Irrigator Water Charges

Mr JOHN WILLIAMS (Murray-Darling) [12.46 p.m.]: I move:

That this House calls on the Government to waive fixed water charges for all New South Wales irrigators.

Since I gave notice of this motion, which was about a year ago, some things have changed. I acknowledge that during the past 12 months, which has been a difficult time for irrigators on the Murray River particularly, through the work of the previous Minister for Climate Change, Environment and Water, Phil Koperberg—I recognise his support for irrigators in that area, particularly those on high security allocations—and through a very fine balancing act in this critical situation with storages in the Hume at their lowest level for many years, we have been able to secure an allocation of water that has managed not only to maintain permanent plantings but to produce a crop, which is a great outcome. Despite all the pressure and stress that people have been under, we have managed to come out the other end with a good result for those high security irrigators.

The problem we face in the southern Riverina, where we have general security irrigators, is a little different. With the indulgence of the House I would like to speak about the history of the southern Riverina irrigation area, in which there are currently about 1,600 irrigators. About 80 years ago the Government—which should receive credit for its actions—produced a great example of regional development. It saw the opportunity to secure water and it realised that there was a benefit in using that water for irrigation. The Government then conducted surveys of the area and produced one of the best-channelled irrigation systems in the world.

As a consequence, the broadacre farms were reduced to small allotments and those small allotments started to receive irrigation. With that irrigation the allotments were able to grow a number of crops in a small, concentrated area to produce a good income for the irrigators. But obviously the worst drought in 100 years has affected irrigators in the southern Riverina. As a consequence the irrigators have, for the first time, received zero water allocations. Their water allocations have been suspended, even though the allocations carried over from their accounts. Southern Riverina irrigators have experienced difficult times indeed. Unless there is some major inflow into the Hume Weir, irrigators face potentially another year of zero allocations. That places them in a very poor position.

The annual bill for fixed water charges—the basic charges imposed by the State Government and Murray Irrigation Limited—on an average irrigated block is about $15,000. Farmers are relying on Federal Government support to live and to remain on their farms, so all members will recognise that a bill of that size is debilitating in the current circumstances. The fixed water charge has two components: the State Government charge and the Murray Irrigation Limited charge. What is now Murray Irrigation Limited was part of the State's public water infrastructure until it was decided to privatise the irrigation companies. Members should be aware that irrigation companies are not-for-profit organisations. They supply water, maintain channels and support the irrigation activities of the area. Murray Irrigation Limited was separated from the State Government through privatisation, and the efficiencies derived were of great benefit to the Government.

By the time the farmers receive their next fixed water charges they will have accumulated accounts of about $45,000, but they have received nothing for that money. Farmers have obviously been borrowing more and more. Last year the Government offered to allow farmers to delay payment of the charges. In theory that sounded pretty good but in reality it just delayed the inevitable. When we come out of the drought farmers will lose their interest assistance and will face huge debts that they will try to maintain through their farming operations. It is a serious situation. We must focus on the plight of irrigators. If this were to happen in a capital city it would be on the front page of newspapers every day and people would be searching for a solution. The irrigators in the southern Riverina have a voice through an organisation, and I hope through me, but the Government needs to consider removing the charges and putting money back into Murray Irrigation Limited.

As far as I know, Murray Irrigation has used all its reserves to date. The staff are working four days a week—and their hours may have been reduced even further. In 2007 180 landholders paid no charges to Murray Irrigation. So it will obviously become more and more difficult for Murray Irrigation to continue to run the organisation and maintain the economy that supports it. The spin-off for communities that rely on the income generated by Murray Irrigation is a very important consideration. We are seeing a whole-of-area deterioration. The economy is falling apart not only because irrigators cannot produce crops and generate income for the area but because an organisation that employs a substantial number of people cannot sustain employment and get the support it needs in order to maintain channels, improve conditions and get things in better shape for when we come out of the drought.

