Bernardi, Sen Cory (The ACTING DEPUTY PRESIDENT)

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ) (17:00): In accordance with the usual practice and with the concurrence of the Senate the government responses will be incorporated in Hansard. The responses read as follows— Government response to the Senate Finance and Public Administration References Committee Report on the Medicare Funding for Hyperbaric Oxygen Treatment Recommendation Response Recommendation 1 Noted The committee recommends that The decision to remove funding for Hyperbaric Oxygen Therapy the Government continue Medicare (HBOT) for non-diabetic wounds from the Medicare Benefits Benefits Schedule interim funding Scheme (MBS) is consistent with the Government's commitment to for Hyperbaric Oxygen treatment evidence based decision making. As noted within the Dissenting for Report, the applicants for HBOT services have been provided with non-diabetic wounds until the opportunities spread over a decade, to meet the criteria for ongoing current randomised control trial is completed and assessed by the Medicare funding and have been unsuccessful on all three occasions. Medical Services Advisory Continuation of MBS funding even for the purpose of supporting Committee. service provision while a randomised control trial (RCT) is conducted may not provide any clearer evidence for Medical Service Advisory Committee's (MSAC's) consideration. The MBS is not a vehicle for public funding of clinical research. Public funding for clinical research is provided principally though the National Health and Medical Research Council (NHMRC). Recommendation 2 Noted The committee recommends that In February 2010, the then Minister for Health and Ageing, the Hon an independent review process be established for decisions by the Nicola Roxon, and the then Minister for Finance and Deregulation, the Hon Lindsay Tanner, publicly released the Report of the Review Medical Services Advisory of Health Technology Assessment in Australia („the HTA Review'), Committee using a similar and announced the government's acceptance of 13 (of 16) approach to the independent review of the Pharmaceutical Benefits recommendations. Advisory Committee. The HTA Review suggested that "all processes align their review processes with a set of shared principles. These principles could include: Whenever possible, encourage resolution informally. The review should be limited to considering information provided as part of the initial application. The review process should not create any opportunities for sponsors or others to manipulate the system. It would be better to encourage a re-submission with a more favourable case for listing than to stagnate in a review process over a less favourable case. The results of independent reviews should be provided back to the primary committee responsible for providing advice to the Minister, to enable re-consideration of the original matter. As review mechanisms can be resource intensive, reducing resources available for HTA of other new technologies, it may be reasonable for an appropriate fee to be charged where a sponsor seeks a review". In line with the HTA Review's recommendations, the decision to remove funding for HBOT for non-diabetic wounds from the MBS has already gone through a number of informal review mechanisms including review by the NHMRC. The applicants have also been encouraged to re-submit when new evidence is available. Government response to the Senate Finance and Public Administration References Committee Report on the Medicare Funding for Hyperbaric Oxygen Treatment Conclusions of Dissenting Report The Dissenting Report supports the decision to withdraw Medicare funding for HBOT for non-diabetic wounds. It was the view of the dissenting Senators that: the decision is consistent with the Government‟s commitment to evidence based decision making; the department has gone out of its way to assist the applicants, including the special review by the National Health and Medical Research Council and other follow-up activities; interim funding has been provided for around a decade to enable new evidence to be obtained to determine if HBOT for non-diabetic wounds can meet the effectiveness test, but such evidence still has not been provided; and even though a new trial is underway, it does not appear to provide a reasonable prospect of better evidence Government Response to Dissenting Report The Government notes and agrees with the conclusions of the Dissenting Report. Government Response Joint Select Committee on Gambling Reform: Fourth Report; and Community Affairs Legislation Committee of the Senate Inquiries into the National Gambling Reform Bill 2012 and related bills The Australian Government (the Government) welcomes the opportunity to respond to thesereports and recognises the important work of both the Parliamentary Joint Select Committee on Gambling Reform, and the Community Affairs Legislation Committee of the Senate (together referred to as 'the Committees'). The Government has responded in full to the two inquiry reports in one combined response. Where recommendations differ between reports, this has been identified in the response. The Government released exposure drafts of the national gambling reform legislation for comment and consultation on 17 February 2012. Extensive consultations were conducted with industry groups, manufacturers, the community sector and state and territory governments in the development of the draft legislation. As a result of these consultations and prior to the introduction of the bills into the Parliament, amendments to the draft bills were made. The Government was pleased to introduce the National Gambling Reform Bill 2012 and related matters bills into the Parliament on 1 November 2012. The legislation was then referred to the Committees for inquiry and report. As a result of recommendations made by the Committees, in conjunction with consultations with other stakeholders, the Government made a number of amendments to the legislation. The Member for New England, Mr Tony Windsor MP also proposed amendments to the legislation which were supported by the Government. Following debate in both Houses of the Parliament, the legislation with amendments was passed by the Parliament on 29 November 2012. The National Gambling Reform Act 2012 and related matters Acts commenced on 11 and 12 December 2012, after receiving Royal Assent. The National Gambling Reform Act 2012 and related matters Acts deliver on the Government's commitment to reduce the harm caused by gaming machines to problem gamblers, and to the families, friends and communities of problem gamblers and those at risk of developing gambling problems, as announced on 21 January 2012. This legislation represents the first time that a national government has legislated to help tackle problem gambling. The reforms in the Acts will help those who may have problems with gambling take control of their gambling behaviour and take back control of their lives. Main report - Recommendations Government Response Recommendation 1 The committee recommends that the ban on the use of biometrics be included as an issue for the Productivity Commission to consider in its review of assessment of progress in complying with the requirements around pre‑commitment. Agree The Government amended the legislation so that this issue will be examined by the Productivity Commission as part of the scope of the Productivity Commission's review of other matters, in line with the recommendation of the Committee. This appears in the National Gambling Reform Act 2012 in paragraph 194(1)(b). Recommendation 2 The committee recommends that the linking of pre-commitment to loyalty schemes be included as an issue for the Productivity Commission to consider in its review of assessment of progress in complying with the requirements around pre-commitment. Agree The Government amended the legislation so that this issue will be examined by the Productivity Commission as part of the scope of the Productivity Commission's review of other matters, in line with the recommendation of the Committee. This appears at paragraph 194(1)(c) of the National Gambling Reform Act 2012. Recommendation 3 The committee recommends that the issue of whether there are grounds for further exemptions for smaller venues in regional and remote areas should be included as an issue for the Productivity Commission to consider in its review of assessment of progress in complying with the requirements around pre-commitment. Agree The Government understands that small hotel and club venues, many in regional areas, are not the same as big gaming venues. In recognition of this, the Government amended the legislation to provide longer implementation timeframes for all venues. Venues with between 11 and 20 gaming machines have an additional four years (until 2022) to implement pre‑commitment technology. This accounts for around 26 per cent of venues nationally. Venues with more than 20 machines (around 48 per cent nationally) will have until 2018 to implement pre‑commitment technology. Small venues with 10 machines or fewer (around 26 per cent nationally) will be able to implement these changes as they replace their gaming machines. This will remove any upfront implementation costs for these venues. The Government does not want to see small gaming machine venues disadvantaged. The Government amended the legislation so that this issue will be examined by the Productivity Commission as part of the scope of the Productivity Commission's review of other matters, in line with the recommendation of the Committee. This appears in the National Gambling Reform Act 2012 in paragraph 194(1)(e). Recommendation 4 The committee recommends that the government develop an appropriate national education and social marketing campaign for voluntary pre-commitment and work with industry to develop training for staff. Agree in principle Education within gaming venues will be an integral component of initiatives to support the introduction of the Government's gambling reforms, including pre‑commitment. The Government recognises the importance of encouraging player take up of pre‑commitment, and how this can be achieved through various methods, including interactions between venue staff and players. In January 2012, the Government made a commitment to improving training for staff in gaming venues. The Australian Government will work with state and territory governments to review and update responsible gambling training in all jurisdictions. This will include a particular focus on staff interaction with players in a pre‑commitment system. Recommendation 5 The committee recommends that the members of the ATM Industry Reference Group be given until the end of 2013 to implement the $250 daily withdrawal limit on ATMs in gaming machine premises should the government believe such an extension would assist with the transition. Agree The Government acknowledges that implementation timeframes were compressed due to delays in securing parliamentary support for the legislation. The automatic teller machine (ATM) industry raised the need for 12 months lead time to implement the $250 per day withdrawal limit. The Government agrees with the recommendation of the Committee to provide additional time to implement ATM withdrawal limits. Section 14 of the National Gambling Reform Act 2012 was amended by the Government, extending the application date of this legislative provision to 1 February 2014, giving the industry over 12 months to implement the $250 limit. Recommendation 6 The committee recommends that the issue of including EFTPOS transactions in the $250 per day ATM withdrawal limit be considered by the Productivity Commission in its review of assessment of progress in complying with the requirements around the ATM withdrawal limits. Agree The National Gambling Reform Act 2012 does not include a withdrawal limit for electronic funds transfer at point of sale (EFTPOS) withdrawals. However, the Government has amended the legislation so that this issue will be examined by the Productivity Commission as part of the scope of the Productivity Commission's review of other matters, in line with the recommendation of the Committee. This appears in the National Gambling Reform Act 2012 in paragraph 194(1)(d). Recommendation 7 The committee recommends that the Australian Gambling Research Centre should, as a priority, conduct a national prevalence study of problem gambling to establish baseline data (using best practice screening tools) that will enable comparison between jurisdictions and will include as many at risk groups as possible. For consideration by the AGRC The National Gambling Reform Act 2012 establishes the Australian Gambling Research Centre (AGRC) as an independent national centre for gambling policy research and evaluation. The AGRC is established in section 196 of the Act. Although the research agenda of the AGRC may align with government policy work, this will be determined by the Director of the AGRC and remain independent from government. However, future research may include the conduct of a national prevalence study of problem gambling. The AGRC aims to provide a forum for experts to shape and inform the direction of gambling research in Australia. In this way, the research agenda will also be shaped by an Expert Advisory Group on Gambling, with membership by appointment of the Director of the AGRC. Under the Act, appointments must only be made if the Director is satisfied the person has relevant