work with the Commonwealth out of the four lakes in the Menindee government to progress these options, scheme full, of course you will run out Thirdly, NSW required in the MoU but is not prepared to compromise of water quicker. that the Commonwealth identify an the enormous water supply benefits alternative secure water supply for provided to all states and the natural The hydrologic modelling, that was Broken Hill. values of the Menindee Lakes, to meet independently reviewed by Bewsher unspecified environmental objectives and Associates, showed that under The indicative capital costs of the downstream. the Commonwealth’s proposal the proposed Managed Aquifer Recharge lakes were effectively dry with less scheme to provide an alternative water It is important that the management than 5 percent of capacity for 22 source for Broken Hill were found to of the lakes now, and into the future, percent of the time, as opposed to be prohibitively expensive. Further, this meet the triple bottom line than 2 percent of the time under current did not include the significant costs addresses environmental, social and arrangements. This gets worse if you of water treatment and the on-going economic issues that is fundamental overlay extended dry sequences under costs of operations and maintenance to the National Water initiative. a future climate change scenario. that would have to be borne by residents of Broken Hill and Menindee. More detailed information about the The second NSW requirement was that management of the Menindee Lakes the environmental values of the lakes In the letter to the Prime Minister including the management of the flood could not be compromised. However, advising the reasons for withdrawing flows in the Barwon Darling and the the Commonwealth’s proposal involved from the MoU on Menindee, NSW Menindee Lakes system can be found the surcharge and extended inundation Premier said that NSW remained at the NSW Office of Water’s website of the two upstream lakes in the committed to investigating options at: www.water.nsw.gov.au PRODUCTIVE WATER WINTER 2012 015

INNOVATIVE WATER MARKET PRODUCTS

WORDS: ANDREW GREGSON AND STEFANIE SCHULTE

drought, temporary water market prices reached values of over $1000/ ML (2006/07) resulting in widespread hardship and financial losses for individual growers. Many high value water users in the horticulture and Derivative products are important viticulture industries were forced to purchased subcategory, irrespective for trade in many agricultural purchase additional water entitlements of the quantity available. The buyer is commodities, assisting both buyers and/or allocations at premium prices. effectively purchasing the possibility of and sellers in managing risk by As a result, many growers looked water being available. offering protection against unforseen for more financially viable options to price fluctuations. While risk maintain their business. Additional flexibility is provided through management products for agricultural River Reach in that put and call option outputs exist, similar products are A new option to allocate water contracts can be purchased. To absent in associated input markets resources more efficiently and effectively acquire an option contract, the buyer such as the water market. has emerged through the introduction pays an upfront fee per ML and then of River Reach, a project sponsored the associated exercise price for each The water market has provided a by the Federal Government to explore ML that it actually purchased. The seller platform for trading water resources the potential for new, innovative always receives the upfront option thereby benefiting rural communities, water market contracts. While not yet fee, irrespective of whether the water farmers and environmental managers. fully integrated with the Government allocation materialise or whether the Yet trading of physical assets - Registration Authorities, trials are buyer’s right to purchase is exercised. entitlements or annual allocations - currently underway to test whether the are so far the only means by which water market has sufficiently matured The opportunities through River Reach to transfer water between consumptive to support sophisticated water related are endless and its establishment users. This is to say that the full derivative products. could potentially change the entire potential of the water market has not dynamics of the water market. The yet been achieved. Like other markets, River Reach does not create more products offered through River further efficiency gains could be water, but it provides a mechanism to Reach would allow environmental achieved through the introduction of match the complementary needs and managers to buy water to meet water related derivative products which risk profiles of water users - reducing ecological requirements, farmers to are cost efficient and provide both potential waste of productive water. maintain core operations and rural buyers and sellers with an alternative River Reach spans a wide range of communities to thrive. All this can be mechanism to protect against the water related products and is applicable achieved without creating more water uncertainty of future allocation streams to both farmers, rural communities, and but instead providing a better and yielded by water entitlements. environmental managers. efficient framework for water trading. More broadly, the development of a The advantages of water related One of River Reach’s approaches is derivatives market may allow exposure derivative contracts become evident to divide a permanent entitlement into to water as a commodity for non- when one is to consider the conditions smaller subcategories, each of which agricultural participants. under which many commodity growers can be traded separately. Through are currently operating. Irrigators this process, buyers of a specific While the demand for a water is are increasingly growing agricultural subcategory are effectively taking on steadily increasing and the supply commodities under predefined the risk of water being available. To of both surface and groundwater is contracts, specifying both price be more concrete, if allocations are finite, variable and increasingly at risk and volume to be delivered at a low and no water is being allocated to from climate change, the opportunities predetermined date. These restrictions the purchased subcategory, then the provided through River Reach should have left many irrigators at risk of buyer gets no water and the seller has be seen as another step towards the fluctuating water allocations and no obligation to provide any water. If optimal management of Australia’s volatile water market prices. As water conversely, allocations are high, then most precious and scarce resource. scarcity intensified during the last the buyer receives all the water in the PRODUCTIVE WATER WINTER 2012 016 MINING & COAL SEAM GAS COMING SOON TO A FARM NEAR YOU?