The average farming family will have fixed water charges of $15,000. Most of them will also receive a shire rates bill of $2,800 and a rural lands protection board bill of $500. Families will perhaps make enough to live on, but it will be subsistence at best. They have to maintain some sort of lifestyle, but the bills keep coming in and they are watching their borrowings increase year by year. I call on the Minister to examine closely the plight of the irrigators affected and try to understand their difficulties. I am sure that funding of about $5.4 million would alleviate most of the problems in the southern Riverina.

Mr BARRY COLLIER (Miranda—Parliamentary Secretary) [12.55 p.m.]: The Government opposes the motion. In recent days the Minister has talked to irrigators about many issues, including the matters raised by the member for Murray-Darling. I understand the Minister will continue to consult widely with water users about this and other issues In September 2006 the Independent Pricing and Regulatory Tribunal [IPART] set water charges for the four-year period 2006 to 2010. For the majority of water consumption, water charges are based on a two-part tariff comprising a fixed or access entitlement component and a usage component.

The setting of charges is an independent and transparent process, removed from Government. In making its determination, IPART took into consideration submissions from all stakeholders and the public, including those of the water users themselves. IPART determined that the share of water management costs attributable to water users was 66 per cent, with the remainder attributable to the Government. IPART set a transitional price path towards recovering these costs from water users over the four-year period of the determination. This means that the actual share of costs recovered from water users averages around 50 per cent over the four-year period, with government funding the balance of these services.

The revenue collected from water charges is used to fund essential activities carried out by both State Water and the Department of Water and Energy in managing the State's water resources on behalf of water users and the community. I mention at the outset that charges for bulk water services are based largely on a two-part tariff of fixed entitlement and actual usage. I am advised that in 2006-07 the fixed charges of about 79 per cent of the State's water customers were less than $1,000. In a drought, when water allocations are low or nil, revenue from usage charges is significantly reduced. This places an even greater reliance on the revenue raised from fixed charges to fund the increased requirement for essential activities, such as compliance, licensing administration and water monitoring, during this time.

Those opposite will argue that we waived general security fixed charges in the Lachlan, so we should do the same for the rest of the State. In 2006-07 the Lachlan Valley was the only major regulated valley in the State to have experienced zero general security water allocations in three of the previous five years. While other regulated river valleys in the basin have had periods of zero allocations in the previous two years, they have had access to water in years prior to 2006-07. I am advised that currently all regulated valleys except the Lachlan and Murray have full high-security allocations and some general security water. If other valleys were to face similar exceptional circumstances the Government would consider what measures may be appropriate.

This Government is not unsympathetic to the plight of the rural sector. When the drought was at its height in October 2006, the Iemma Government announced the extension of a range of existing drought assistance measures and new measures to assist farming communities manage the drought. These measures included emergency household support, mental health services, transport subsidies and assistance for small businesses. To date, the Government has committed more than $370 million to drought assistance measures. Make no mistake, in late 2006 the Government and the State were facing an unprecedented situation caused by the vagaries of nature, not by political decision making. The Murray River system was suffering from the lowest recorded falls in its history and there was a severe shortage of water. In December 2006 only 34 gigalitres were collected from inflows—the lowest monthly figure on record. The real threat was that some rural communities would run out of water.

The Government acted quickly to implement emergency measures to secure town water supplies in the Murray and Murrumbidgee areas, as well as water for stock and domestic purposes. The Government had to make tough decisions to reduce allocations in the Murrumbidgee and Murray valleys, suspend water sharing plans and reduce water for the environment. An emergency response team made up of more than 50 Department of Primary Industries personnel was put in place to help farmers and irrigators. In January 2007 the Government announced a new $20 million assistance package for struggling southern irrigators to alleviate some of the pain from the suspended water allocations and to tide them over until the rains finally came. Of course, many in the south-west of the State are still waiting for rain. The Government has been proactive in assisting the rural community throughout the drought period. We made the tough decisions during the time of an election campaign while the policy-bereft Opposition did not hesitate to take cheap shots at the farmers' expense.