expertise and satisfies the Director's terms and conditions of appointment. Recommendation 8 The committee recommends that the bills be passed. Agree The National Gambling Reform Act 2012 and related matters Acts were passed, with amendments, on 29 November 2012. The legislation received Royal Assent on 11 and 12 December 2012. Joint Select Committee Chair's Additional Comments - Recommendations Government Response Recommendation 1 I recommend that the independence of members of the expert advisory group from the interests of the gambling industry should be a pre‑requisite for appointment. In addition, researchers should be required to declare any existing or previous funding or relationships with the gambling industry, including publishing the details of such relationships. For consideration by the AGRC The National Gambling Reform Act 2012 establishes the AGRC as an independent national centre for gambling policy research and evaluation. Section 197 of the Act establishes an Expert Advisory Group on Gambling. Members of the Expert Advisory Group on Gambling will be appointed by the Director of the AGRC. Under the Act, appointments must only be made if the Director is satisfied the person has relevant expertise and satisfies the Director's terms and conditions of appointment. The Government agrees that appropriate mechanisms should be put in place to promote transparency around research findings. Recommendation 2 I recommend that the government take action to ensure that the funding for the Australian Gambling Research Centre is increased to be a more realistic figure and that it makes explicit publicly that the funding is ongoing. Disagree The AGRC will be an independent national centre for gambling policy research and evaluation, funded by the Government at a level required for the AGRC to undertake the functions outlined in the legislation. The AGRC will be adequately funded by the Government, with approximately $1.5 million allocated per annum to establish and run the Centre, commencing 1 July 2013. Coalition members' dissenting report - Recommendations Government Response Recommendation 1 Coalition committee members recommend that the different technical situations in jurisdictions, which will directly affect timelines and costs for implementation, be taken into consideration by moving the timelines from the legislation to the regulations to allow greater flexibility and more time. Community Affairs Legislation Committee Coalition members' dissenting report Recommendation 1 Coalition Senators recommend that to ensure full successful implementation, timelines for implementation are incorporated in the regulations and not in the legislation thus reflecting the pre-existing technical variations between jurisdictions. Disagree The timelines for implementing the requirements were considered in detail, through extensive consultations conducted on the exposure draft of the legislation with industry, state and territory governments and interested stakeholders. All timelines in the National Gambling Reform Act 2012 were extended through amendments. For example, the Government amended the Act to provide venues with between 11 and 20 gaming machines an additional four years (until 2022) to implement pre‑commitment technology. This accounts for around 26 per cent of venues nationally. The Government also amended the Act to give venues with more than 20 machines (around 48 per cent nationally) until 2018 to implement pre‑commitment technology. The Act was amended to allow small venues with 10 machines or fewer (around 26 per cent nationally) to implement these changes as they replace their gaming machines. In addition, section 14 of the Act was amended by the Government, extending the application date of the ATM withdrawal limit to 1 February 2014, giving the industry over 12 months to implement the $250 limit. Recommendation 2 Coalition committee members recommend that existing pre‑commitment systems that meet the minimum requirements specified in the legislation should be recognised as compliant as quickly as possible in order to provide regulatory certainty for venues. Community Affairs Legislation Committee Coalition members' dissenting report Recommendation 2 Coalition Senators recommend that existing pre-commitment systems that already meet minimum requirements proposed in the bill be automatically recognised as compliant to assist in delivering regulatory certainty to some gaming premises. Agree in principle The Government has intentionally not been prescriptive about particular systems or technologies in the legislation to provide flexibility for industry to choose systems that suit their particular operating environment. Instead the National Gambling Reform Act 2012 sets out the broader functionality to be satisfied in order for a system to be approved. This approach also allows for new systems to be developed over time, in addition to those currently available, providing greater compatibility with future technology and opportunities for innovation. The Australian Government is undertaking consultations with state and territory government regulators and industry to inform regulations specifying additional functionalities and system based requirements. These regulations will provide industry with the certainty required to operate in the new regulatory environment, while allowing continued flexibility around pre-commitment systems. However until these regulations take effect, pre-commitment systems cannot be approved and recognised as compliant with the requirements contained in these regulations. Recommendation 3 Coalition committee members recommend that further consultation with industry take place to ensure the timelines proposed in the bill can take further consideration of the ability of smaller venues, those in regional and rural areas and those in financial distress to comply with the requirements. This should include the suggestions put forward by industry and the placement of deadlines in regulations. Community Affairs Legislation Committee Coalition members' dissenting report Recommendation 3 Coalition Senators recommend that Government undertake more targeted consultation to address the concerns of some gambling premises regarding the implementation of the bill ' s measures. This consultation should specifically address the needs of smaller venues and those in regional and rural areas that may be more financially marginal operations, and make proposals to ameliorate the time and cost pressures of implementing measures proposed by the bill. Agree in part The Government recognised the concerns of industry during consultations on the exposure draft of the legislation, in particular, that small hotel and club venues, especially those in regional areas, are not the same as big gaming venues. Consequently, the National Gambling Reform Act 2012 was amended by the Government to provide longer implementation timeframes for all venues. Venues with between 11 and 20 gaming machines have an additional four years (until 2022) to implement pre‑commitment technology. This accounts for around 26 per cent of venues nationally. Venues with more than 20 machines (around 48 per cent nationally) will have until 2018 to implement pre‑commitment technology. Small venues with 10 machines or fewer (around 26 per cent nationally) will be able to implement these changes as they replace their gaming machines. Additionally, the National Gambling Reform Act 2012 was amended by the Government to have the Productivity Commission consider further exemptions for small venues in regional and remote areas as part of the review of other matters. This is detailed in paragraph 194 (1)(e) of the Act. Recommendation 4 Coalition committee members recommend that there should be a lead time of not less than 12 months from the date of the bills passing parliament for the proposed daily withdrawal limit to apply. Agree The Government acknowledges that implementation timeframes were compressed due to delays in securing parliamentary support for the legislation. The ATM industry also raised the need for 12 months lead time to implement the $250 per day withdrawal limit. The National Gambling Reform Act 2012 was amended by the Government to provide additional time to implement ATM withdrawal limits. This measure will commence on 1 February 2014, giving the industry more than 12 months to implement the limit from the time of the enacting of the legislation. Recommendation 5 Coalition committee members recommend that measures around ATM use targeted specifically to help problem gamblers, such as lowering their daily withdrawal limits and/or the use of self-exclusion ATMs, should be pursued in preference to causing inconvenience to all patrons. However, if implemented, the proposed daily limit should be increased to at least $400 to take account of the issues raised by industry. Community Affairs Legislation Committee Coalition members' dissenting report Recommendation 4 Coalition Senators recommend the daily withdrawal limit for ATMs be raised from $250 to $400 and that attention be given to use of self-exclusion mechanisms on ATMs for problem gamblers. Disagree The Government has considered the points raised by industry around alternative measures to limit ATM withdrawals for problem gamblers, specifically the use of self-exclusion on ATMs. Advice to the Government is that the technology for self-exclusion on ATMs does not currently exist, and that there is no evidence indicating that this tool would be effective in minimising harmful gambling behaviour. The Government supports the recommendation of the Productivity Commission to prescribe an ATM daily withdrawal limit of $250 in gaming venues, as this limit could help address gambling harms without unduly affecting most patrons of clubs and hotels. The Productivity Commission found that nearly 85 per cent of ATM withdrawals in hotels and clubs are already less than $250 per card per day. The withdrawal limit does not apply to EFTPOS which will continue to be available to patrons. Recommendation 6 Coalition committee members recommend that the bills not be passed in their current form. Community Affairs Legislation Committee Coalition members' dissenting report Recommendation 5 Coalition Senators recommend that the bills not be passed in their current form. Disagree The National Gambling Reform Act 2012 and related matters Acts were passed, with amendments, on 29 November 2012. The legislation received Royal Assent on 11 and 12 December 2012. Dissenting Report by Senator Xenophon - Recommendations Government Response Recommendation 1 : That the bills not be passed unless amended to include provisions for the implementation of maximum $1 bets and hourly losses of $120 on all gaming machines in Australia. Disagree The Government does not support the implementation of a $1 bet limit on all gaming machines. The Government's technical advice on $1 bet limits and other low intensity parameters is that as a harm minimisation measure, it is not as simple and affordable as some have suggested. The National Gambling Reform Act 2012 implements a pre‑commitment system, a key recommendation of the Productivity Commission. Recommendation 2 : That there be a plebiscite to be held at the next Federal Election to determine the will of the Australian people on the maximum $1 bet and $120 hourly loss recommendation of the Productivity Commission. Disagree The Government has enacted Australia's first national legislation to tackle problem gambling, including a staged, evidence-based pathway to pre‑commitment. Pre‑commitment was recommended by the Productivity Commission as it assists players in making their own choices about how much they can afford to lose on gaming machines, and stick to these limits. Australian Greens Additional Comments—Recommendation (Joint Select Committee only) Government Response Recommendation 1 That the Australian Gambling Research Centre should prioritise research into the effectiveness and cost of implementing national bet limits on poker machines in Australia. For consideration by the AGRC The AGRC will be an independent national centre for gambling policy research and evaluation, and established within an independent statutory agency. Although the research agenda of the AGRC may align with government policy work, it will be set by the Director of the AGRC and will remain independent from government. Australian Government response to the Senate Environment and Communications References Committee report: Sustainable management by the Commonwealth of water resources The Australian Government welcomes the Senate Environment and Communications References Committee's final report for the inquiry Sustainable Management by the Commonwealth of Water Resources. The final report was presented on 7 October 2010. The report made four recommendations. The Government's response to each of these recommendations is set out below. Following these responses is the Government's response to one recommendation for the Government in the minority report by Independent Senator Nick Xenophon. On 13 September and 1 November 2012, the Minister for Water, the Hon Tony Burke MP made suggestions for changes to the Proposed Basin Plan under section 44(1) of the Water Act 2007 . The suggestions have taken full account of the recommendations from jurisdictions, parliamentary committees and community meetings. The final Basin Plan was signed into law by the Minister on 22 November 2012 and tabled in the Parliament on 26 November 2012. Government Response to t he Committee