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An address to the
BankSA 'Trends' Business Luncheon
by the
Federal Minister for the Environment and Heritage
Senator the Hon Robert Hill

7 May 2001


(Check against delivery)

The Prime Minister was in South Australia recently for the historic signing of the documents to seal the creation of the Alice Springs to Darwin rail link.

While it may have been a long time coming, this $1.3 billion project is a further vote of confidence in the South Australian economy - an economy which has undergone a significant regeneration over the past 8 years under the State Liberal Government. .

The State's debt burden has been cut by around 60 per cent, the State's economy grew at a remarkable rate of 3.6 per cent last year, new business has been attracted, unemployment is down, and exports continue to grow. .

The Howard Government has played its role in this economic resurgence by providing sound economic management at national level, delivering four consecutive Budget surpluses, reducing Commonwealth debt, and delivering a low interest rate/low inflation environment for business to operate in. .

We have also financially supported major infrastructure projects such as the Heysen Tunnel and the extension of the Adelaide Airport runway which will help South Australia achieve its economic potential. We also, of course, retain a strong commitment to the continued presence of a viable and competitive motor vehicle and car component manufacturing industry in this State. .

Airport runways, roads, tunnels and railways are the physical capital required to deliver continued economic prosperity. .

But South Australia is a State which has traditionally relied on exports of primary produce as the foundation of its economy. The importance of this sector continues today with South Australia being both the nation's leading grain producer and the nation's leading wine producer and exporter. .

So the continued economic prosperity of this State will rely just as heavily on our natural capital - in particular our soils and fresh water - as it will on physical infrastructure. And just as we need to make wise investments and timely decisions to maintain our physical capital, so too must we make similarly prudent decisions to sustain our natural capital. .

In this regard, South Australian industry is part of a global challenge. The world faces the task of providing for an ever-increasing population from an ever-decreasing natural resource base. .

Already industries have taken up the challenge of increasing their levels of production while decreasing their impact on the natural environment. Along the way they have discovered that reducing waste and resource use delivers better bottom-line profits. .

So wise use of our natural capital need not come at the expense of company profits or economic growth. In fact it is the only long term guarantee of continued, sustainable prosperity. This is a lesson which is just as relevant to primary producers in rural Australia as it is to manufacturing industries in our major cities. .

Last month the National Land and Water Resources Audit released its assessment of Australian water resources. The report revealed that of the water diverted for use from Australia's rivers, on average only 77 per cent actually reaches the customer with the remainder lost to seepage or evaporation. So on average, about one in every four litres of water taken from our rivers for primary production is lost. I can think of no other industry which would tolerate such a high rate of wastage of its most valuable production input. .

Even more alarmingly, the assessment reported that in some cases that rate of loss could be as high as almost sixty per cent. With the ever-increasing demands for water, including the use of water for environmental flows, this situation can no longer be tolerated. .

South Australia does face substantial challenges in effectively managing its natural resources, particularly in regard to dryland salinity, and of course in managing our primary source of water, the Murray River. .

Again, we are not alone in this regard. .

The Murray Darling Basin is our nation's most important agriculture region, accounting for around 41 per cent of the nation's gross value of agricultural production. Perhaps more importantly, its rivers provide drinking water for more than 3 million people, more than a third of whom live outside of its borders. .

But this once mighty river system is under significant stress. .

The scientific evidence of this has been apparent for some time now. The Murray Darling Basin Commission's Salinity Audit in 1999 sounded the warning that within two decades Adelaide's major source of drinking water may not pass World Health Organisation standards on two days out of every five. .

More recently, the Water Resources Assessment I have mentioned confirmed that water extractions from the Murray Darling Basin are beyond sustainable limits. This audit also showed that the Lower Murray recorded nutrient, phosphorous, nitrogen and turbidity levels that exceeded water quality guidelines. Salinity readings exceeded the audit's water quality levels at monitoring stations from all of the State's river basins. .

The Australian Dryland Salinity Assessment, released at the same time, indicated the extent of deterioration of soil quality within the Basin. It predicted that the area of land affected by salinity within South Australia's portion of the basin would increase by 50 per cent in the next 20 years. Groundwater modelling suggests that earlier vegetation clearance in the Mallee will cause salinity to increase dramatically over the next 50 years. Scientists warn that the increases will be of such a magnitude as to bring the concentration of salts up to a level where the water can be toxic to fruit trees and grapevines. This represents a major threat to our State's primary producers. Even in a best case scenario, it would involve millions of dollars in additional costs each year for water treatment processes. .

As a South Australian speaking to an Adelaide audience, it is only natural that I canvass the consequences for our State of allowing the decline of this river system to continue. .