WORDS: BRIANNA CASEY NSW FARMERS ENVIRONMENT POLICY DIRECTOR

providing a framework for future development right across NSW – not just those regions currently under the most development pressure. The policy included an ambitious timeframe for delivery of crucial legislative and policy provisions, not the least of which was the development of an Aquifer Interference Policy, aimed at better regulating activities that impact on aquifers. There was Land use conflict has come to a head in a clear commitment to providing NSW. The mining boom and the gas rush The Strategic Regional Land Use Policy “guidance on the acceptability of are coming to a town near you, and The Strategic Regional Land Use Policy impacts on aquifers to ensure our without appropriate protections in place, (SRLUP) was launched by the NSW water resources are protected for the future of sustainable food and fibre Liberals and Nationals in February current and future generations” production hangs in the balance. 2011 – one month out from the state (p4, Strategic Regional Land Use election that delivered the Coalition Policy), and a clear affirmation that It is important to note at the outset a landslide victory. The policy was “agricultural land and other sensitive that NSW Farmers is not opposed to the culmination of more than 12 areas exist in NSW where mining and mining or coal seam gas. However, months of negotiations between NSW coal seam gas extraction should not strong regulatory frameworks, upfront Farmers, NSW Minerals Council and occur” (p2, Strategic Regional Land strategic planning and rigorous the then Shadow Resources Minister, Use Policy). The scene was set for scientific assessments are required to in response to growing community historic, meaningful protections for our give the community confidence that concern about the unprecedented precious land and water resources. our land and water resources are scale of minerals and coal activities, protected from extractive industries. and the rapid expansion of the coal The challenge of policy delivery The rapid pace with which the former seam gas industry in NSW. Within weeks of being elected, the Government allowed mining and coal O’Farrell Government set about seam gas activities to proceed means NSW Farmers viewed the policy as a engaging key stakeholders in what that it will take time for science and positive and significant step forward would be a year-long negotiation as legislation to catch up, which is why in in achieving a balance between the to what the policy actually meant from October 2010, NSW Farmers called for State’s major land uses, not limited a project, enforcement, policy and a moratorium on new exploration and to agriculture and mining. The policy legislative perspective. The Government mining licences until a better planning outlined a clear commitment to quickly implemented some very positive framework is developed. statewide, upfront strategic planning, measures by way of formal transitional arrangements, including a 60-day assessment process does enough to all walks of life came together to moratorium on the granting of new actually protect them, especially from passionately but peacefully demand coal and coal seam gas exploration invasive exploration activities. stronger protections for land and licences in NSW, and interim aquifer water resources. With a line-up of interference measures requiring new The draft Aquifer Interference Policy speakers including NSW Farmers mining and petroleum exploration is a massive step forward in that we President Fiona Simson, Country activities that take more than three now have a framework with which to Women’s Association of NSW President COMING SOON megalitres per year from groundwater assess mining and coal seam gas Elaine Armstrong, Muswellbrook Shire sources to hold a water access licence. activities that potentially interfere with Council Mayor Martin Rush, Lock the NSW Farmers viewed these measures our complex groundwater systems. Gate President Drew Hutton, and as a ‘show of good faith’ that the However, by exempting exploration groundwater engineer Dr Philip Pells, government was committed to righting activities from the need for an aquifer the overwhelming message was one the wrongs of the past. interference approval, activities such as of balance, and the current lack bulk sampling and test pilot production thereof. NSW Farmers was extremely As a member of the Stakeholder (which can include hydraulic fracturing encouraged by the commitment from Reference Group overseen by or ‘fracking’, once the current fracking Deputy Premier, the Hon Andrew the Department of Planning, NSW moratorium is lifted) can continue Stoner MP, who addressed the crowd. Farmers was very vocal about the without triggering this new approval He said: “If any proposed mining or importance of accurately delivering process. The draft policy is also gas extraction activity is likely to harm on the policy. In October 2011, NSW limited to biophysical strategic our prime agricultural land or other Farmers signalled what it perceived agricultural land, limiting its application important rural industry clusters or the to be an apparent departure from to less than 3 percent of the state. water resources associated with those the commitments made in the policy, areas - it will not go ahead under calling on the Deputy Premier to this government.” This very public Strange Bedfellows intervene in his capacity as Minister commitment suggests that the tide Given what NSW Farmers perceived for Trade and Investment, Regional may well be turning. to be significant departures from the Infrastructure and Services. Whilst original policy, the six-week public negotiations took a turn for the consultation period was crucial. The Where to from here? better, with assurances that election challenge for NSW Farmers was ensuring NSW Farmers understands that more commitments would be met, it soon that triple bottom line sustainability than 1400 submissions have been became apparent that in the ongoing principles underpinned policy delivery, received in response to the draft battle between short-term economic meaning that input from community and regional plans, draft Aquifer Interference benefits and long-term sustainability, environment representatives were more Policy and draft Code of Practice for the former was set to trump the latter. crucial than ever. Coal Seam Gas; which highlights the significance of this issue right across When push comes to shove In April 2012, NSW Farmers launched its the state. NSW Farmers has lodged The NSW Planning Minister released Protect our Land and Water campaign, a detailed submission, outlining a the draft Strategic Regional Land bringing together community leaders, number of sensible, easily-implemented Use Plans for New England North industry groups, conservationists and amendments to the draft documents West and Upper Hunter, the draft concerned citizens to demand the NSW that would ensure the final policies Aquifer Interference Policy and the Government deliver on its promise meet community expectations. Strategic draft Code of Practice for Coal Seam to protect land and water resources agricultural land and water resources Gas on 6 March 2012. What was in NSW, and restore balance to land must be mapped – and protected. The immediately apparent was that crucial use planning across the state. The Aquifer Interference Policy must apply documents – such as the draft Aquifer campaign brought together more statewide, and all new protections must Interference Policy, had undergone a than 20 organisations, ranging from apply pre-exploration. ‘rapid evolution’, with the scope of the the Country Women’s Association to draft policy, and proposed ‘Gateway’ GetUp to the Nature Conservation The solutions put forward by NSW planning and assessment process, Council. Whilst these organisations do Farmers are not rocket science. They dramatically reduced. not traditionally share common policy are not radical. They will not break perspectives, on this issue, there was the bank. They do not differ from The draft regional plans identify rock-solid unity on the importance of the consistent approach that NSW ‘strategic agricultural land’ based on the O’Farrell Government delivering on Farmers has taken to this debate for its biophysical attributes (eg soil, its policy. The campaign was also more than three years now. But they slope, rainfall, groundwater quality and supported by food identities including will require leadership, and they will availability etc) or on the basis of iconic Sydney chef Tony Bilson, who require a move away from the past, critical industry clusters (where critical stressed the importance of farmers towards a long-term, triple bottom line mass is essential to productivity, being able to continue growing the best. approach to the way in which we plan eg thoroughbred and winegrape for and regulate extractive industries. industries). However, whilst these The campaign culminated in a rally This is a once in a generation areas are identified, NSW Farmers held in Sydney on 1 May 2012, opportunity to restore the balance and is not convinced that the proposed where more than 4000 people from deliver on historic land use reforms.