Report Recommendation 1 The government should prepare an annual report of the Sustainable Rural Water Use and Infrastructure Program, detailing projects completed, in progress and planned, including for each project information on costs and timelines, water savings, and the share of water savings dedicated to the environment, extractive uses or other purposes. Agree in principle. The Government will report on progress under the Sustainable Rural Water Use and Infrastructure Program annually commencing with a report for the 2012-13 financial year. Recommendation 2 The government should commit to making community impact statements for Commonwealth water purchases from each sub region of the Murray Darling Basin. Agree in principle. The Australian Government supports the principle of examining the impact of water reform at a regional level, and considers this is being addressed through work of the Murray-Darling Basin Authority (the MDBA) and the Department of Sustainability, Environment, Water, Population and Communities (SEWPaC). The MDBA has commissioned detailed economic modelling of the impacts of Basin water reform. This modelling indicates the Basin Plan will have a modest impact on food production at the Basin level, with the Government investment under the 'Water for the Future' initiative substantially offsetting the impacts of reduced water availability. This modelling is discussed in more detail in the Basin Plan Regulation Impact Statement, released in November 2012, and the report Socioeconomic Analysis and the Draft Basin Plan, published by the MDBA in May 2012. These reports are available from the MDBA website. These reports are complemented by a recently released survey of more than 500 people who participated in the Commonwealth's water purchase program. The survey showed the water purchase program was seen to be beneficial for 80 per cent of those surveyed, the majority of proceeds from water sales are spent within the local region and almost all who exited farming found alternative local employment, or retired in their local community. The report can be downloaded from SEWPaC's website: http://www.environment.gov.au/water/publications/mdb/survey-seller-rtb-program.html The Government will continue to monitor the impact of Basin water reform on the Basin economy and food production. This will be supported by the regular monitoring and evaluation reports required by the Basin Plan, in particular the requirement for reports into the effect of the Basin Plan on social, economic and environmental outcomes. Recommendation 3 The Commonwealth should fund a structural adjustment package, based on the needs identified by community impact statements, for communities affected by reduced water availability resulting from the Commonwealth ' s water buyback system. Agree in principle. The former Minister for Regional Australia, the Hon Simon Crean MP, announced $100 million of Federal Government funding for community-driven economic diversification projects in the Basin which will assist Basin communities to adjust to a future with more sustainable water use. Recommendation 4 The Commonwealth with the states and territories should give priority to developing a more efficient and transparent water market, including setting best practice standards or regulations for water brokers or intermediaries. Agreed in principle. The Australian Government is pursuing a number of initiatives to improve the performance of water markets. The Government is working with Basin states to reform barriers to water trade, facilitate the introduction of appropriate water market regulation and develop a National Water Market System (NWMS) that will improve management of water registries, transactions and market information. Basin states have also agreed to implement, and report on, faster processing of water trades. A key initiative of the NWMS is the Common Registry System (CRS). The Government is progressing the first phase with the selected Implementation Partner. The Government introduced water market rules and three sets of water charge rules under the Water Act 2007to reduce barriers to trade and promote greater rigor, transparency and consistency in the way charges for rural water infrastructure services and water planning, and management activities are levied across the Basin. The Basin Plan contains rules, known as water trading rules, specifically for the trade or transfer of tradable water rights in relation to Basin water resources. The Government will undertake a Council of Australian Governments (COAG) Regulation Impact Statement (RIS) to examine options to regulate the conduct of water market intermediaries. The RIS process will examine a number of options and will include stakeholder consultation. Government Response to the Minority Report b y Independent Senator Xenophon Recommendation That there is an immediate full federal takeover of the Murray-Darling Basin to ensure that there is a uniform and consistent approach to water licences in the Basin. Disagree. The Water Act 2007 as amended extends Commonwealth management of the Murray‑Darling Basin (the Basin) to new levels. The Government will use the powers it now has to ensure good management of the Basin. Australian Government Response to the Environment and Communications Legislation Committee inquiry into: Water Amendment (Long-term Average Sustainable Diversion Limit Adjustment) Bill 2012 [Provisions] Water Amendment (Water for the Environment Special Account) Bill 2012 [Provisions] The Australian Government welcomes the Senate Environmental and Communications Legislation Committee ' s report for the inquiry, Water Amendment (Long-term Average Sustainable Diversion Limit Adjustment) Bill 2012 [Provisions] and the Water Amendment (Water for the Environment Special Account) Bill 2012 [Provisions] which was presented on 28 November 2012. The report made four recommendations, with a further five by Senator Nick Xenophon. The Government's response to each of these recommendations is set out below. The final Basin Plan was signed into law by the Minister on 22 November 2012 and tabled in the Parliament on 26 November 2012. Recommendation 1 The committee recommends that the Adjustment Mechanism bill as amended in the House of Representatives on 30 October 2012 be passed. Agreed. This Bill was passed by the Parliament on 21 November 2012. Recommendation 2 The committee recommends that the words ' up to ' are removed from paragraph 86AA(3)(b) of the Special Account bill. Agreed. The Government introduced amendments to this Bill to clarify the outcomes to be achieved by funds in the Special Account. These amendments removed the words 'up to'. The House of Representatives agreed to these amendments on 28 November 2012. Recommendation 3 The committee recommends that the Special Account bill is amended to include the intended outcomes listed by the minister in his second reading speech. Agreed. The Government introduced amendments to this Bill to include the Minister's intended outcomes Recommendation 4 Subject to the preceding recommendations, the committee recommends that the Special Account bill be passed. Agreed. The Government welcomes the support of the Committee. Senator Xenophon Recommendation Clause 86AA(3)(b) of the Water Amendment (Water for the Environment Special Account) Bill 2012 be amended so as to ensure 450 gigalitres is a minimum amount rather than a maximum amount to be returned to the environment. Disagreed. The Government is committed to acquiring 450GL of additional water for the environment. The Government has amended this Bill to reflect that commitment by removing the words 'up to'. Recommendation Clause 88AD of the Water Amendment (Water for the Environment Special Account) Bill 2012 be amended to ensure that funding priority is given to projects with maximum guaranteed water returns to the system within the shortest timeframe, taking into account social and economic factors, as well as early adopters of water efficiency measures. Disagreed. In relation to the use of funds from the Special Account, the Government is committed to acquiring additional water for the environment in a way that maintains or improves social and economic outcomes for Basin communities. It is the Government's intention that these funds will be targeted primarily at on-farm irrigation efficiency projects which return greater volumes of water per dollar than off-farm efficiency projects while maintaining productive capacity at the farm gate scale. Recommendation Urgent modelling is undertaken to establish the comparative efficiencies of irrigation communities in the Murray-Darling Basin to ensure fair treatment of irrigators. Disagreed. Funds will be allocated on a competitive basis to those projects that deliver the greatest volume of socio-economically neutral water at least cost. Recommendation Clause 86AD(2)(a) of the Water Amendment (Water for the Environment Special Account) Bill 2012 be amended to include projects in Research and Development or projects using emerging technologies and to acknowledge and reward early adopters of water efficiency measures. Disagreed. Funds will be allocated on a competitive basis to those projects that deliver the greatest volume of socio-economically neutral water at least cost. Recommendation The Water Amendment (Water for the Environment Special Account) Bill 2012 be amended to require the ANAO conduct an audit of the Special Account after the first year of operation, the third year of operation, and every three years after that, with specific attention to: The financial performance of the account; The projects funded under the account, and the robustness of the funding process; The performance of these projects in relation to the outcomes under 86AA; Any related matters. Agreed in principle. The Special Account is subject to public annual performance based reporting. The Government has also amended the Bill to include a requirement for two reviews to be conducted by an independent panel into the adequacy of program design and sufficiency of funds in the Special Account to acquire 450GL and remove key constraints. These reviews will occur by 30 September in 2019 and 2021. As with all Government programs, the Special Account is subject to financial reporting and ANAO audit. Australian Government response to the Senate Rural and Regional Affairs and Transport References Committee report: Management of the Murray-Darling Basin system: Second interim report: The Basin Plan MARCH 2013 The Australian Government welcomes the Senate Rural and Regional Affairs and Transport References Committee's second interim report for the inquiry Management of the Murray-Darling Basin system—the Basin Plan which was presented on 3 October 2012. The report made eight recommendations, with a further seven each by the Australian Greens, and Senator Xenophon respectively. The Government's response to each of these recommendations is set out below. On 6 August 2012, the Murray-Darling Basin Authority (MDBA) released the altered Proposed Basin Plan, taking into account the views of the Murray-Darling Basin Ministerial Council. On 13 September and 1 November 2012, the Minister for Water, the Hon Tony Burke MP made suggestions for changes to the Proposed Basin Plan under section 44(1) of the Water Act 2007. The suggestions have taken full account of the recommendations from jurisdictions, parliamentary committees and community meetings. The final Basin Plan was signed into law by the Minister on 22 November 2012 and tabled in the Parliament on 26 November 2012. Recommendation 1 The committee recommends that the Murray-Darling Basin Authority (MDBA) publicly release a succinct, non-technical explanation of the assumptions used to develop the 2750 gigalitres per year (GL/y) figure. Agree. The Murray-Darling Basin Authority (MDBA) has published a range of documents that explain the assumptions used to develop the 2750 gigalitres (GL) per year figure, including the following: Delivering a Healthy Working Basin, Chapter 4, pages 20–34; Frequently asked question: How did you determine the limits on water use?; Fact sheet—The proposed environmentally sustainable level of take for surface water of the Murray–Darling Basin; Proposed Basin Plan consultation report (s43 report), May 2012, p37–39; and The Basin Plan Regulation Impact Statement, November 2012, Chapter 4 . The above documents are in addition to the detailed explanations in the document The proposed 'environmentally sustainable level of take' for surface water of the Murray– Darling Basin: Method and outcomes, November 2011, and the document, Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Recommendation 2 The committee recommends that the MDBA consider modelling several alternative scenarios other than the 2750 GL/y. All relevant results (including the allocation of different water types) from any modelling must be publically released. The CSIRO must be commissioned to review the effectiveness of any scenario to reach the Water Act's required ecological outcomes. Finally, the socio-economic impacts of any scenario must be independently modelled and the results publicly released. Agree. The MDBA has modelled the scenarios of 2400 GL, 2800 GL and 3200 GL with the present operating constraints. The results of this modelling were published by the MDBA in The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes (MDBA 2011), available on the MDBA's website. The MDBA has also modelled the 2800 GL and 3200 GL scenarios with key constraints relaxed. Results