GROUNDWATER ENTITLEMENTS

Page: 76

Mr PETER DRAPER (Tamworth) [6.14 p.m.]: Today I raise a matter of serious concern regarding the cuts to groundwater entitlement for irrigators in the Namoi Valley and the issue of adequate compensation for that loss. If the current recommendations are adopted we will soon see irrigators leaving their farms and the decimation of a $400 million a year industry. Recently, irrigators in the Namoi Valley were informed of their new entitlement under the Achieving Sustainable Groundwater Entitlements [ASGE] program, confirming the recommendations to Minister Macdonald made by the Groundwater Adjustment Advisory Committee and the Namoi Catchment Management Authority [CMA]. These new entitlements cut the original allocations anywhere from 70 per cent to 90 per cent. This entitlement will be temporarily gazetted under the 1912 Water Act until implementation of the water sharing plan on 1 October this year.

The ASGE program builds on previous efforts to return groundwater to sustainability in the Namoi Valley. Under various titles, this process has dragged on laboriously for many years, and it now seems that the program will be completed quickly to allow irrigators to plan for their future. A number of critical issues remain before the water sharing plan can commence. These issues effectively disallow the stated positive outcomes for industry being sought through the ASGE program, namely, firstly, the recognition of a property right; secondly, the capacity to plan cropping rotations and forward market based on good resource knowledge; and, thirdly, creation of a tradable and easily valued right.

These are serious matters, and to date no response has been provided to the industry through the ASGE program. Following consultation with Namoi Water and local irrigators, I believe the following actions should be taken to resolve these critical issues. In regard to point one, the New South Wales Government is requested to issue a deed of offer with the payments made under the ASGE program, which should be viewed as compensation for lost access to the groundwater resource. I ask the New South Wales Government to reject attempts by the Commonwealth to have the deed of offer described as structural adjustment income assistance, as this allows the Commonwealth to recoup up to half of the payment in tax.

In regard to point two, reviews of sustainable yield should be implemented following the commencement of the Namoi groundwater water sharing plan, if required by irrigators in the relevant zone. It is also important that this review be conducted in accordance with a credible scientific process identified as appropriate by the Natural Resources Commission in New South Wales, and that the review be carried out under the auspices of the Namoi CMA and not the Department of Natural Resources. Elevations in sustainable yield must also be linked directly to elevations in entitlement holders' share of the resource within the water sharing plan. Water to be transferred from consumptive use to environmental use should be identified through transparent scientific processes and be acquired according to the principles of just terms acquisition.

On point three, the Government was asked to consider that committees be established immediately in each groundwater zone to discuss hotspot management issues or areas of over extraction. I am pleased to say that Minister Macdonald has agreed to this request, and the first meeting of these committees will be held shortly. The recent news of entitlement cuts confirmed the worst fears of many. For example, the Billinghams, who are lucerne producers located in zone 12 in the Kelvin area, are facing the loss of 84 per cent of their current entitlement. Such a large cut will force them from the land, and I am not exaggerating. They will be unviable, yet they are to receive a pittance for compensation resulting from their loss of entitlement, especially when one considers that they have spent over $600,000 on their property to develop a sustainable lucerne business within the framework of a 73 per cent cut that many Government officials had indicated they should expect.

There also remains the critical issue of compensation for loss of entitlement, which I have attempted to address through the Water Management Amendment (Water Property Rights Compensation) Bill 2006 that I introduced earlier this year. That legislation will guarantee compensation under the Land Acquisition (Just Terms Compensation) Act 1991 for the compulsory acquisition of water access licences and for any reduction in water entitlement. This will give irrigators financial security by allowing water to be viewed as an asset when applying for finance using the water component of their property as collateral. The Federal Member for New England, Tony Windsor, has called on the Commonwealth Government to amend the Income Tax Assessment Act so that payments for loss of entitlement are recognised as compensation, not income. Farmers have met the challenge of sustainability and they contribute substantially to the Namoi Valley economy. The State and Federal governments must offer irrigators fair just terms compensation to give them security of tenure, as well as provide them with the capacity to forward plan based on sound scientific study. I urge the Government to consider this issue carefully before we see the decimation of what has been an excellent industry in the local area.

Private members' statements noted.

[Madam Acting-Speaker (Ms Saliba) left the chair at 6.19 p.m. The House resumed at 7.30 p.m.]

Proof, NSW Legislative Assembly Hansard, 30 August 2006, article 42.