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WHAT’s NEXT FOR THE WORDS: ANDREW GREGSON, CEO NSW IRRIGATORS COUNCIL BASIN PLAN?

It has been a long and turbulent ride The Murray-Darling Basin Authority submissions that have been delivered for the Basin Plan. From the National to us in response for our call for Water Initiative in 2004 to the National Over the past 12 months, the good ideas. Plan for Water Security in 2005 and Authority has travelled across the then from the Water Act of 2007 to Basin to cities and towns to meet with Our assessment of these submissions, the Guide to the Proposed Basin Plan many thousands of individuals, groups and the suggestions they contain is in 2010, each step on the long road and governments who have an interest available in a report on our website has met with controversy. in how water is managed in the and has been presented to Basin Murray–Darling Basin. Through these Ministers. The report, along with the Late last year, the Murray-Darling discussions we have been exposed to revised Basin Plan, also picks up on Basin Authority produced a Draft a multiplicity of views and attitudes. and develops many of those good Basin Plan for consultation. A 20 week ideas and opportunities for river period for consultation followed which We’ve heard good ideas about how improvement we have gathered over resulted in some 12,000 submissions. we can do things better; we’ve heard the past 12 months or so. concerns about how changes will The MDBA has now published a final affect industries and communities; But, in the end, decisions about how version of the Plan which, frankly, and we’ve heard arguments as to why to best manage the basin's resources is largely unchanged from the Draft there should be either more or less will not end solely with the Basin Plan. despite 20 weeks of "consultation" water recovered for the environment. and allegedly 12,000 submissions. But one consistent theme is that we In fact, managing the Basin will always The Commonwealth Minister has the want to manage the Basin to keep it be an on-going challenge for this capacity to require changes but, in good health; make it more resilient nation as we continue to learn more eventually, he will take it to the for the next inevitable drought; and, about the science, about the Basin's Commonwealth Parliament where it will underpin its capacity to continue to hydrology, about local innovations, face the challenge of becoming law. produce food and fibre. about the effects of climate change, and as we find new technologies that Productive Water asked the MDBA These are challenging themes and will allow us to be more efficient. to give us their view on what has ones which we believe we have happened to date and what happens addressed in the Basin Plan. We do, however, believe we’ve created next: a good template to meet this ongoing Since the close of the submission and never-ending challenge. period in April we have been working our way through the more than 12000 The time has now come for all PRODUCTIVE WATER WINTER 2012 019

governments to show leadership on the on this point but the practical application and, more importantly, to the other management of the Murray Darling Basin of it remains thin. Government purchase players in the Senate. To survive the and its assets, whether environmental, of water continues at great pace along Parliament, the Regulation must be able social or economic; and we look to our with its devastating consequences, so to survive a disallowance motion in either governments to provide the leadership we remain concerned that rhetorical House if so moved. That means Minister and courage needed to take this critical commitment to infrastructure isn't being Burke needs support in the Senate from reform forward. met with practical application. either the Coalition or the Greens. He'll be talking to Senators Joyce and Senator The submission of the NSW Government Milne extensively to understand what to the MDBA reflected its interest in the needs to happen to win their support. Of NSW Irrigators Council implementation phase of the Basin Plan. course, they'll be pulling in diametrically

They've suggested that any purchase only opposed directions. The key question for NSWIC is - and occur after all infrastructure options have always has been - how much water been exhausted and then that purchases One big external factor could possibly are you taking away from productive be limited to a maximum of 3% in any send the process sideways - the High use? It remains the case that the Basin ten year period. These are strong positions Court. Players from all sides of the fence, Plan is, when all is said and done, an that have the support and endorsement including the South Australian Government, environmental plan about reallocating of NSWIC. The response of the MDBA and have threatened the High Court route. water use. Commonwealth to these positions will likely Whether anyone takes that step - and

be telling in whether the Basin Plan wins whether the Court will agree to hear the Implementation of the Basin Plan, whilst the support of the NSW Government or not. matter - is anyone's guess. If it goes a secondary issue to the volume for ahead, though, it means the Court having removal, is clearly also critical. We've It seems highly unlikely that a politician a large say in the content of the Basin argued long and hard the investment of the skill and capacity of Minister Plan rather than the Parliament. in infrastructure and delivery of savings Burke will introduce a Regulation to the for environmental use will have the best Parliament that he's not already certain In any event, it seems pretty likely that chance of success with the minimal will survive that rocky passage. There can this won't be the last edition of this amount of social and economic harm. be little doubt that he's currently talking Journal in which you'll read about the Over the past couple of years, the rhetoric to the cross-benches in the Lower House Basin Plan. from decision makers has remained strong PRODUCTIVE WATER WINTER 2012 020 WIDE OPEN

CWORDS: ELIZABETHYB STOTT ERSPHow Social MediaACE is providing S opportunities to enhance both personal and business communication in the modern age - and why you should be into it.