Mr KEVIN HUMPHRIES (Barwon) [1.00 p.m.]: I support the motion moved by the member for Murray-Darling. When the member first brought this motion before the House almost 12 months ago the State was experiencing unprecedented times, particularly many of the towns that the member and I represent. The member for Murray-Darling and I represent two of the 93 electorates in the State, which represents 61 per cent of the State. We cover an area ranging from the Victorian, South Australian and Queensland borders and all places in between. Most of the irrigation areas in New South Wales are in our electorates. We are also subject to the vagaries of our Queensland counterparts. As the previous speaker said, 2006 were unprecedented times. I acknowledge the Government's work in helping towns to secure water supplies. Four towns in my electorate ran out of water. Water had to be carted to places like Goodooga and Byrock, and the department gave reasonably clear and concise directions to irrigators and town communities. The fact that our towns were able to get through that plight augurs well for the commitment and work of interdepartmental bureaucracies.

Barwon consists of the four major regulated rivers—the McIntyre, the Upper Barwon or where the Darling starts, the Gwydir where I live and the Namoi in the Macquarie. Most of our irrigation schemes in the north are slightly different from those in the south because we do not have irrigation schemes. Our farmers or irrigators deal directly with State Water. I am talking mainly about regulated water, which is water coming out of dams. State Water has a responsibility to deliver water to the offtake point. Most of the channels and storages within those valleys I have just mentioned are run by the farming entities themselves. So the farmer or irrigator is responsible for the offtake once the water reaches the river. The previous speaker was correct when he said that the Independent Pricing and Regulatory Tribunal is the responsible mechanism for pricing. There are fixed water charges and shared water charges. Yesterday I joined a delegation of the Gwydir Valley irrigators in a meeting with the Minister. I believe the Minister will be open to ongoing discussions with the industry. As we speak, the New South Wales irrigators are meeting with their State counterparts to form a national irrigators association. Governments at all levels will be able to better deal with a consolidated body.

The State has had good rain, particularly in the last three or four months, and dams are starting to fill. However, the water allocations are minimal, less than 10 per cent in all the valleys in my electorate, bar the McIntyre Valley. The Minister and the Government have been told that it is not a case that the irrigators cannot or will not pay. In times of plenty, when there is plenty of water and high security can be delivered, irrigators can pay more because they can project and will have a higher income. That is how the agricultural sector works. In unprecedented times, as we have just had, things get tough because farmers, particularly irrigators, do not have cash flow and they have to try to reduce fixed costs. The Government has been asked to spread the costs over a period, to review the costs imposed by IPART and to see if we can work out a sensible solution.

The northern part of the State, the area that I represent, is different to the south, which has a lot of small irrigators. In the north fewer irrigators cover a larger area and the farmers tend to be major producers of cotton and grain. The average fixed water charge is much higher. In some cases, corporate family farms are paying up to $200,000 in fixed charges. That is the difference when four to five families are located on the farms. In places like Moree where I live, the shire has lost nearly 2,000 people out of a population of 15,000. Warren, Burke and Wee Waa are not dissimilar. We have to keep those communities viable and keep the families located in the area. If farmers are not viable, ultimately the community pays more for food. It is a value chain that we all recognise. I urge the Government to support the motion and keep an ongoing discussion.

Mrs DAWN FARDELL (Dubbo) [1.05 p.m.]: I support the motion moved by the member for Murray-Darling and congratulate the member on bringing this issue of water charges for irrigators before the House. Although this motion was brought before the House abut 12 months ago, it is still pertinent today. Other rural members and I have made many representations in this House on behalf of our constituents, in particular, in my electorate of Dubbo the Lachlan Valley and Narromine irrigators. Apart from water charges for irrigators, there has been a great deal of confusion about local government separation of water to real estate and related charges. To pay for their irrigator licences, which entitled them to a substantial allocation of water, people have had to go to the bank to renegotiate the mortgage on their property. Many people would consider that a heavy burden.