indicated the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling was published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. In conjunction with this hydrological modelling, the MDBA also commissioned modelling of the social and economic impacts of water recovery of 2400 GL and 3200 GL. The outcomes of this modelling are summarised in the report Socioeconomic Analysis and the Draft Basin Plan, published by the MDBA in May 2012 and the Basin Plan Regulation Impact Statement, released by the MDBA in November 2012. These reports and the detailed modelling are available on the MDBA's website. In June 2011, the CSIRO was invited to lead a team of experts to review the MDBA's methods to determine the Environmentally Sustainable Level of Take (ESLT). The report, Science review of the estimation of an environmentally sustainable level of take for the Murray–Darling Basin (Young WJ, Bond N, Brookes J, Gawne B and Jones GJ 2011), is available on the MDBA's website. Recommendation 3 The committee recommends that the MDBA publicly release a succinct, non-technical explanation of its climate change projections and the resulting effects to each Basin catchment's water harvesting potential. This should also include considerations of forest interception of water in the modelling for the return of water to the Murray-Darling Basin system. Agreed in part. The MDBA is a partner of the South Eastern Australian Climate Initiative (SEACI). SEACI has produced two succinct, non-technical explanations of climate change projections at the Basin scale, with the final report, Climate and water availability in south-eastern Australia: A synthesis of findings from Phase 2 of the South Eastern Australian Climate Initiative, released on 21 September 2012. The Basin Plan (section 6.06(3)) requires that future reviews of the Basin Plan should give further consideration to the management of climate change risks and consider all relevant knowledge about the connectivity of surface and groundwater. The MDBA has taken into consideration forest interceptions in developing SDLs for the Basin Plan. The Basin Plan (Section 4.03(3)(h)(i)) provides that the MDBA must have regard to improve knowledge of the impact of interception activities and land-use change on Basin water resources. Under section 10.24 and 10.25, Basin states must also monitor the impact of significant interception activities in their jurisdiction, and identify actions to be taken if that interception activity compromises meeting the environmental objectives of the Basin Plan. Recommendation 4 The committee recommends that the Government commit immediate resources to addressing the information gaps in scientific knowledge in surface and ground water connectivity particularly in the Murray-Darling Basin. Agree in principle. The Australian Government considers it has, and continues to commit significant resources to increasing scientific knowledge. The Government has undertaken, commissioned and/or consulted on significant quantities of scientific work, utilising various respected and expert sources. Information gaps in scientific knowledge, particularly in respect of Basin connectivity, do not require the further commitment of "immediate resources" beyond the significant commitment the Government continues to make in respect of this issue. The Basin Plan (section 6.06(1)) states the MDBA may conduct research and investigations into aspects of the work underpinning SDLs or other aspects of the Basin Plan. This work may inform future reviews and will allow the MDBA to address information gaps in scientific knowledge in surface and groundwater connectivity. Recommendation 5 The committee recommends that the MDBA further articulate the reasoning for the changes in groundwater SDLs that have occurred over the various iterations of the Basin Plan. This should include details of all individual resource units and the aggregate for the Basin. Agree. The MDBA has publicly detailed the changes to groundwater SDLs over the various iterations of the Basin Plan. The following explanatory documents have been published: The proposed Groundwater Baseline and Sustainable Diversion Limits: methods report provides the general reasons for changes between the Guide and the November 2011 version of the draft Basin Plan. Importantly, this document provides a baseline for subsequent changes; The Addendum to the proposed Groundwater Baseline and Sustainable Diversion Limits: methods report provides the basis for the revision made between the November 2011 and May 2012 versions of the draft Basin Plan. This revision was largely a response to submissions on the draft Basin Plan as well as consultation with Basin states and advice from groundwater experts; and The Proposed Basin Plan consultation report released in May 2012 provides an explanation of Basin scale changes to groundwater SDLs from the November 2011 to May 2012 versions of the draft Basin Plan. In developing groundwater extraction limits for the Basin Plan, the MDBA has worked with groundwater experts from organisations including the CSIRO and hydrogeology associations. A recharge risk assessment method, originally developed by CSIRO for the MDBA, has been applied where numerical groundwater models have not been available. The same modelling and risk assessment methods have been applied to determine groundwater SDLs in each iteration of the Basin Plan, and these will continue to be applied to any future proposals and assessments relating to adjusting groundwater limits. The Basin Plan (section 6.06) allows for a review of specified groundwater baseline diversion limits (BDLs) and SDLs in NSW and Victoria within two years of commencement of the Basin Plan. The MDBA also intends to conduct research and investigations by 2015 in the Northern Basin, including the basis for the surface and groundwater SDLs, drawing on community input from relevant local bodies. Recommendation 6 The committee recommends that the MDBA clearly and publicly explain whether the 2750 GL/y target, and any subsequently modelled targets, meet the water requirements of key environmental assets and key ecosystem functions which are set out in the Basin Plan and required by the Water Act 2007 and to what extent they are met. Agree. The MDBA has explained the results and anticipated environmental outcomes with respect to 2400, 2800 and 3200 GL per year water recovery amounts in the documents: The proposed ' environmentally sustainable level of take ' for surface water of the Murray–Darling Basin: Method and outcomes (November 2011); Hydrologic modelling to inform the proposed Basin Plan: Methods and results (February 2012); and Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (September 2012). The Water Act 2007 does not identify, nor require the identification of, key environmental assets or key ecosystem functions in the Basin Plan. The Basin Plan does not set out key environmental assets and key ecosystem functions; rather it specifies management objectives and outcomes to be achieved by the Basin Plan. The Basin Plan requires the states to develop watering plans that identify priority environmental assets and ecosystem functions and their watering requirements (consistent with objectives and criteria contained in the Basin Plan). The MDBA has released modelling for 3200 GL and 2800 GL scenarios after key constraints in the system had been relaxed. The modelling indicated relaxing constraints provides some benefits at 2800 GL, while the removal of constraints at 3200 GL significantly increased environmental benefits, including the meeting of 17 out of 18 key indicator targets, compared to 13 targets met without the removal of constraints. The Basin Plan requires the MDBA to prepare a Constraints Management Strategy within 12 months of the Basin Plan commencing, in close consultation with Basin jurisdictions. Further, the MDBA must annually give a report to the Murray Darling Basin Ministerial Council on progress on the matters covered by the strategy. Recommendation 7 The committee recommends that the MDBA clearly and publicly explain the socio-economic impacts of the 2750 GL/y target and any subsequently modelled targets. Agree. The MDBA has made public the documents The Socio-economic implications of the proposed Basin Plan, published May 2012, Socioeconomic Analysis and the Draft Basin Plan, published November 2011, and the Basin Plan Regulation Impact Statement, published in November 2012,whichprovide a detailed explanation of the independent socio-economic modelling undertaken for the water recovery scenarios of 2400 GL, 2800 GL and 3200 GL. These reports are available from the MDBA's website. Recommendation 8 The committee recommends that when the final Basin Plan is being implemented that the Government introduce support programs for Basin communities that are disproportionately affected by reduced water entitlements. Agree. The former Minister for Regional Australia, the Hon Simon Crean MP, announced $100 million of Commonwealth Government funding for community-driven economic diversification projects in the Basin which will assist Basin communities to adjust to a future with more sustainable water use. This is in addition to the already substantial funding commitments to reduce the possible impacts of the Basin Plan, particularly by investing over $12 billion in assisting irrigators and communities to adjust to a future with less water. The Government's investments in more efficient irrigation infrastructure form the bulk of this funding and will help place irrigators, irrigation industries and communities on a better footing to deal with reduced water availability. The SDL adjustment mechanism will also assist in reducing the impacts of water reform, by allowing Basin states to develop projects, such as environmental works and measures, that deliver the environmental outcomes required by the Basin Plan but with less water. It will also support the Government's objective of recovering additional environmental water through projects that maintain or improve social and economic impacts. In addition, implementation of SDLs will not take effect until 2019, providing more time for communities to adapt. Australian Greens: Recommendation The Australian Greens recommend that the MDBA model several alternative scenarios above 2750 GL/y including 4000 GL/y and above, with major system constraints removed. All relevant results (including the allocation of different water types) from the modelling must be publically released. The CSIRO must be commissioned to review the effectiveness of each scenario to satisfy the Water Act's required ecological outcomes. Agreed in part. The MDBA has modelled the 2800 GL and 3200 GL scenarios with key constraints relaxed. Results indicated the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling were published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. Recommendation The Constraints Management Strategy should be provided to Parliament for consideration prior to the tabling of the final Basin Plan by the Minister so that Parliament may make an informed decision. Disagree. The Basin Plan requires the MDBA to prepare a Constraints Management Strategy within 12 months of the Basin Plan commencing, in close consultation with Basin jurisdictions. Further, the MDBA must annually give a report to the Murray Darling Basin Ministerial Council on progress on the matters covered by the strategy. Recommendation The Basin Plan must set appropriate salinity targets and provide for a minimum annual allocation of environmental water for the Coorong, Lower Lakes and Murray Mouth including during dry periods. Agree in principle. The Basin Plan includes clauses that provide for appropriate salinity and water levels in the Coorong, Lower Lakes and Murray Mouth including during dry periods. Section 8.06(3) of the Basin Plan states that an overall objective for the protection and restoration of ecosystem functions of water dependent ecosystems is to protect and restore connectivity within and between water-depended ecosystems, including by ensuring that: 1. the Murray Mouth remains open at frequencies, for durations, and with passing flows, sufficient to enable the conveyance of salt, nutrients and sediment form the Murray‑Darling Basin to the ocean; and 2. the Murray Mouth remains open at frequencies, and for durations, sufficient to ensure that the tidal exchanges maintain the Coorong's water quality (in particular salinity levels) within the tolerance of the Coorong ecosystem's resilience; and Note: This is to ensure that water quality is maintained at a level that does not compromise the ecosystem and that hydrologic connectivity is restored and maintained. 