Many users set up profiles or pages on facebook for business reasons. The more people who “like” your page and interact with your profile online can be a measure of the success of a social media communications strategy, remembering that third party endorsement (or “word of mouth”) is still the most powerful form of advertising. The best aspect of Social media is the term commonly email or mobile. Increasingly, use of maintaining a facebook profile as a given to internet and mobile device- social media is becoming the norm, business or organisation is the way your based channels and tools that allow with many businesses looking to these profile can interact with other users. users to interact with each other and free, web-based platforms to market The “Newsfeed” feature is unique to share opinions and content. As the their products, promote their business facebook and is like a homepage that name implies, social media involves or create forums for other like minded allows an active rather than passive the building of communities or individuals to discuss relevant topics. way of sharing information in real time. networks and encouraging participation Most websites rely on somebody actively and engagement. Who uses these websites and why? The typing in the webpage address or answer to that question varies depending clicking through from a search engine Millions of Australians log on to a on the individual, group or business like Google to see the information social media websites every day. and what they are seeking to achieve. that is posted there. The homepage Whether you are one of them or not, Most people who maintain a presence of facebook, the “Newsfeed”, shows a it is highly likely that you have heard on a social network do so for personal constantly updating list of stories about words like facebook, Twitter or YouTube reasons. Setting up a facebook account people a user is friends with or the bandied about in conversation just as for instance, allows you to connect with pages they follow. This way, people you you would hear the words newspaper, “friends” and share updates. are friends with, or who follow your business or organisation’s page, will see space of time. attributes is that information is available, the latest information you have shared and can be shared, immediately rather on your profile when they log in, without The reach of announcements or than waiting for a standard procedure having to remember to specifically statements made on Twitter is often to take place, like a media release or visit your site. If a user wants more exponential as users can “retweet” an official announcement. The reach information, they can then click through your statement which makes it visible and power of the “Twittersphere” was to your page, follow the link you have to all of their followers. Then one demonstrated the day Osama bin posted or view your photos and any of those users can retweet to all of Laden was killed by American troops in information associated with it. their followers and so on. It is what Pakistan, where the tweets per second is known as a “viral” network, which reporting that bin Laden had been killed Another popular social media site, can in itself either be a blessing or a peaked approximately 35 minutes prior Twitter, is known as a “microblogging” curse, depending on whether or not to U.S. President Obama confirming his site. Users post ‘tweets’; messages of the spread of the information works in death in a press conference. What is 140 characters or less. Twitter users your favour or against you. There have interesting is that news outlets began “follow” people or businesses they are been numerous examples of Twitter reporting his death based on Twitter interested in, and posts from these campaigns “going viral”, resulting in sources almost one hour prior to this. users appear on the homepage in real- a public relations nightmare for the While it is useful to obtain information time. Twitter is therefore a very useful individual or company involved. “as it happens”, it should be treated tool for sharing short statements or with caution until it can be confirmed links in the public domain in a short One of Twitter’s most beneficial by a reputable source.

Tweets per second on the night Osama bin Laden was killed. Source: Twitter

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Another of the site’s most attractive features is the ability to mention other Twitter users in your tweets, thereby drawing that user’s attention to whatever it is that you have posted. This might be a question, a statement, photo or a link. This allows users to actively engage other users in a public forum. Case study one explains how NSWIC currently use Twitter and other social media. platforms in their advocacy work.

Case study one - NSWIC

NSW Irrigators Council operates a two way stream of expected. For example, a broadcast-quality upload from the communication - it gets information out to its stakeholders Deniliquin Basin Plan Guide consultation session was viewed and it gets their key messages to political decision makers. over 500 times. Capacity exists for that footage to be Social media provides an additional toolkit to get that done. “lifted” by traditional media for use, meaning that an event held where urban television crews rarely travel can make it One of the challenges in the traditional communications to the lounge rooms of Sydney and Melbourne. technique of a media release is that it must pass through a filter prior to being heard or read. That filter is, of course, NSWIC makes use of a similar social media strategy for the newspaper, radio or television station that will deliver it audio recordings - AudioBoo. This facility allows for an to the end user. The filter may, deliberately or inadvertently, audio recording using a hand held device (such as a change the content such that the outcome is not what mobile telephone) which can be immediately uploaded to was intended. It might be edited for clarity or length or, in a central website. All uploads are automatically posted to certain instances, to cast the entire story in a different light. Twitter (with a link to facebook) meaning interested parties Social media provides the opportunity to directly distribute are notified in a very short space of time. It was through material without a filter being applied. After distributing a use of this media that radio stations in Sydney were media release, NSWIC will place that same document onto running audio coverage of speakers at Basin Plan Draft their website and provide links to it through both Twitter consultation sessions within minutes of those comments and facebook. Users will be notified of the existence of the being made at the meetings. document and can access it directly. For significant issues, several thousand “hits” are not uncommon. Politicians are keen users of social media to boost their profile and, as above, to get an “unfiltered” message out. It’s not only written material that NSWIC is able to get There is advantage to advocacy groups in their keen use directly to stakeholders. They make use of the online as questions can be asked directly and responses received video channel, YouTube, to post footage of various events in quick time - in a public forum. Federal Water Minister or analysis. Once the material is uploaded, subscribers Tony Burke is an avid Twitter user, a fact that NSWIC to the online television channel receive an electronic has taken advantage of on a number of occasions to put mail notification with a direct link. That same link is question or points of view directly to him. More often than also distributed through Twitter and facebook. On bigger not, they’ll receive a direct response in a very short space issues, several hundred direct views of the material can be of time.

Sharing information and engaging other or comments as well. Feedback is often Harnessing the power of social media to users in real-time can be done most public and therein lies the potential communicate with an audience in real effectively by maintaining a social risk for many businesses, groups or time can be very useful. Case study two media presence across a range of individuals when maintaining a social describes how Murrumbidgee Irrigation networks. It is important to remember, media presence. A well prepared social used facebook and Twitter during the however, that social media sites are a media strategy and adequate resourcing recent flood crisis around Griffith and forum for two-way, rather than one-way can help to mitigate this risk and allow Leeton, NSW, to communicate important communication, therefore resources users to enjoy the benefits of this information to their customers and the must be dedicated not only to posting method of communication. general public as the situation unfolded. information, but responding to questions Case study two – Murrumbidgee Irrigation

Murrumbidgee Irrigation (MI) had been contemplating a able to upload and share aerial photos to help visually foray into the social media space for the past 6 months. demonstrate the scale of the flooding disaster. As the flooding emergency in the Murrumbidgee Irrigation Area unfolded in early March they needed a way to Both sites provided notifications via email when someone distribute information quickly to as many people as engaged with MI via their Twitter or facebook profile, so possible. MI was already uploading evacuation orders and they were able to respond to their comment or question information about the irrigation system onto the company quickly. This was especially useful outside of normal office website, but distribution was limited to the people who hours while they were facing extraordinary circumstances. actively chose to visit the site. By using Twitter and facebook, they were able to share updates from MI as well Since the emergency situation has eased, MI has scaled as announcements by other reputable agencies such as the back use of these sites and now use them on occasion State Emergency Services, the Police, the RTA and local to share important information, such as the upcoming Councils with other users in real time. The sites allowed MI Centenary of Irrigation celebrations. As the sites are to bring all of this information into one spot quickly and free and do not cost anything to maintain, MI is able to easily and also provided a mechanism for the information ramp up and ramp down their usage depending on their to be passed on more widely through “Sharing” the updates communication requirements. on facebook and “Retweets” on Twitter. They were also