For many irrigators, challenging their assessment and the charges, and the lack of support from the Government was too much. Many irrigators, particularly in Narromine, had to purchase additional allocations. State Water assessed its allocations without averaging it fairly over previous years. In some cases, they now have to purchase back the water that they were originally entitled to under their licence. So they are further out-of-pocket. Additional financial burden is always an issue during times of drought. The State has experienced a very severe drought. Irrigators and rural producers have also had the emotional burden. The example has been given in the House before where the wife, who used to work alongside the spouse on the property, has had to seek employment in town to obtain some form of income for the family. With a spouse working, many farmers did not qualify for government assistance. In many cases sons have left properties to go to work in the mines. Will they ever return?

The member for Barwon and the member for Murray-Darling and other members have spoken in the House about rural suicide, which is still happening. The National Association of Loss and Grief, which has a large agency in Dubbo, had 40 referrals at the beginning of this year. The situation in that area is appalling. So when we say that the drought is over and the rain has fallen in many areas of the State, the drought is over when it comes to water but not finances. Recently in Sydney a taxi driver who took me to the airport asked me about the drought. The only way I could explain it to him was to ask him to imagine working five years without receiving a regular income. That is what the irrigators and producers in my area have faced. Since this motion was first brought before the House decisions have been made about water charges. The support was not as swift as the support that was given to the racing industry. It is all about whom you know. The former Minister for Climate Change, Environment and Water advised at one stage that water charges could not be waived any further. A reply to a representation I made on behalf of a person in the Lachlan Valley stated that the State Water Corporation has a hardship policy and that, should I be aware of anyone experiencing difficulty in paying fixed water charges, I should advise that person to urgently contact State Water to see what options may be available. Any person who comes to me is suffering hardship—people do not see their local member if everything is going wonderfully—and I give assistance on that basis. The Minister for Water recently visited regional New South Wales: he impressed all the rural and regional councils in my area. He listened to my constituents who spoke on matters relating to his portfolio, which now covers all water matters.

Some time ago I asked the Premier a question about the separation of the water and infrastructure portfolios and who was in charge of what, because it has caused great confusion to local members and their constituents. I am pleased to see that one portfolio now covers all areas. I believe only one Minister should administer water and water infrastructure. I fully support the motion moved by the member for Murray-Darling. This matter must be kept on the books, not because things have changed and the State Government has given various support and drought assistance, which I very much welcome, but because we could very easily experience drought again. We have had rain recently, but we could go through another period of drought for which we must be prepared so that we are not caught out again. We should be on the front foot and have some sort of plan to meet our needs.

Mr STEVE WHAN (Monaro—Parliamentary Secretary) [1.10 p.m.]: I acknowledge the positive comments of the member for Murray-Darling and also the member for Barwon—although I did not hear all of his contribution—about the work carried out by the former Minister for Climate Change, Environment and Water in the interim after the motion was moved. The situation has changed somewhat since then, probably not as much as we would have liked, because although parts of New South Wales have had rain, water allocation will continue to present a serious challenge over the coming years. As the member for Monaro I see what is going into some of the inflows—not so much the inflows that affect the area of the member for Barwon, but certainly those in the areas represented by the members for Murray-Darling and Murrumbidgee. Although we have slightly better levels in our lakes this year than we did this time last year, it is not much better. According to Snowy Hydro we had an overall increase: the lake levels did not drop as expected in January because of the inflows in December. However, we are still well below average and our water storages in the Snowy, at least, are still around their lowest levels since construction of the Snowy Mountains Hydro-Electric Scheme.