3. as far as practicable, water levels in the Lower Lakes are maintained above 0.4 metres Australian Height Datum for 95 per cent of the time and as far as practicable maintain levels above 0.0 metres Australian Height Datum all of the time. The Government has committed funding to recover an additional 450 GL of water, including for the Coorong, Lower Lakes and Murray Mouth, through efficiency savings. Recommendation The Basin Plan should not increase groundwater extraction unless it can demonstrated on a case by case basis, with independent scientific assessment of connectivity and ecological outcomes, that the proposed increase in extraction is sustainable and justified. Agree. Changes to groundwater extraction limits should be addressed on a case-by-case basis to ensure any changes are sustainable and justified. In developing groundwater extraction limits for the Basin Plan, the MDBA has worked with groundwater experts from organisations including the CSIRO and hydrogeology associations. A recharge risk assessment method, originally developed by CSIRO for the MDBA, has been applied where numerical groundwater models have not been available. The same modelling and risk assessment methods have been applied to determine groundwater SDLs in each iteration of the Basin Plan, and these will continue to be applied to any future proposals and assessments relating to adjusting groundwater limits. The Basin Plan allows for a review of specified groundwater base line diversion limits (BDLs) and SDLs in NSW and Victoria within two years of commencement of the Basin Plan. The MDBA also intends to conduct research and investigations by 2015 in the Northern Basin, including the basis for the surface and groundwater SDLs, drawing on community input from relevant local bodies. Recommendation The Basin Plan must incorporate climate change modelling as forecast by the best available scientific data. Agreed in principle. Climate change science was taken into consideration in developing the Basin Plan. The MDBA is a partner of the South Eastern Australian Climate Initiative (SEACI). SEACI has produced two succinct, non-technical explanations of climate change projections at the Basin scale, with the final report, Climate and water availability in south-eastern Australia: A synthesis of findings from Phase 2 of the South Eastern Australian Climate Initiative, being released on 21 September 2012. The Basin Plan (section 6.06) requires that future reviews of the Basin Plan should give further consideration to the management of climate change risk and that the MDBA may conduct research and investigations into aspects of the work underpinning SDLs or other aspects of the Basin Plan. This work may inform future reviews of the Basin Plan and will allow the MDBA to address information gaps in scientific knowledge in surface and groundwater connectivity. Recommendation The adjustment mechanism should be structured to better accommodate the removal of constraints and to facilitate a future decrease in SDLs but not to facilitate any less water being returned to the river. Agree in part. The SDL adjustment mechanism guarantees a minimum level of environmental outcomes and provides a pathway for improved environmental outcomes in a way that works for communities. This will allow the amount of water for the environment to increase if projects are put forward that make irrigation more efficient and still maintain the social and economic outcomes of the Basin Plan. The Government has committed $1.77 billion over ten years from 2014 to relax priority river constraints and to provide for 450 GL of additional environmental water recovery without adverse social and economic impacts. Recommendation The adjustment mechanism should be altered to facilitate and encourage future buybacks where they are strategic and voluntary as buybacks are proven to be the most cost-efficient and secure manner of recovering water from consumptive use. Agreed in part. The Basin Plan provides for a SDL adjustment mechanism that provides greater flexibility in the volume of water recovered for the environment, while maintaining or improving social and economic outcomes. There is no single preferred method of recovering water for the environment using the adjustment mechanism, and any such water acquisition must be in accordance with the requirements of the criteria as set out in the Basin Plan. The role that water buybacks play in recovering water for the environment is outlined in the Commonwealth's draft Environmental Water Recovery Strategy. The Government's approach to water purchasing will also include a new program which integrates water purchasing with strategic opportunities to reconfigure inefficient or underutilised irrigation delivery infrastructure. If the volume of SDL offsets is less than 650 GL, any shortfall will be recovered between 2016 and 2019 using the approaches, outlined in the draft Environmental Water Recovery Strategy. Senator Xenophon: Recommendation The MDBA publicly release a non-technical explanation of the assumptions used to develop the 2750 GL/y. Agree. The MDBA has published a range of documents explaining the assumptions used to develop the 2750 GL per year figure, including the following: Document - Delivering a Healthy Working Basin, Chapter 4, pages 20–34; Frequently asked question -How did you determine the limits on water use?; Fact sheet - The proposed environmentally sustainable level of take for surface water of the Murray Darling Basin; Document -Proposed Basin Plan consultation report(s43 report), May 2012, p37–39; and The Basin Plan Regulation Impact Statement, November 2012, Chapter 4. The above documents are in addition to the more detailed explanations in the document The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes, November 2011, and the document, Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Recommendation The MDBA conduct urgent modelling of a number of figures above the 2750 GL/y figure, up to 4000 GL/y. This modelling must be publicly released with a both a technical and non-technical explanation and conducted in a timely manner. Agreed in part. The MDBA modelled the scenarios of 2800GL and 3200GL with the present operating constraints. The results of this modelling were published by the MDBA in The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes (MDBA 2011), available on the MDBA's website. The MDBA also modelled these scenarios with key constraints relaxed, and found the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling have been published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. Recommendation The Murray-Darling Basin Plan is delayed until such modelling is completed. Disagree. The MDBA has publicly detailed the results and anticipated environmental outcomes with respect to 2400, 2800 and 3200 GL per year water recovery amounts in the following documents, available on the MDBA website: The proposed ' environmentally sustainable level of take ' for surface water of the Murray–Darling Basin: Method and outcomes, (November 2011); Hydrologic modelling to inform the proposed Basin Plan: Methods and results (February 2012); and Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (September 2012). Further, the MDBA undertook and publicly released modelling for 3200 GL and 2800 GL scenarios after key constraints in the system had been relaxed. The modelling indicated relaxing constraints provides some benefits at 2800 GL, while the removal of constraints at 3200 GL significantly increased environmental benefits, including the meeting of 17 out of 18 key indicator targets, compared to 13 targets met without the removal of constraints. The Basin Plan was made on 22 November 2012. Recommendation The MDBA must urgently provide advice as to the methodology for the setting of the BDL. Agreed in part. The MDBA has already provided information about the methodology for the setting of the baseline diversion limits (BDL) in several reports, which are publicly available on the MDBA website. In addition, the MDBA has engaged the CSIRO and other independent experts to review the models and methodology used to determine BDLs. The MDBA acknowledges that further communication on this matter would be beneficial for the broader Basin community. Consequently, the MDBA is preparing a series of fact sheets which set out the methodology in clear and concise language. These fact sheets will be available on the MDBA's website in the near future. Further information and links to the relevant reports is set out below. These reports are all available on the MDBA website: Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Comparison of watercourse diversion estimates in the proposed Basin Plan with other published estimates . This document summarises and explains the main differences between the diversion estimates under baseline development conditions used in the draft Basin Plan and estimates published in the past. Independent review of models to assess their representation of the baseline conditions specified in the Basin Plan and estimating BDL. The models were assessed regarding their ability to generate a robust BDL estimate and how they represent BDL definition presented in the proposed Basin Plan. River system modelling for the Basin Plan assessment of fitness for purpose. The MDBA engaged CSIRO to conduct this assessment of the without-development and baseline models. This study found that the baseline models reliably represent the Basin at its current level of development. Recommendation Urgent modelling is undertaken to establish the comparative efficiencies of irrigation communities in the Murray-Darling Basin. The results of such modelling can be used to fairly determine Baseline Diversion Limits, and take into account such comparative efficiencies to ensure fair treatment of irrigators. Disagree. The approach used to determine the BDLs has been applied in a fair and equitable manner. The MDBA has adopted a consistent approach to defining and quantifying the BDLs across the Basin. These are set out in Schedule 3 of the Basin Plan. BDLs provide a common baseline against which the introduction of the requirements of the Basin Plan can be assessed. These requirements include the setting of SDLs. The BDLs reflect the water sharing arrangements that were in place in June 2009. In most cases the BDL reflects the diversion limit established under the Murray-Darling Basin cap arrangements, unless there is a state water resource plan that sets the limit lower than the cap. The consistent settings and assumptions for BDLs include: using the most up-to-date means of quantifying the baseline (typically using a model) using the same climate period (1895-2009) accounting for certain environmental water as outside the baseline (including the Living Murray and Water for Rivers), and adjusting for permanent trade to 30 June 2009. Recommendation Irrigators must receive recognition for their past water efficiencies. In the absence of any prior recognition for past water-saving efforts, the guidelines for the Sustainable Rural Water Use and Infrastructure Program and other similar programs should be amended to allow irrigators to apply for funding for research and development purposes. Disagree. The Australian Government recognises the initiative demonstrated by early adopters to improve rural water use efficiency, however the Sustainable Rural Water Use and Infrastructure Program (SRWUIP) does not provide funding to cover expenditure already incurred or committed. The argument of early adoption and efficiency is often linked to irrigators in South Australia. As at 31 January 2012, the Government had committed almost $1.6 billion under Water for the Future (which commenced in 2007-08) to South Australian projects, including major investments to improve ecological outcomes in the Coorong and Lower Lakes, as well as funding for irrigation-related projects (both on and off-farm) and the Adelaide Desalinisation Plant. Subject to due diligence, the total funding also includes up to $180 million from SRWUIP for the South Australian River Murray Improvements Program, as well as up to $85 million for research, development and industry redevelopment in regional South Australia. Recommendation The MDBA provide urgent evidence that the current market-based buyback approach will not distort the water and commodity market. In the absence of any available evidence, the MDBA conduct urgent modelling on the impact the market-based buyback approach will have on those who have not accessed funds under the Federal Government's $5.8 billion Sustainable Rural Water Use and Infrastructure Program and other similar programs. Agreed in part. In June 2011, the Government released a survey of more than 500 irrigators who had applied to sell or sold water to the Commonwealth between 2008-09 and late 2011. Almost 80 per cent of those interviewed said that selling water to the Commonwealth was a positive decision for them. The majority of proceeds from water sales are spent within the local region. Less than 5 per cent of survey respondents said that most of the money they had received from Commonwealth water sales had been spent outside their region. Almost all of those who sold their entitlement to the government and exited farming found alternative local employment, or retired in their local community. Entitlement holders are able to choose whether to participate in either, or both, of the Government's water buybacks, or Government programs investing in more efficient irrigation infrastructure. Australian Government response to the Senate Rural and Regional Affairs and Transport References Committee report: Management of the Murray-Darling Basin system: Second interim report: The Basin Plan The Australian Government welcomes the Senate Rural and Regional Affairs and Transport References Committee's second interim report for the inquiry Management of the Murray-Darling Basin system—the Basin Plan which was presented on 3 October 2012. The report made eight recommendations, with a further seven each by the Australian Greens, and Senator Xenophon respectively. The Government's response to each of these recommendations is set out below. On 6 August 2012, the Murray-Darling Basin Authority (MDBA) released the altered Proposed Basin Plan, taking into account the views of the Murray-Darling Basin Ministerial