The biggest drawcard of social media is quickly becoming recognised as Elizabeth Stott is an irrigation farmer for many users is that it provides the premier Twitter forum to discuss near Whitton, NSW and is the a platform for anyone to tell their agricultural issues, demonstrated by Policy & Public Relations Officer at story. Recently sites like YouTube, the fact that the #agchatoz tag is Murrumbidgee Irrigation. Twitter, facebook and Blogs have been used to draw attention to relevant embraced as a great way to spread agricultural statements or articles the word about agricultural issues and posted throughout the week. One of close the gap between the city and its founding members, Danica Leys, the country. The Australian Year of was also recently recognised for her the Farmer organisers are using all work establishing AgChatOz by being four mediums to share information awarded the NSW/ACT RIRDC Rural and engage the public in events that Women’s Award. are being held to celebrate farmers throughout the year. Having material The only way to truly understand on sites like YouTube for example, the many different ways social allow them to take advantage of the media can be utilised as a powerful ‘viral network’ mentioned earlier and communication tool is to get involved. share the Year of the Farmer message There is much more to all of these more widely via the social media sites than can be covered in this brief profiles of other users. article. Fortunately, a quick search on the web uncovers a plethora of AgChatOz is another great example information to get you started. You of the way social media sites can can be as active or as passive as you be used to connect people from all want to be and move into regular use over Australia to discuss a common at your own pace. It is likely that once issue. The group runs a weekly Twitter you discover all of the opportunities conversation attracting rural men using social media provides to engage, and women, journalists, agricultural communicate and network, you will advocacy groups, retailers, politicians, wonder how you ever lived without it! marketers and farmers of all persuasions to discuss relevant issues. Questions are submitted in advance on a set topic and the conversation is facilitated by a host, usually one of the founding members of the group. The conversation can be tracked by those participating by following the searchable term #agchatoz. This forum PRODUCTIVE WATER WINTER 2012 023 1912 - 2012 CENTENARY OF IRRIGATION IN THE MURRUMBIDGEE IRRIGATION AREA

In 2012, Murrumbidgee Irrigation and the communities of the Murrumbidgee Irrigation Area (MIA) will celebrate a significant milestone – 100 years of irrigation in the MIA.

Centenary celebrations will be marked by a series of community events throughout 2012, which will pay homage to the visionaries, engineers, and dam workers who pioneered the investment in irrigated agriculture, and recognise our farmers, businesses and communities that have made the MIA the success story it is today.

Discovery

In 1817, as the surveyor General of NSW John Oxley considered the view from Mt Brogden (near Binya) he described it as

“a country which, for barrenness and desolation, can I think have no equal. I believe I am the first white man to ever view this desolate landscape and believe I will likely be the last, there is little probability that these desolate plains will ever again be visited by civilised man”.

Charles Sturt in 1829 had an equally pessimistic view of the Murrumbidgee Valley. Little did the explorers realise, that with irrigation, this area would become one of the richest areas of land in Australia. Philanthropist Sir Samuel McCaughey was closer to the mark in 1909 when he said “water was more precious than gold”. Today the MIA is one Early settler Binya Hills of the most diverse and productive regions in Australia PRODUCTIVE WATER WINTER 2012 025

Conserving the precious drop

Early settlement along the Murrumbidgee River began in 1821, where initially settlers raised cattle and sheep on the banks of its land. However, the Australian cycle of flood and drought forced many settlers back to the city. In 1884, a Royal Commission agreed to look into the best methods of conserving rainfall and the viability of setting up a system of water conservation and distribution.

In 1891 Hugh McKinney drew plans for a Northern Murrumbidgee Irrigation Canal to be supplied with water from a dam constructed near the source of the Murrumbidgee, to water lands via gravity. His plans were shelved due to severe economic depression during the 1890s. The Government did nothing on water conservation until 1903 when a Select Committee was appointed to examine the scheme which would Building MIA canals be the largest public works construction in NSW. Mr L Wade, Principal Engineer of the Public Works Department prepared plans which were similar to McKinney’s early proposals. The Select Committee approved the plans on the condition of a 200 feet dam being built at Barren Jack Gorge.

The advantage of the Barren Jack storage over other proposals was the magnitude of the catchment area. The volume of water would be 766,324 acre feet. This water could be held and released when needed. The water was to be diverted from the Murrumbidgee River near Narrandera, and the flow in the canals would be controlled entirely by gravity. The initial proposal was to irrigate over six million acres of land. It would involve resumption of land which was classified as ‘first class’ rich loamy soils (around Griffith/Hanwood) or ‘second class’ heavy soil on a clay base closer to the river.

In 1906 construction commenced on what became known as the Burrinjuck Dam. In 1911 Murrumbidgee Irrigation Trust reclaimed land in the MIA and began building the canals. Canals were first dug by manpower with horse and scoop, Burrinjuck Dam circa 1911. Source State Library of NSW and later with the help of steam engine tractors. In 1913 the Water Conservation and Irrigation Commission (WCIC) replaced the Irrigation Trust. The WCIC covered virtually every facet of the MIA’s economic and social administration. They supervised all dealings with land, constructed all works for irrigation and local infrastructure, distributed water and collected rates and charges, and conducted all local services until local Government was established in 1928. It recruited labour and procured the immense range of plant and machinery needed to develop the irrigated blocks. For many years, the Commission even acted as the MIA’s principal banker. It invested heavily in the construction of houses and public buildings, controlled traffic, stabled and fed hundreds of working horses and ran its own motor fleet.

Irrigation officially began at a “Turning on the Water” ceremony on 13 July 1912 and the first farms of the MIA settlement were opened. It was a time of great activity and excitement, with people optimistic for the future of the MIA. The Minister of Works, Mr Arthur Griffiths said in his speech: “I regard this scheme as the largest and most promising irrigation settlement ever established south of the line.”