The level of water in Lake Eucumbene is critical for people in the Murrumbidgee and Murray-Darling irrigation areas. At this time last year it was bumping around 16 per cent of lake levels there; this year it is only about 3 or 4 per cent higher than that, which means it is still around 20 per cent. Even though we had a good ski season last year we did not get follow-up snow in August and September, which would have helped to get the inflow into the lakes. Even though the situation is a bit better than it was last year, it is still going to be a challenge for many irrigators over coming years unless we get good sustained rain in the catchments for those major storages. As the member for Monaro, it is something I hope for and I know that other members representing country electorates are also concerned for it to happen.

As Chair of Country Labor I have heard from many people about fixed water charges. I know that is something that concerns those who are paying fixed water charges. I discussed this matter with the former Minister for Climate Change, Environment and Water, on a number of occasions, as I know others in this place did, and he certainly did his best to ensure that there were easy mechanisms for people to defer those charges if they were unable to pay them. He met with many people and understood the hardship they were facing, and that is the action that he took. The deferral of the charge is something I hope people are taking advantage of if they need it. But, obviously, there is an argument on both sides.

It is possible to say that you should not have to pay these charges because we are in drought, but there are also a lot of precedents that say you have to maintain capital infrastructure in good condition for use when we get decent rain and decent water storage levels. The pricing authorities have put forward that legitimate, but difficult, argument. The Government has to consider how it allocates money and, as was outlined by the Parliamentary Secretary, government has provided a lot of money for drought relief. Through Country Labor and through the work of groups such as the Rural Taskforce we have tried to make sure we continue to focus on the areas of need with the limited funds available.

I was pleased to hear the member for Dubbo talk about the positive response to the visits around rural New South Wales of the Minister for Water. I am also very pleased to hear that during his visits the Minister talked mainly about town water supplies and sewerage schemes, and I welcome his broader role in this whole area of water allocation. I look forward to representing Minister Macdonald at the Murray-Darling Basin ministerial meeting, at which the Minister for Water will be the lead Minister for New South Wales. I am sure that, having spent so much time in the last few months travelling around the State meeting rural communities and hearing about their water needs, he will bring an educated perspective to the meeting. Farmers will face further difficulties if rain is not more widespread and sustained in the next couple of years than it has been recently. The State Government will continue to work with farmers to help them through difficult times.

Mr ADRIAN PICCOLI (Murrumbidgee) [1.15 p.m.]: I support the motion moved by the member for Murray-Darling and congratulate him on his continued advocacy on behalf of his constituents along both the Murray and the lower Murrumbidgee rivers. I have represented private irrigators within a large section of Murray irrigation and along the Murray River, and I am well aware of the difficulties they have been facing over the past few years with zero or very low water allocations. In fact, for the nine years I have been a member of Parliament they have had a decent allocation for only two or three of those years. It has been very, very tough for them, particularly in the Murray.

Those tough situations have now extended right across country New South Wales: the Murrumbidgee, the Lachlan, the Namoi, the Macquarie and the Darling, particularly the Barwon-Darling we have heard so much about, and seen some of the consequences, particularly in Bourke, of the downgrading of some of those farms because of zero water allocations. Zero water allocations for an irrigation farm obviously means a very limited ability to earn any income. It is galling for those farmers who still have to pay substantial fixed charges. I do not believe any other business would accept having to pay huge fixed charges without delivery of the product they are actually paying for.

On top of those fixed charges, and I know this was part of the debate a couple of years ago, the Independent Pricing and Regulatory Tribunal [IPART] determination will result in fixed charges in some parts of New South Wales increasing by as much as 85 per cent over a four-year period. The Government previously said that IPART is independent—it makes recommendations about fixed charge increases—and that true to some extent, but the Government has the ability to say no to IPART's recommendations. It was argued on this side of the Chamber and by the crossbenchers that the Government should reject the recommendations, the same way it rejects increases to State Rail charges. The Government has rejected those kinds of recommendations in the past. If increases are to occur the Government could have made them much less than IPART had recommended.