Council. On 13 September and 1 November 2012, the Minister for Water, the Hon Tony Burke MP made suggestions for changes to the Proposed Basin Plan under section 44(1) of the Water Act 2007. The suggestions have taken full account of the recommendations from jurisdictions, parliamentary committees and community meetings. The final Basin Plan was signed into law by the Minister on 22 November 2012 and tabled in the Parliament on 26 November 2012. Recommendation 1 The committee recommends that the Murray-Darling Basin Authority (MDBA) publicly release a succinct, non-technical explanation of the assumptions used to develop the 2750 gigalitres per year (GL/y) figure. Agree. The Murray-Darling Basin Authority (MDBA) has published a range of documents that explain the assumptions used to develop the 2750 gigalitres (GL) per year figure, including the following: Delivering a Healthy Working Basin, Chapter 4, pages 20–34; Frequently asked question: How did you determine the limits on water use?; Fact sheet—The proposed environmentally sustainable level of take for surface water of the Murray–Darling Basin; Proposed Basin Plan consultation report (s43 report), May 2012, p37–39; and The Basin Plan Regulation Impact Statement, November 2012, Chapter 4 . The above documents are in addition to the detailed explanations in the document The proposed 'environmentally sustainable level of take' for surface water of the Murray– Darling Basin: Method and outcomes, November 2011, and the document, Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Recommendation 2 The committee recommends that the MDBA consider modelling several alternative scenarios other than the 2750 GL/y. All relevant results (including the allocation of different water types) from any modelling must be publically released. The CSIRO must be commissioned to review the effectiveness of any scenario to reach the Water Act's required ecological outcomes. Finally, the socio-economic impacts of any scenario must be independently modelled and the results publicly released. Agree. The MDBA has modelled the scenarios of 2400 GL, 2800 GL and 3200 GL with the present operating constraints. The results of this modelling were published by the MDBA in The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes (MDBA 2011), available on the MDBA's website. The MDBA has also modelled the 2800 GL and 3200 GL scenarios with key constraints relaxed. Results indicated the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling was published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. In conjunction with this hydrological modelling, the MDBA also commissioned modelling of the social and economic impacts of water recovery of 2400 GL and 3200 GL. The outcomes of this modelling are summarised in the report Socioeconomic Analysis and the Draft Basin Plan, published by the MDBA in May 2012 and the Basin Plan Regulation Impact Statement, released by the MDBA in November 2012. These reports and the detailed modelling are available on the MDBA's website. In June 2011, the CSIRO was invited to lead a team of experts to review the MDBA's methods to determine the Environmentally Sustainable Level of Take (ESLT). The report, Science review of the estimation of an environmentally sustainable level of take for the Murray–Darling Basin (Young WJ, Bond N, Brookes J, Gawne B and Jones GJ 2011), is available on the MDBA's website. Recommendation 3 The committee recommends that the MDBA publicly release a succinct, non-technical explanation of its climate change projections and the resulting effects to each Basin catchment's water harvesting potential. This should also include considerations of forest interception of water in the modelling for the return of water to the Murray-Darling Basin system. Agreed in part. The MDBA is a partner of the South Eastern Australian Climate Initiative (SEACI). SEACI has produced two succinct, non-technical explanations of climate change projections at the Basin scale, with the final report, Climate and water availability in south-eastern Australia: A synthesis of findings from Phase 2 of the South Eastern Australian Climate Initiative, released on 21 September 2012. The Basin Plan (section 6.06(3)) requires that future reviews of the Basin Plan should give further consideration to the management of climate change risks and consider all relevant knowledge about the connectivity of surface and groundwater. The MDBA has taken into consideration forest interceptions in developing SDLs for the Basin Plan. The Basin Plan (Section 4.03(3)(h)(i)) provides that the MDBA must have regard to improve knowledge of the impact of interception activities and land-use change on Basin water resources. Under section 10.24 and 10.25, Basin states must also monitor the impact of significant interception activities in their jurisdiction, and identify actions to be taken if that interception activity compromises meeting the environmental objectives of the Basin Plan. Recommendation 4 The committee recommends that the Government commit immediate resources to addressing the information gaps in scientific knowledge in surface and ground water connectivity particularly in the Murray-Darling Basin. Agree in principle. The Australian Government considers it has, and continues to commit significant resources to increasing scientific knowledge. The Government has undertaken, commissioned and/or consulted on significant quantities of scientific work, utilising various respected and expert sources. Information gaps in scientific knowledge, particularly in respect of Basin connectivity, do not require the further commitment of "immediate resources" beyond the significant commitment the Government continues to make in respect of this issue. The Basin Plan (section 6.06(1)) states the MDBA may conduct research and investigations into aspects of the work underpinning SDLs or other aspects of the Basin Plan. This work may inform future reviews and will allow the MDBA to address information gaps in scientific knowledge in surface and groundwater connectivity. Recommendation 5 The committee recommends that the MDBA further articulate the reasoning for the changes in groundwater SDLs that have occurred over the various iterations of the Basin Plan. This should include details of all individual resource units and the aggregate for the Basin. Agree. The MDBA has publicly detailed the changes to groundwater SDLs over the various iterations of the Basin Plan. The following explanatory documents have been published: The proposed Groundwater Baseline and Sustainable Diversion Limits: methods report provides the general reasons for changes between the Guide and the November 2011 version of the draft Basin Plan. Importantly, this document provides a baseline for subsequent changes; The Addendum to the proposed Groundwater Baseline and Sustainable Diversion Limits: methods report provides the basis for the revision made between the November 2011 and May 2012 versions of the draft Basin Plan. This revision was largely a response to submissions on the draft Basin Plan as well as consultation with Basin states and advice from groundwater experts; and The Proposed Basin Plan consultation report released in May 2012 provides an explanation of Basin scale changes to groundwater SDLs from the November 2011 to May 2012 versions of the draft Basin Plan. In developing groundwater extraction limits for the Basin Plan, the MDBA has worked with groundwater experts from organisations including the CSIRO and hydrogeology associations. A recharge risk assessment method, originally developed by CSIRO for the MDBA, has been applied where numerical groundwater models have not been available. The same modelling and risk assessment methods have been applied to determine groundwater SDLs in each iteration of the Basin Plan, and these will continue to be applied to any future proposals and assessments relating to adjusting groundwater limits. The Basin Plan (section 6.06) allows for a review of specified groundwater baseline diversion limits (BDLs) and SDLs in NSW and Victoria within two years of commencement of the Basin Plan. The MDBA also intends to conduct research and investigations by 2015 in the Northern Basin, including the basis for the surface and groundwater SDLs, drawing on community input from relevant local bodies. Recommendation 6 The committee recommends that the MDBA clearly and publicly explain whether the 2750 GL/y target, and any subsequently modelled targets, meet the water requirements of key environmental assets and key ecosystem functions which are set out in the Basin Plan and required by the Water Act 2007 and to what extent they are met. Agree. The MDBA has explained the results and anticipated environmental outcomes with respect to 2400, 2800 and 3200 GL per year water recovery amounts in the documents: The proposed ' environmentally sustainable level of take ' for surface water of the Murray–Darling Basin: Method and outcomes (November 2011); Hydrologic modelling to inform the proposed Basin Plan: Methods and results (February 2012); and Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (September 2012). The Water Act 2007 does not identify, nor require the identification of, key environmental assets or key ecosystem functions in the Basin Plan. The Basin Plan does not set out key environmental assets and key ecosystem functions; rather it specifies management objectives and outcomes to be achieved by the Basin Plan. The Basin Plan requires the states to develop watering plans that identify priority environmental assets and ecosystem functions and their watering requirements (consistent with objectives and criteria contained in the Basin Plan). The MDBA has released modelling for 3200 GL and 2800 GL scenarios after key constraints in the system had been relaxed. The modelling indicated relaxing constraints provides some benefits at 2800 GL, while the removal of constraints at 3200 GL significantly increased environmental benefits, including the meeting of 17 out of 18 key indicator targets, compared to 13 targets met without the removal of constraints. The Basin Plan requires the MDBA to prepare a Constraints Management Strategy within 12 months of the Basin Plan commencing, in close consultation with Basin jurisdictions. Further, the MDBA must annually give a report to the Murray Darling Basin Ministerial Council on progress on the matters covered by the strategy. Recommendation 7 The committee recommends that the MDBA clearly and publicly explain the socio-economic impacts of the 2750 GL/y target and any subsequently modelled targets. Agree. The MDBA has made public the documents The Socio-economic implications of the proposed Basin Plan, published May 2012, Socioeconomic Analysis and the Draft Basin Plan, published November 2011, and the Basin Plan Regulation Impact Statement, published in November 2012,whichprovide a detailed explanation of the independent socio-economic modelling undertaken for the water recovery scenarios of 2400 GL, 2800 GL and 3200 GL. These reports are available from the MDBA's website. Recommendation 8 The committee recommends that when the final Basin Plan is being implemented that the Government introduce support programs for Basin communities that are disproportionately affected by reduced water entitlements. Agree. The former Minister for Regional Australia, the Hon Simon Crean MP, announced $100 million of Commonwealth Government funding for community-driven economic diversification projects in the Basin which will assist Basin communities to adjust to a future with more sustainable water use. This is in addition to the already substantial funding commitments to reduce the possible impacts of the Basin Plan, particularly by investing over $12 billion in assisting irrigators and communities to adjust to a future with less water. The Government's investments in more efficient irrigation infrastructure form the bulk of this funding and will help place irrigators, irrigation industries and communities on a better footing to deal with reduced water availability. The SDL adjustment mechanism will also assist in reducing the impacts of water reform, by allowing Basin states to develop projects, such as environmental works and measures, that deliver the environmental outcomes required by the Basin Plan but with less water. It will also support the Government's objective of recovering additional environmental water through projects that maintain or improve social and economic impacts. In addition, implementation of SDLs will not take effect until 2019, providing more time for communities to adapt. Australian Greens: Recommendation The Australian Greens recommend that the MDBA model several alternative scenarios above 2750 GL/y including 4000 GL/y and above, with major system constraints removed. All relevant results (including the allocation of different water types) from the modelling must be publically released. The CSIRO must be commissioned to review the effectiveness of each scenario to satisfy the Water Act's required ecological outcomes. Agreed in part. The MDBA has modelled the 2800 GL and 3200 GL scenarios with key constraints relaxed. Results indicated the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling were published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. Recommendation The Constraints Management Strategy should be provided to Parliament for consideration prior to the tabling of the final Basin Plan by the Minister so that Parliament may make an informed decision. Disagree. The Basin Plan requires the MDBA to prepare a Constraints Management Strategy within 12 months of the Basin Plan commencing, in close consultation with Basin jurisdictions. Further, the MDBA must annually give a report to the Murray Darling Basin Ministerial Council on progress on the matters covered by the strategy. Recommendation The Basin Plan must set appropriate salinity targets and provide for a minimum annual allocation of environmental water for the Coorong, Lower Lakes and Murray Mouth including during dry periods. Agree in principle. The Basin Plan includes clauses that provide for appropriate salinity and water levels in the Coorong, Lower Lakes and Murray Mouth including during dry periods. Section 8.06(3) of the Basin Plan states that an overall objective for the protection and restoration of ecosystem functions of water dependent ecosystems is to protect and restore connectivity within and between water-depended ecosystems, including by ensuring that: 1. the Murray Mouth remains open at frequencies, for durations, and with passing flows, sufficient to enable the conveyance of salt, nutrients and sediment form the Murray‑Darling Basin to the ocean; and 2. the Murray Mouth remains open at frequencies, and for durations, sufficient to ensure that the tidal exchanges maintain the Coorong's water quality (in particular salinity levels) within the tolerance of the Coorong ecosystem's resilience; and Note: This is to ensure that water quality is maintained at a level that does not compromise the ecosystem and that hydrologic connectivity is restored and maintained. 