The Adelaide Advertiser described the ceremony in an article published on 14 July, 1912. “Mr Griffiths said the Turning on the water irrigation land they hoped to open up was the best in PRODUCTIVE WATER WINTER 2012 026

the world, and this settlement should be as successful as any in America. It would be also be an insurance to the Riverina pastoralists.

Then he set to work at the winch, and in a few moments, with the noise of cheers, a wave of muddy red water broke out and along the surface of the southern channel. This begins at the bridge head, and by branch channels from it the 300,000 acres are to be irrigated.

Mr. Beeby (a Labor party minister) said some of those who heard him would live to see the population of the Riverina ten times as great as now.

Today was the initial ceremony of the establishment of a settlement which would enable thousands of poor men to make homes for themselves. It was poor men they were aiming to help, the rich men could always get suitable conditions. A man of courage, energy, determination and a little capital would be able here to win prosperity for himself which would also benefit his country. Burrinjuck would be the largest artificial reservoir, next to the Aswan dam, in the world. The trust would do everything possible to help settlers. There would be butter factories, bacon factories, and canning factories. The suppliers would run no risk of being bothered or robbed by any middlemen, it would take the settlers’ products, cream or fat lambs, or bacon, or whatever they were, and send them to the Sydney or the London market and give the settlers the net returns less only the actual cost.”

Building cooperatives

The infrastructure built by the WCIC helped farmers realise the potential of the freshly irrigated land. A butter factory, bacon factory, abattoir and later a cannery were built in Leeton. A cheese factory and tomato pulping factory were built in the town of Griffith. Most of these went on to become farmer cooperatives.

The WCIC also built accommodation houses - what is known today as the Historic Hydro Leeton and the former Mirrool House in Griffith – but to keep control of the social environment, there was prohibition in the MIA until the mid- Historic Hydro Leeton 1920s. Interestingly, more and more unofficial liquor stores popped up and Narrandera and Whitton pubs were popular on weekends. Farmers later formed producers’ cooperatives, and when Italian migrants moved into the area in the 1930’s, horticulture began to thrive. In the late 1920’s rice was the first broad-acre crop to show good profits for the MIA.

Challenging times

The MIA got off to a shaky start. Irrigation was originally only for small horticultural blocks and large area dairy and lucerne production on leasehold land, however information on crop and soil types was wrong and lucerne crop yields were low. Many different types of produce were trialed unsuccessfully, including tobacco, peanuts and ostriches. At one time thousands of peach trees had to be pulled out and replanted with different varieties because they were the wrong type for use in the cannery. Farmers were given subsistence payments until their crops produced but their capital expenditure slowly Pioneer family at Yanco 1912 mounted and farmers experienced hardship and poverty. There PRODUCTIVE WATER WINTER 2012 027

were more hard times to come as the First World War broke out followed by the Great Depression in 1929.

Serious protests by farmers in 1924 led the government to increase farm sizes and changed land tenure to freehold. From around this time, the WC&IC started to hand control of the MIA over to banks, local councils and farmer co-operatives.

In 1935 there was a severe drought and Burrinjuck Dam almost ran dry. An emergency meeting was held in Griffith where residents called for Burrinjuck wall to be heightened to increase the dam’s capacity. Luckily the drought broke, saving local farms, but it led to a Royal Commission into water conservation. In 1938 Burrinjuck Dam was strengthened and March on the Commission, Griffith 1924 enlarged. The completion of the Snowy Mountains Scheme in the 1970s and the construction of Blowering Dam further enhanced the growth and development of irrigation.

Growth and prosperity

After the Second World War, soldier settlers were encouraged to move to the area and through the sheer determination and hard work of the local farmers, the MIA finally began to boom. The MIA and districts remained a State Government entity until 1999 when it was privatised. The irrigation network is now owned by landholders and managed on their behalf by Murrumbidgee Irrigation (MI).

Today, MI is one of the largest private irrigation companies in Australia, serving over 3,200 landholdings owned by over 2,500 customers within an area of 660,000 hectares. The MIA is one of Australia’s most important agricultural areas and is home to more than 40,000 residents. The region produces livestock as well as a wide variety of crops such as canola, stone fruit, rice, cereals such as wheat and barley, citrus, vegetables such as onions, tomatoes and lettuce, olives and more recently, a large expansion in almonds, walnuts and cotton.

A century of irrigation

A one-hundred year milestone provides us with an opportunity to reflect on the past. To honour the pioneers of the MIA and acknowledge their foresight, their endurance, and their commitment to the success of this irrigation area. It also provides us with an opportunity to look forward and to share a vision for our region that ensures continued productivity and sustainability. To embrace change and innovation as we shape the future of the MIA for the next generation.

The Centenary of Irrigation celebrations includes a 10-month program of events, incorporating a gala dinner, community open day, historical displays, DVD launch and field tours around the region. The program has been planned by the MIA Centenary Organising Committee in cooperation with Murrumbidgee Irrigation. A full program of events can be downloaded from Murrumbidgee Irrigation’s website www.mirrigation.com.au.

Some information for this article was sourced from From wilderness to eden: a history of the City of Griffith, its region and its people by B.M. Kelly. City of Griffith Council, Griffith, N.S.W. 1988. Poster advertising farms in the MIA PRODUCTIVE WATER WINTER 2012 028

Many agricultural businesses are sitting on assets that have not been identified and as such are under- utilised. Paul Fisher, of Boyce Chartered Accountants in Moree explains the case for ensuring your assets are fully productive.