But the scientific reports I have referred all point to growing problems throughout the Murray Darling Basin - an area which crosses the boundaries of four States. .

In Victoria, one third of rivers and streams are rated as being in a poor or very poor condition. .

In New South Wales, levels of phosphorous in most inland rivers exceed management targets while the frequency, size and persistence of blue-green algal blooms have increased over the past 30 years. .

In Queensland, more than 70 per cent of the water that once flowed down the Balonne River to the internationally-recognised Narran Lakes wetlands in New South Wales has now been diverted for irrigation purposes, placing the ecological future of the wetlands at severe risk. .

There can be no question that urgent action to repair the damage we have done is not just local politics but indeed a matter of the highest national interest. .

And there have already been successes. .

The Commonwealth, through the Natural Heritage Trust, has invested almost $280 million for work under the Murray Darling 2001 Initiative and natural resource projects throughout the basin. .

The Murray Darling Basin Commission has provided a world-recognised model for the coordinated management of this river system and has had significant success in addressing the issue of salinity associated with irrigation practices. These successes are set to continue with the most recent meeting of the Murray Darling Basin Ministerial Council approving funding of $60 million to further address salinity through a joint State/Commonwealth work program. The Council has also approved an integrated catchment management policy and has, for the first time, set end of river salinity targets to improve our capacity to better manage salinity across the Basin. Further work is now being done to develop targets for riparian health, terrestrial biodiversity and soil quality. These targets are necessary to ensure an integrated approach to sustainably managing the entire river system. .

The Prime Minister's National Action Plan for Salinity and Water Quality also provides a vehicle for improved outcomes in the Murray-Darling. Through the plan $1.4 billion will be targeted to works within 20 priority catchment areas - almost half of which fall within the Murray Darling Basin. It is pleasing that South Australia was quick to sign up to the plan and to commit significant funding to match Commonwealth contributions. To date, only two States have signed up leaving serious doubts over the commitment of States such as Western Australia and New South Wales to this national challenge. .

We have also begun to address the question of what environmental flows are needed and at which times to keep the river system healthy. The Commonwealth has earmarked $75 million as part of the corporatisation process for the Snowy Mountains Power Scheme to be used to fund increased environmental flows for the Murray. .

What is now required is to determine on the best available science how best to spend that money - that is, what actions are required to deliver short and medium term water flow changes required to restore the health of key areas of the system, particularly the lower Murray and the Coorong Lakes. .

Twelve months ago the Murray Darling Basin Commission undertook to provide a range of options to the Ministerial Council for its meeting in March of this year. It confirmed this in writing to the Council late last year. .

Regrettably it was unable to meet its own deadline leaving the issue unresolved at this stage. The Council now expects to receive the Commissions technical advice on options for increased environmental flows and water quality at its October meeting.

Given the sense of urgency surrounding the debate on the future of the Murray, any further delay in reaching a position where the Council can make meaningful decisions about the river systems future would run the risk of undermining public confidence in both the Commission and the Council. .

Restraining unsustainable water diversions is obviously critically important. .

The acceptance in 1995 by all States except Queensland of the need to cap extractions of water from the Murray-Darling was a useful and prudent first step in dealing with this debate. The capping of extractions at 1993/94 levels was only ever intended to be a precautionary move to prevent further damage to the system while further scientific analysis was done.

But in the years since, pressure has mounted for increased diversions from the river while at the same time the scientific evidence has been mounting that we need to consider taking less water from the system. .

In New South Wales, for example, an independent audit has shown that the cap is being exceeded in the Barwon-Darling and also in the Gwydir River. .

This situation has also not been helped by Queensland's refusal to play its part. When other States signed up to the cap, Queensland refused saying it would not accept a cap until it had completed water allocation management plans for its key rivers. .

Queensland has consistently failed to meet its own deadlines for finalisation of these plans. Meanwhile diversions from its rivers have escalated at an alarming and unsustainable rate. For example, off-stream storages in the Condamine-Balonne more than tripled in the period between 1993/94 and 1999 while total annual diversions almost doubled. .

The Beattie Government's latest promise is that it will finalise its cap by the middle of this year. The test will then be whether the cap is set at a sustainable level because clearly many of the options canvassed under Queensland's water allocation management plans are unsustainable and will not prevent further degradation of river eco-systems. .

As I said earlier, the science is indicating that in a national perspective capping diversions at 1993/94 levels may not be sufficient to maintain the health of the system. .

Given the rapid expansion in diversions in Queensland since that time it is difficult to see how the current Queensland position is any way consistent with the wise management of natural resources. .