It is a very difficult period for irrigators; there is no doubt about that. I believe one of the consequences, particularly with many of the reforms that are taking place, will be more farmers going out of business. Two constituents came to my office last Friday. One was a citrus farmer who said he has had enough, that he is going to bulldoze all his citrus trees, sell his water, just keep a few megalitres on his farm, just live there and get a job in town. The very next constituent I saw was a broadacre general security irrigator who also said that he had had enough; he was going to sell his water allocation and then sell his property as a dryland farm. He is a young, progressive farmer—the sort of farmer we need for the future of New South Wales and Australia. He has had a gutful. He said that fixed charges were the last straw for him. In addition, he faced an unenviable situation last year that was forced on him by New South Wales Government decisions.

The Government announced that Murrumbidgee irrigators would have access to 17 per cent of their water. That young farmer worked out that he could grow a certain tonnage of corn and he forward contracted the crop based on that allocation. A month or two later, the Government announced that the allocation would be cut to 10 per cent. Now, 18 months later, that farmer is still in court and could be faced with paying a couple of hundred thousand dollars to wash out those contracts because of a decision that had nothing to do with him. That was entirely a decision made by the Government, which acknowledged that it made an error in calculating how much water was available. These are the real consequences of government decisions. For the Government to say that it cannot afford the $15 million required to waive fixed water charges across New South Wales for a year is nonsense. It easily found $25 million to delay the narrowing of Epping Road for the Lane Cove Tunnel operators to avoid fallout during the election campaign. If it could find that money, surely it can find $15 million for struggling irrigators in country New South Wales.

Mr JOHN WILLIAMS (Murray-Darling) [1.20 p.m.], in reply: I thank the Parliamentary Secretary and members representing the electorates of Barwon, Dubbo, Monaro and Murrumbidgee for their contributions. I state at the outset that I am not blaming the Government for the drought. I represent people who are in a very difficult situation. The Parliamentary Secretary mentioned the $25 million package given to irrigators and split between the Murrumbidgee and Murray valleys. General security water users have an opportunity not to use their full allocation; they can put the water they do not use into a bank—and it is as safe as a bank. Carryover water is like money in the bank.

At the beginning of the season, irrigators were allocated their carryover water. When a farmer knows what area he will farm, he starts preparing it by spreading fertiliser and seeds, and irrigating. However, the crop was planted and the Government said, "Sorry, but that absolutely guaranteed amount of water must be decreased." The farmer must then turn off irrigation cells and that investment in fertiliser, seed and water is lost, and the area under crop is reduced. The compensation package was purely to recognise that loss—no more no less—and I thought it was fair. Thankfully, most of the irrigators affected were compensated.

The Parliamentary Secretary also said that general security irrigators in the Murray irrigation area were given some general security allocation. Yes, they were. However, irrigators on a channel cannot run them in these circumstances, so they are isolated. They will not get the allocation because it will not come down the channel. They were able to put that water back into the marketplace, which was good—it gave them a few dollars for Christmas. However, ultimately, they could never access it. We have had a double drought and we are heading for a triple drought. I ask members to imagine watching a relative going downhill but still having the pride to try to hold his head up high only to be busted by this trap.

They have no alternative and they cannot irrigate their farms. Unless the drought is well and truly broken, they cannot go back to dryland farming either. Suddenly they receive a bill for $15,000 on top of their other bills, another $15,000 bill arrives and another one is coming this year. If it were the son, daughter or daughter-in-law of any member in this House he or she would be crying blue murder about their having to fork out $45,000 for nothing. They have not received a cracker. They have simply increased their debt by $45,000. The Government has provided some assistance with interest if that debt increases, but this cannot go on. When the drought is over they will still have the debt and they will have to service it. They will have to try to farm their way out of it, which will be very difficult.

Question—That the motion be agreed to—put.

The House divided.

Question resolved in the negative.

Motion negatived.

[Assistant-Speaker (Ms Alison Megarrity) left the chair at 1.32 p.m. The House resumed at 2.15 p.m.]