I recently presented a session at a that privilege. This is already happening holding a license to use and share- conference run by the New South to some extent as evidenced by private farming are all legitimate ways of Wales Irrigators Council for young landholdings being sold to government gaining access to land without owning it. farmers. The breadth of the topics for use as national parks. Scale, that is the ability to spread fixed covered during the two-day program - overheads over a greater productive such as the environment, the role of In order to maximise the return on area, is becoming increasingly important political lobbying in agriculture, carbon, your land, it is important to consider in agriculture. Have you examined government infrastructure and personal the associated assets or ‘rights’, such alternative methods of gaining scale in motivation - reaffirmed to me that as the right to irrigate land, the right your farming business? there is much more to farming than to extract water from rivers (works just growing crops. license) and flood-protect land, and Water the option to buy or close public My presentation addressed the roads. These associated rights may It was only a short while ago that question of ‘What assets do I have not have a role in your current land and water were inextricably and how do I manage them?’ circumstances, but it is important to linked. With water now, in most pay attention to any opportunities that cases, a separate asset from land it’s There are two obvious ‘businesses’ arise and not let them lapse. essential to identify what you have within agriculture. Firstly there is the and to work out whether you are profit coming from the use of the The ability to generate income from maximising utilisation. On that basis, assets at your disposal, and secondly land by less traditional sources is have you analysed whether it’s better the capital gain resulting from the gaining momentum. The sale of carbon to own water, lease water or buy increase in the value of those assets. credits and the capability to capture temporary transfer water? and sell power from wind and solar It follows, if your goal is to maximise are a few examples. If such a ‘right’ or There are some obvious water wealth, you need to know what assets ability is inherent in your land, have you assets, that is, those that have a you have and how to make the best investigated the opportunities available title attached to them such as high use of them. to exploit this for further profit? security, general security and high flow. Other less obvious water assets So what assets do you have? In our experience, although the value are often overlooked. Overland of rural land seems to continually flow and the ability to capture a increase, the most significant rises in Land percentage of the rain that falls on values have corresponded with changes your farm under the Farm Dams in land use. For example, the change Land is a major asset to any farming Act, the right to store water in from grazing sheep to growing cotton, business, but in recent times it has a government dam and licensed from grazing to dryland farming, and become a very different asset to what structures to aid with the capturing of from irrigating broad-acre crops to it once was. water, can all make a huge difference intensive horticulture, all have resulted to the amount of water available to in significant increases in land values. The public and governments now an irrigation operation. Landholders who recognised the have considerable say in how you opportunities early made substantial manage your land, and the legal term Interestingly, in some valleys where gains from controlling land, along with ‘quiet enjoyment’ has a very different the government has purchased increased profits from new enterprises. connotation to what it once did. I licensed water from irrigators for the believe that we are getting closer to environment, there has been some It is important to bear in mind that the point where, if the public want temporary transfer water offered although land is an asset, there is more increasing input into land use and back to the market. In our view, than one way to control it. Leasing, care, they may well have to pay for there are significant opportunities PRODUCTIVE WATER WINTER 2012 029

Many agricultural businesses are sitting on assets that have not been identified and as such are under- utilised. Paul Fisher, of Boyce Chartered Accountants in Moree explains the case for ensuring your assets are fully productive.

here for irrigators. On offer is the contract rates to be in a position to entitlement to borrow money. ability to reduce fixed costs per unit make an informed decision? of production and access temporary This entitlement comes from having transfer water at possibly a reduced equity, but also from the relationship People cost due to increased supply. you have with your bank manager. Your ability to deliver consistent There are many outstanding operators profits and to keep on top of your Plant in the irrigation industry, most of figures to indicate that you know your whom know the importance of ‘people’ business, generally signal to your bank As an industry, agriculture is extremely as an asset. manager that you are a good ‘risk’. capital intensive and a very quick adopter of new technology. Currently there is much discussion Even if you have relatively low gearing, surrounding the exodus of people from this entitlement is still important. If you In our business, we are often asked rural areas and, exacerbated by the encounter a prolonged period of hard ‘If I’ve made a profit, and I now mining industry, this is causing a shift times, the ability to borrow may well have tax to pay, where has my cash in traditional approaches to attracting mean the difference between retaining gone?’ Invariably, our clients will have and retaining people. land and having to undergo a fire sale. purchased assets (often plant) with the profit, prior to the tax being paid. Money seems to always be front and centre of this debate. Most studies Summary A second question posed by clients however show that remuneration is is ‘How much plant do I need?’ only one of a number of factors that Like any other business, farming is about Unfortunately, there is no easy answer influence an employee to accept or using scarce resources in the most as there are so many variables and remain in employment. efficient way to produce a product. complexities across all businesses. Factors that may influence the Another important aspect, in our view, Unlike other businesses, farming is decision include: is to understand that the engagement impacted by falling terms of trade and of your team is critical. Involving the capacity of those in the industry ••OH & S (making the whole opera- people in the full process - from to adopt new technology to increase tion safer); planning and budgeting, through to the efficiency and output; both of which are ••the lumpiness of efficiency (whereby review of operations, making decisions emphasised in irrigation operations due a piece of plant will optimally and celebrating the results - helps to to the intensive nature of the business. perform say 5,000 hectares of work, ensure everyone is working together but you only have an additional toward one measurable goal. If you are sitting on resources 2,000 hectares of work for it); (assets) that you don’t know you ••the environment; and have, and therefore are not utilising, Debt ••attitude towards debt and the ease you will not only be falling short on of obtaining credit. maximising production, but you could Some of you, and definitely any also be falling short when it comes to accountants reading this article, will One factor that must always be participating in capital gains. ask ‘How can debt be an asset, surely considered is profit. Will this new plant it’s a liability?’ produce more profit? Will I increase Paul Fisher is a Director of Boyce my production budget / goal after I Chartered Accountants and is based Debt can be looked at in two ways purchase it? Where there are specific in Moree. Irrigated cotton growers – yes it’s money you owe the bank, concerns about efficiency (area and dryland farmers make up a but from the another perspective, debt covered) maybe a contractor can large percentage of the Boyce Moree indicates that you have the ability or fill the gap? Do you know the going client base. PRODUCTIVE WATER WINTER 2012 030 SHARING THE KNOWLEDGE

Irrigating in a changing climate.