3. as far as practicable, water levels in the Lower Lakes are maintained above 0.4 metres Australian Height Datum for 95 per cent of the time and as far as practicable maintain levels above 0.0 metres Australian Height Datum all of the time. The Government has committed funding to recover an additional 450 GL of water, including for the Coorong, Lower Lakes and Murray Mouth, through efficiency savings. Recommendation The Basin Plan should not increase groundwater extraction unless it can demonstrated on a case by case basis, with independent scientific assessment of connectivity and ecological outcomes, that the proposed increase in extraction is sustainable and justified. Agree. Changes to groundwater extraction limits should be addressed on a case-by-case basis to ensure any changes are sustainable and justified. In developing groundwater extraction limits for the Basin Plan, the MDBA has worked with groundwater experts from organisations including the CSIRO and hydrogeology associations. A recharge risk assessment method, originally developed by CSIRO for the MDBA, has been applied where numerical groundwater models have not been available. The same modelling and risk assessment methods have been applied to determine groundwater SDLs in each iteration of the Basin Plan, and these will continue to be applied to any future proposals and assessments relating to adjusting groundwater limits. The Basin Plan allows for a review of specified groundwater base line diversion limits (BDLs) and SDLs in NSW and Victoria within two years of commencement of the Basin Plan. The MDBA also intends to conduct research and investigations by 2015 in the Northern Basin, including the basis for the surface and groundwater SDLs, drawing on community input from relevant local bodies. Recommendation The Basin Plan must incorporate climate change modelling as forecast by the best available scientific data. Agreed in principle. Climate change science was taken into consideration in developing the Basin Plan. The MDBA is a partner of the South Eastern Australian Climate Initiative (SEACI). SEACI has produced two succinct, non-technical explanations of climate change projections at the Basin scale, with the final report, Climate and water availability in south-eastern Australia: A synthesis of findings from Phase 2 of the South Eastern Australian Climate Initiative, being released on 21 September 2012. The Basin Plan (section 6.06) requires that future reviews of the Basin Plan should give further consideration to the management of climate change risk and that the MDBA may conduct research and investigations into aspects of the work underpinning SDLs or other aspects of the Basin Plan. This work may inform future reviews of the Basin Plan and will allow the MDBA to address information gaps in scientific knowledge in surface and groundwater connectivity. Recommendation The adjustment mechanism should be structured to better accommodate the removal of constraints and to facilitate a future decrease in SDLs but not to facilitate any less water being returned to the river. Agree in part. The SDL adjustment mechanism guarantees a minimum level of environmental outcomes and provides a pathway for improved environmental outcomes in a way that works for communities. This will allow the amount of water for the environment to increase if projects are put forward that make irrigation more efficient and still maintain the social and economic outcomes of the Basin Plan. The Government has committed $1.77 billion over ten years from 2014 to relax priority river constraints and to provide for 450 GL of additional environmental water recovery without adverse social and economic impacts. Recommendation The adjustment mechanism should be altered to facilitate and encourage future buybacks where they are strategic and voluntary as buybacks are proven to be the most cost-efficient and secure manner of recovering water from consumptive use. Agreed in part. The Basin Plan provides for a SDL adjustment mechanism that provides greater flexibility in the volume of water recovered for the environment, while maintaining or improving social and economic outcomes. There is no single preferred method of recovering water for the environment using the adjustment mechanism, and any such water acquisition must be in accordance with the requirements of the criteria as set out in the Basin Plan. The role that water buybacks play in recovering water for the environment is outlined in the Commonwealth's draft Environmental Water Recovery Strategy. The Government's approach to water purchasing will also include a new program which integrates water purchasing with strategic opportunities to reconfigure inefficient or underutilised irrigation delivery infrastructure. If the volume of SDL offsets is less than 650 GL, any shortfall will be recovered between 2016 and 2019 using the approaches, outlined in the draft Environmental Water Recovery Strategy. Senator Xenophon: Recommendation The MDBA publicly release a non-technical explanation of the assumptions used to develop the 2750 GL/y. Agree. The MDBA has published a range of documents explaining the assumptions used to develop the 2750 GL per year figure, including the following: Document - Delivering a Healthy Working Basin, Chapter 4, pages 20–34; Frequently asked question -How did you determine the limits on water use?; Fact sheet - The proposed environmentally sustainable level of take for surface water of the Murray Darling Basin; Document -Proposed Basin Plan consultation report(s43 report), May 2012, p37–39; and The Basin Plan Regulation Impact Statement, November 2012, Chapter 4. The above documents are in addition to the more detailed explanations in the document The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes, November 2011, and the document, Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Recommendation The MDBA conduct urgent modelling of a number of figures above the 2750 GL/y figure, up to 4000 GL/y. This modelling must be publicly released with a both a technical and non-technical explanation and conducted in a timely manner. Agreed in part. The MDBA modelled the scenarios of 2800GL and 3200GL with the present operating constraints. The results of this modelling were published by the MDBA in The proposed 'environmentally sustainable level of take' for surface water of the Murray–Darling Basin: Method and outcomes (MDBA 2011), available on the MDBA's website. The MDBA also modelled these scenarios with key constraints relaxed, and found the 3200 GL scenario with relaxed constraints could deliver increased environmental benefits. The outcomes of this further (relaxed constraints) modelling have been published by the MDBA in Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (MDBA 2012), which is available on the MDBA's website. Recommendation The Murray-Darling Basin Plan is delayed until such modelling is completed. Disagree. The MDBA has publicly detailed the results and anticipated environmental outcomes with respect to 2400, 2800 and 3200 GL per year water recovery amounts in the following documents, available on the MDBA website: The proposed ' environmentally sustainable level of take ' for surface water of the Murray–Darling Basin: Method and outcomes, (November 2011); Hydrologic modelling to inform the proposed Basin Plan: Methods and results (February 2012); and Hydrologic modelling of the relaxation of operational constraints in the southern connected system: Methods and results (September 2012). Further, the MDBA undertook and publicly released modelling for 3200 GL and 2800 GL scenarios after key constraints in the system had been relaxed. The modelling indicated relaxing constraints provides some benefits at 2800 GL, while the removal of constraints at 3200 GL significantly increased environmental benefits, including the meeting of 17 out of 18 key indicator targets, compared to 13 targets met without the removal of constraints. The Basin Plan was made on 22 November 2012. Recommendation The MDBA must urgently provide advice as to the methodology for the setting of the BDL. Agreed in part. The MDBA has already provided information about the methodology for the setting of the baseline diversion limits (BDL) in several reports, which are publicly available on the MDBA website. In addition, the MDBA has engaged the CSIRO and other independent experts to review the models and methodology used to determine BDLs. The MDBA acknowledges that further communication on this matter would be beneficial for the broader Basin community. Consequently, the MDBA is preparing a series of fact sheets which set out the methodology in clear and concise language. These fact sheets will be available on the MDBA's website in the near future. Further information and links to the relevant reports is set out below. These reports are all available on the MDBA website: Hydrologic modelling to inform the proposed Basin Plan: Methods and results. Comparison of watercourse diversion estimates in the proposed Basin Plan with other published estimates . This document summarises and explains the main differences between the diversion estimates under baseline development conditions used in the draft Basin Plan and estimates published in the past. Independent review of models to assess their representation of the baseline conditions specified in the Basin Plan and estimating BDL. The models were assessed regarding their ability to generate a robust BDL estimate and how they represent BDL definition presented in the proposed Basin Plan. River system modelling for the Basin Plan assessment of fitness for purpose. The MDBA engaged CSIRO to conduct this assessment of the without-development and baseline models. This study found that the baseline models reliably represent the Basin at its current level of development. Recommendation Urgent modelling is undertaken to establish the comparative efficiencies of irrigation communities in the Murray-Darling Basin. The results of such modelling can be used to fairly determine Baseline Diversion Limits, and take into account such comparative efficiencies to ensure fair treatment of irrigators. Disagree. The approach used to determine the BDLs has been applied in a fair and equitable manner. The MDBA has adopted a consistent approach to defining and quantifying the BDLs across the Basin. These are set out in Schedule 3 of the Basin Plan. BDLs provide a common baseline against which the introduction of the requirements of the Basin Plan can be assessed. These requirements include the setting of SDLs. The BDLs reflect the water sharing arrangements that were in place in June 2009. In most cases the BDL reflects the diversion limit established under the Murray-Darling Basin cap arrangements, unless there is a state water resource plan that sets the limit lower than the cap. The consistent settings and assumptions for BDLs include: using the most up-to-date means of quantifying the baseline (typically using a model) using the same climate period (1895-2009) accounting for certain environmental water as outside the baseline (including the Living Murray and Water for Rivers), and adjusting for permanent trade to 30 June 2009. Recommendation Irrigators must receive recognition for their past water efficiencies. In the absence of any prior recognition for past water-saving efforts, the guidelines for the Sustainable Rural Water Use and Infrastructure Program and other similar programs should be amended to allow irrigators to apply for funding for research and development purposes. Disagree. The Australian Government recognises the initiative demonstrated by early adopters to improve rural water use efficiency, however the Sustainable Rural Water Use and Infrastructure Program (SRWUIP) does not provide funding to cover expenditure already incurred or committed. The argument of early adoption and efficiency is often linked to irrigators in South Australia. As at 31 January 