It is consistent, however, with the Beattie Government's approach to the other key natural resource management issue confronting the Murray Darling Basin - the issue of excessive landclearing. .

Part of the cause of the problems we now face can be found in the astonishing fact that we have cleared an estimated 15 billion trees from the Murray Darling Basin since European settlement. .

This has led to increased dryland salinity and increased salinity in our rivers. .

It is incomprehensible that with everything we now know about the effects of excessive clearance of native vegetation, Queensland continues to refuse to implement responsible land management practices. .

Under the Beattie Government, land clearing has accelerated to record levels with up to 450,000 hectares being stripped of native vegetation each year. Of particular concern is the fact that an estimated 40 per cent of this clearing takes place within the Murray Darling Basin. .

This is in direct contravention of undertakings given by the Queensland Government to achieve no net loss of native vegetation by the middle of this year. Queensland is now massively in default of this commitment. .

While land management remains a State issue, the Commonwealth does have the capacity to play a role in bringing about better practices. .

For example, the Commonwealth does have a specific legislative responsibility for the protection of endangered species and threatened ecological communities under the Environment Protection and Biodiversity Conservation Act. .

The State's endorsed this responsibility through the COAG process in 1997. .

As a result of Queensland's failure to halt unregulated landclearing, I recently moved to include this practice as a threatening process under the EPBC Act. Clearly it is threatening to endangered species and vegetation communities. .

At the same time I listed five ecological communities under the same Act as being endangered from a national perspective. .

These decisions were made solely on the basis of independent expert advice provided by the Commonwealth Threatened Species Scientific Committee in terms of the Commonwealth legislation. .

We are now working cooperatively with farming organisations to ensure the effective implementation of these latest listings. .

Every other mainland State has implemented land clearing controls. Where compensation has been paid to affected landholders it has been without Commonwealth financial support. .

South Australia took this course of action back in the mid-1980s and paid around $80 million in compensation to landholders. .

The situation in Queensland has become so serious in national terms that the Commonwealth has for the first time offered to provide financial support for a compensation package for landholders, provided the Queensland Government will in return guarantee a better environmental outcome through setting and enforcing a cap on land clearing rates. .

The Prime Minister wrote to Premier Beattie in November of last year committing the Commonwealth to providing assistance. .

Despite this unprecedented offer, six months later Queensland appears to be no closer to introducing these controls. .

This is despite both the major agricultural groups in Queensland - Agforce and the Queensland Farmers Federation - publicly stating their willingness to negotiate the details of a land clearing cap, including compensation. .

If anything Mr Beattie appears to be becoming even further removed from the reality of the situation. .

In a statement quoted in the media last week Mr Beattie stated the Prime Minister "must offer at least $103 million in Commonwealth assistance with no strings attached." .

In other words his position on land clearing is unchanged - Queensland will accept Commonwealth taxpayers' money but will not provide a guarantee of a better environmental through the setting of a cap. .

While the Howard Government's offer remains on the table, the Commonwealth cannot hand over large sums over taxpayers' funds without an assurance that it will deliver a better outcome in terms of greenhouse, biodiversity conservation, and prevention of soil degradation. .

As I said earlier, it is the national interest which must drive our efforts toward the sustainable use of our natural capital. .

The national interest demands that we strike a balance between satisfying the legitimate economic aspirations of current generations while protecting our natural capital for the use and prosperity of future generations. .

Our farming community through grassroots movements such as Landcare has acknowledged that it has made mistakes in the past and is committed to repairing the damage. .

While most of our present problems were caused by a lack of understanding of how land management practices were impacting on our unique natural systems, there is also an ever-growing understanding within rural Australia that we cannot afford to repeat the mistakes of the past. .

The Commonwealth has shown it is prepared to support this move toward more sustainable land management practices through programs such as the Natural Heritage Trust and the National Action Plan on Salinity and Water Quality. .

The funding provided by these programs reflects our belief that better land management provides not only a benefit to farmers but a broader public good. .

Finally, I stress that this debate does not, as has been suggested in some quarters, come down to a conflict between farmers in one State versus environmentalists in another. .

One could easily fall into the same trap by suggesting it's a conflict between farmers in South Australia versus farmers in the eastern States. Or a conflict in New South Wales between grain growers, cotton farmers and rice farmers. .

Setting this issue up as a conflict between different parties will do nothing to resolve the problems. .

The decisions we face in the coming months will require a unity of purpose among all stakeholders within the Murray Darling Basin. .

Put simply, the natural system doesn't recognise State boundaries or differentiate between water users. .

The only thing we can be sure of is that if we don't act now to protect and restore the environmental health of our rivers and lands, we will all be the losers.

Commonwealth of Australia