WORDS: MARK MOORE

After a trip down memory lane, we’re We had Richard join us on our first stop on the tour. The drive from getting back to discussing one of our Sharing the Knowledge (STK) trip to Brisbane took about 2 ½ hours, that’s more recent programs and presenters. Queensland in November 2011. The with some road construction along the For this edition of the journal we itinerary was planned over a week way and a much needed coffee stop decided to highlight an operation just and included stops in Pittsworth, in Toowoomba. A pleasant enough a bit south of the big island.... you Emerald and Ayr, vastly different from drive for the most part, at least it guessed it, Tasmania! the climate and soil conditions of was for me. The others appeared to Eastern Tasmania, so Richard was be a bit more concerned during the A beautiful area of Australia with a quite eager to get started. This was trip, for some reason feeling that they fair amount of irrigation already taking going to be a wonderful opportunity constantly needed to remind me “In place as well as some new schemes for all the presenters as well as the Australia we drive on the left hand being developed, it was the perfect spot attendees, with topics ranging from side of the road”! for a participant to be chosen from. pulse irrigation on Olives to Variable A Tassie boy through and through, Rate centre pivots on Poppies, there Our Pittsworth forum got a good Richard Gardner is our presenter topic was something for everyone. turnout and we definitely had some for this issue and I’m sure you’ll find positive participation with insightful the information interesting. This program as you know is all about questions and in-depth discussions. sharing information on what’s working, The group were happy they came, Policy Analyst – Mark Moore where it’s working and why it’s working. although it was not the best time to Farmers are an ingenious bunch and visit..... yup, it never is. if there’s a way to do something more efficiently, you can bet they’ll find We’ve mentioned this before, but one it. Problem is, that this information of the real highlights of doing this doesn’t easily get spread around, program is the ability to get out and so something that could benefit a kick some dirt on someone else’s great number of farmers is not being farm. There is just so much more that promoted. STK to the rescue! can be understood and appreciated by seeing an operation in person. The first thing you notice when you From the layout to the management arrive is the warmth of Queensland techniques and the equipment being and I’m not talking about the weather, used, no two farms are the same. you can’t help but notice that. There is a genuine friendliness and warmth Pittsworth was no exception. Just you experience when you meet a a quick trip down the road and we Queenslander. They don’t seem as arrived at Johannes Roellgen’s farm rushed, appear to be quite happy to (Tyunga). A large operation which go with the flow and have a bit of a we were all rightfully impressed with. chat.... we really liked that! Johannes has spent an immense Sharing the Knowledge presenters (left to right): Andrew Parkes, amount of time perfecting the layout Marek Kwiecien-Fisher, Eric Watson, (Johannes Roellgen - not a presenter) and Richard Gardner. It had already been a long day by the and the ability to utilize every bit of At Johannes’s property, Pittsworth QLD. time we arrived into Pittsworth, the the property. I just never seem to PRODUCTIVE WATER WINTER 2012 031

leave enough time for farm visits like as the complexity this set-up added, technique involves a comb front on a these, the group could have continued requiring flow metering and another silage harvester travelling at 18km/ talking for several more hours. variable speed drive for the operation hr with the head of the poppy being of the fertigator pump. picked for processing. The entire Back on the road and this time process of sowing, harvesting and everyone was so preoccupied in The fertigation is a simple system, transport is managed very closely for conversation I didn’t have to take any utilizing a 20,000 litre plastic tank, security reasons. grief for my driving. We headed east fitted with a Milk vat stirrer and an to pick up our flight to the next stop, injection pump, Richard was able to Although there are many varieties of Emerald. reduce his costs by bulk storing the poppies grown around the world, very urea and then either using it as a few countries are allowed to legally Wow... I thought this was a small topdress or injecting it. A flexible and grow the “opium poppy”. The current town... and why is everyone wearing cost effective option. Tasmanian crop is around 25 000 ha, fluoro work wear? The mining boom nearly all grow under irrigation on a has hit and it’s hard not to notice! This utilization of VRI has enabled minimum three year rotation. This place has been transformed Richard to significantly reduce his into a very busy and big town. Stay water usage and nutrient run-off. After There are changes taking place in tuned.... our adventures will continue in mapping the land, the information was Tasmania with regards to irrigation, the next issue! programmed into the computer system with a new “Midlands Water Scheme” and the result is an automatically being developed in the area around Sharing the Knowledge is supported adjusting water application rate which Tunbridge. This new scheme is slated by funding from the Australian is compensating for the variable soil to be ready for the 2014 season and Government Department of Agriculture, types. This variable rate application will supply 100 farmers with access Fisheries and Forestry under technique has not only dealt with the to reliable water through a 38.5 GL Farmready, part of Australia’s farming water logging issue, but also enhanced pipeline, resulting in a 95 % guarantee future. the crop yield, and as any famer will of water availability for the area. attest to that is a welcome result. Richard worked tirelessly on this IT’S ALL ABOUT THE POPPIES Poppies are very susceptible to project and was an instrumental part Richard Gardner – Tunbridge, TAS water logging damage and with in getting the program approved. The a value around (GM $3500 / ha) opening up of 55,000 ha of land The land cannot be considered flat, any reduction is yield as you can to regular cropping means a great in fact you struggle to find a flat bit appreciate, needs to be avoided. deal to the local area and the hard throughout the paddocks. With a working families who are now able to mix of soils and this undulating land, The growing of poppies (specifically irrigate this land. Richard faced a few hurdles when the opium poppy - Papaver setting up his irrigation system. Somniferum) is a tightly controlled NSW Irrigators Council would like to activity in Tasmania (as opposed thank Richard for his participation in The utilization of two 64 ha towable to let’s say Afghanistan). Tasmania the Sharing the Knowledge program centre pivots means Richard can be a supplies around 45% of the world and the positive outlook he not only lot more flexible with how he manages demand for legal opiates used for brought to the program but also his paddocks and although there is a pain relief products such as morphine managed to incorporate into his bit of effort required in moving them and codeine. presentation. around (approximately 1 1/2 hours), his capital investment was significantly Poppies are planted in September and Contact with Richard Gardner can be lower. harvested in January. The harvesting facilitated through NSWIC.

Utilizing Variable Speed Drives, a necessity for Variable Rate Irrigation (VRI) on the centre pivots, he’s reduced his electricity usage and is able to run a smoother operation with less over pressure events. There are always other factors to consider, such