2012, the Government had committed almost $1.6 billion under Water for the Future (which commenced in 2007-08) to South Australian projects, including major investments to improve ecological outcomes in the Coorong and Lower Lakes, as well as funding for irrigation-related projects (both on and off-farm) and the Adelaide Desalinisation Plant. Subject to due diligence, the total funding also includes up to $180 million from SRWUIP for the South Australian River Murray Improvements Program, as well as up to $85 million for research, development and industry redevelopment in regional South Australia. Recommendation The MDBA provide urgent evidence that the current market-based buyback approach will not distort the water and commodity market. In the absence of any available evidence, the MDBA conduct urgent modelling on the impact the market-based buyback approach will have on those who have not accessed funds under the Federal Government's $5.8 billion Sustainable Rural Water Use and Infrastructure Program and other similar programs. Agreed in part. In June 2011, the Government released a survey of more than 500 irrigators who had applied to sell or sold water to the Commonwealth between 2008-09 and late 2011. Almost 80 per cent of those interviewed said that selling water to the Commonwealth was a positive decision for them. The majority of proceeds from water sales are spent within the local region. Less than 5 per cent of survey respondents said that most of the money they had received from Commonwealth water sales had been spent outside their region. Almost all of those who sold their entitlement to the government and exited farming found alternative local employment, or retired in their local community. Entitlement holders are able to choose whether to participate in either, or both, of the Government's water buybacks, or Government programs investing in more efficient irrigation infrastructure. Government Response Inquiry into the pricing and supply arrangements in the Australian and global fertiliser market Report of the Senate Select Committee on Agricultural and Related Industries The Australian Government welcomes the Senate Select Committee on Agricultural and Related Industries report into pricing and supply arrangements in the fertiliser market. The fertiliser industry is an important contributor to the Australian economy, underpinning much of our agricultural production. Fertiliser is a critical agricultural input. According to farm surveys data collected by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), in 2011-12 fertilisers represented 11 per cent of total cash costs for broadacre farms. The Australian Government notes that its role in fertiliser regulation is facilitative, with responsibility for regulation lying with the state and territory governments. The Australian Government will continue to work with the fertiliser industry and state and territory governments to ensure standards, specifications and labelling requirements for chemical fertilisers are consistent across Australia and support the safe and effective use of fertilisers in agriculture. The Australian Government also publishes information on fertilisers, including pricing, through the ABARES website. The ABARES annual Australian Commodity Statistics publication provides quarterly and annual international fertiliser price data and annual average prices paid by Australian farmers for a number of fertiliser types, as well as quarterly and annual fertiliser import volumes and values by state and generic fertiliser type. The Australian Government additionally promotes competition, fair trading practices, consumer protection and transparency in the market place, in particular through the provisions of the Competition and Consumer Act 2010 (CCA) (formerly the Trade Practices Act 1974). The Australian Government thanks the committee and the stakeholders who contributed to this report. Recommendation 1 The committee recommends that the states and territories should consider, as a matter of priority, adopting uniform description and labelling of fertiliser products to ensure consistency between jurisdictions. Noted The Australian Government notes that this recommendation is primarily for the consideration of state and territory governments as the jurisdictions responsible for regulation. The Australian Government supports a nationally consistent approach to fertiliser regulation. The Australian Government has engaged with state and territory governments and the fertiliser industry on fertiliser issues through the Primary Industries Standing Committee (PISC). In 2002 the PISC established a Fertiliser Working Group (FWG) which developed a policy framework to progress a nationally consistent approach to fertiliser regulation. The framework included the setting of a national standard for contaminants and the requirement that all fertiliser product labels contain accurate and nationally consistent information about the product and its use. As part of its involvement in the FWG, the Fertiliser Industry Federation of Australia (FIFA) developed a Code of Practice for Fertiliser Description and Labelling designed to harmonise these elements of fertiliser regulation across state jurisdictions. The code was circulated to all states and territories for comment and, following a number of revisions, was accepted by the FWG in March 2011. The code has yet to be considered by the PISC as progression of the COAG Agvet reform work has taken priority. The Australian Government understands that PISC consideration of the code is expected soon. Formal adoption by all states and territories is expected to follow PISC acceptance of the code. Recommendation 2 The committee recommends that all state and territory agriculture departments should consider undertaking regular sample testing for specified ingredient levels, such as nitrogen/phosphorus/potassium (NPK) levels, in fertiliser products. Noted The Australian Government notes that this recommendation is for the consideration of state and territory governments, with monitoring of specified ingredients being the responsibility of the states and territories. Consultation by the Australian Government with state and territory agricultural departments has indicated that the issue of specified ingredient levels is already addressed under the respective fair trading legislation of each state and territory. The state and territory department representatives also noted that the committee reported only a small number of instances where ingredient levels did not match the levels specified in the labels. The state and territory department representatives therefore suggested that these isolated incidents did not reflect a widespread problem nor warrant the imposition of regular testing. From the Australian Government perspective, consumers are protected from misleading or deceptive conduct and false or misleading representations under sections 18 and 29 of the Australian Consumer Law (ACL). The ACL is located in Schedule 2 of the CCA. The ACL is based on the consumer protection provisions of the former Trade Practices Act 1974 and draws on provisions in State and Territory fair trading laws. The ACL applies in all States and Territories and is administered jointly by the Australian Competition and Consumer Commission (ACCC) and the State and Territory fair trading agencies. Section 18 of the ACL prohibits a supplier from engaging in misleading or deceptive conduct or conduct that is likely to mislead or deceive. Section 29 of the ACL provides that a supplier must not falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use. The ACCC, consumers and competitors can bring legal action for breaches of the ACL. Additionally, the ACL contains a statutory guarantee that goods supplied to consumers by description must correspond with their description. Consumers and the ACCC can bring legal action to enforce this guarantee. Recommendation 3 The committee recommends that the Commonwealth review Part IV of the Trade Practices Act 1974 relating to restrictive trade practices with a view to amending these provisions of the Act so as to more effectively regulate anticompetitive practices and prevent abuse of market power. Noted The Australian Government notes the Committee's recommendation. The Government believes it is important that Australia's competition laws provide a strong, robust framework that guards against anti competitive conduct, but otherwise leaves businesses free to act as they see fit. The Government considers it unacceptable for businesses to engage in any conduct in breach of our competition or consumer laws. Since 2007, the Australian Government has made significant reforms to Australia's competition laws, including: Amendments to the prohibition on misuse of market power to strengthen the laws against predatory pricing by: clarifying that there is no need for a corporation to demonstrate that it can recoup its losses from predatory pricing; and, amending the definition of 'take advantage' to ensure that it was not interpreted unduly narrowly. Making it a crime to engage in serious cartel conduct—individuals and companies that fix prices or reduce choice by distorting competition now face some of the toughest penalties in the world for cartel behaviour, including jail terms for individuals. Clarifying the mergers and acquisitions provisions in relation to 'creeping acquisitions'. It is only after the laws have been suitably tested in the Courts that a review of current provisions should be considered. The Australian Competition and Consumer Commission (ACCC) has publicly stated that it is currently investigating claims regarding the potential misuse of market power and unconscionable conduct in other sectors of the economy which may provide further guidance as to the application of Australia's Competition and Consumer Act 2010 (CCA).1 Recommendation 4 The committee recommends that ABARES: collect and publish international input price information on fertiliser products on a regular basis on its website; and disseminate this information widely to farmers through the ABARES website, farmers' organisations, the rural press and other appropriate avenues. Agree in principle ABARES collects and publishes international and other input price information on fertiliser products on both a quarterly and annual basis. The Australian Government will ensure that this information continues to be presented in a timely and accessible fashion. ABARES' quarterly Australian Commodities publication contains an annual fertiliser index of prices paid by farmers, including a forecast for the year ahead. ABARES' annual Australian Commodity Statistics publication provides quarterly and annual international fertiliser price data and annual average prices paid by Australian farmers for a number of fertiliser types, as well as quarterly and annual fertiliser import volumes and values by state and generic fertiliser type. This information is available on the website. Subscribers to the website, including farmers and the rural press, have access to a range of data including the above fertiliser information. Subscription is free. Recommendation 5 The committee recommends that in the interests of transparency the industry improve its business practices to ensure that fertiliser companies: publish general information, including arrival of shipments, detailing the amount of fertiliser available in stock; and provide greater certainty in the filling of orders, especially orders for fertiliser products placed earlier in the season. Agree in principle The Australian Government considers the publication of general fertiliser stock information, including arrival of shipments, to be a business decision for individual organisations. With reference to the recommendation that fertiliser companies provide greater certainty in the filling of orders, the Australian Government notes section 36 of the ACL prohibits a supplier from accepting payment for goods where there are reasonable grounds—of which the supplier is aware or ought to be aware—for believing that it will not be able to supply the goods within the period that the supplier has specified or within a reasonable time. Like the other provisions of the ACL, this prohibition applies in all States and Territories. Recommendation 6 The committee recommends that, wherever possible, supply agreements between suppliers and customers be more structured and equitable, and, where appropriate, include standard contractual terms and conditions. Agree in principle The Australian Government considers the content and structure of fertiliser supply agreements to be a matter for individual companies and their clients provided the agreements do not breach the CCA. The Australian Government currently provides general protection for consumers in their dealings with business through the ACL including through its provisions prohibiting unconscionable conduct and voiding unfair contract terms in standard form consumer contracts. The government notes the role of the ACCC in providing guidance to consumers and businesses about fair trading. In particular, the Australian Government notes the ACCC's general guidance for consumers entering into contracts, which is available on the ACCC website. The Australian Government strongly encourages businesses and consumers who believe the ACL may have been breached to contact the ACCC. _____________ 1Sims, R. Current ACCC priorities Australia Israel Chamber of Commerce, Western Australia, Business Leaders Lunch (13 September 2012).