Transcript of Speech: 2015 Lower Murray Forum



28 April 2015

Langhorne Creek, South Australia

Thank you Mayor Parkes and all the mayors in attendance. My good friend and colleague Adrian Pederick. It's always great to be in Langhorne Creek. Usually it's Langhorne Creek on a Friday for the Winemakers' Lunch. I'll be back here twice in a week Barry, so that's a KPI for the year.

It is great to be here talking about what has been a very important issue for the whole time I've been the Member for Mayo—nearly seven years now. When I was first running for Mayo back in 2008, the dominant issue of course at the time was the health of the lower lakes and the condition of the Murray-Darling Basin through mismanagement and a combination of a very dry period, when the lower lakes were in a real crisis point, particularly in 2008 and then early 2009. And it has been terrific to see over the last three or four years the return to some semblance of health in the Lower Lakes from the combination of better management, I think; the lessons learned over a period of time and also obviously environmental factors with more rain not just in our region, but also up in Queensland and northern New South Wales, which helped bring the lakes back to a condition that we expect them to be.

In that time, obviously there's been a very heavy debate politically about how we manage this system in the future and there are diverse interests of course across the Murray-Darling Basin. There always will be diverse interests across the Murray-Darling Basin, and it has been some task dating back pre-Federation to manage the diverse interests in the Murray-Darling Basin, but we must because it is a very important part of our country's economy and in fact our agricultural lifeblood in many ways.

It has been, I think, something which has taken us generations to come to an agreement upon. We now have in place that agreement and we are working in a reasonably bi-partisan manner to deliver it. It's not a debate which now really stretches into the politics as much as it used to. That's putting aside occasional outbreaks between the Liberal Party and the National Party as far as those diverse interests across the states, but I think with the agreement what we've got is a framework which each of the states through the federal government are working to implement. That's obviously reducing the amount that's taken from the system, but more importantly, I think, improving the efficiency of the water that is used within the system itself. And there's been a lot of taxpayer's money spent on trying to improve that efficiency; recognising that we don't want to close down agricultural communities along the Murray-Darling Basin. We just need to ensure that the water that's being taken from the system is used in the most efficient and effective way and that we've got a sustainable Murray-Darling Basin into the future. And that's what we are beginning to see in a genuine way. The latest figures from the authority indicate that by 28 February 2015 approximately 1951 gigalitres or 71 per cent of the targeted 2750 gigalitres of water had been recovered through a combination of infrastructure investment and purchasing of water licences. We are a long way down the path of that aim. The federal government is quite confident that we are on track, and I'm sure Neil Andrew the new chair of the Murray-Darling Basin Authority would be able to update you more in more detail about that during the day.

In that respect, I think the reforms, which did take a long time to put in place, are starting to take effect in a positive way. That is not to say of course that we won't have periods of drought and periods where the system will again be challenged, but hopefully the key in the future when the system is put into challenges—it is healthier going into that drought than what it was in the 2000s when it entered the drought period in an unhealthy state. That is what we are working towards from a policy perspective—balancing that use of the system for what we want to achieve in an economic sense, in an agriculture sense, at the same time as ensuring environmental capacity for it to continue to deliver. They're the real aims of what we are trying to achieve in a policy sense.

You will be aware that there was as part of the agreement federal money for a diversification of the economy along the Murray-Darling Basin. There was $100 million allocated to the Murray-Darling Basin Diversification Fund and it was spread across the four states—Queensland, New South Wales, Victoria and South Australia. Queensland, New South Wales and Victoria have begun spending their money. In fact, they've got projects underway under that programme. It was a programme that was put in place when an agreement was signed back in 2012. Part of the agreement was to help the communities adjust to the changes from the changing amount of water that was available for access.

It's an agreement under a National Partnership Agreement, which the states had all signed on to. Different states had different processes of selecting projects and it is a programme run by my Department. As I say, in Victoria there is a major gas pipeline, which is being built with the money. In New South Wales, there's a range of projects the money's being used for and equally in Queensland. The only state which has not yet spent the money—although there were project announcements by the former Labor government—is South Australia. Now, some of you in the room are very familiar with this argument, but can I just update you and make it very plain from our perspective where we are at with this money.

The South Australian Government claims wrongly that by accepting the $25 million—which we have to spend through South Australia. I know there are some who are suggesting why doesn't the federal government just go and fund all these proponents individually? Constitutionally we can't; we have not got the capacity under the Constitution. There was a High Court case last year which made very clear the limits on Commonwealth capacity to spend money. We have to spend this type of money through the states. We have to spend this type of money through an existing programme through the states. If we could avoid dealing with this state government, trust me, we would. Trust me, we would. We wouldn't give them a cent if we didn't have to. But, in this case, we have got no choice but to spend the money through that authority. There are implications about that High Court case which stretches into all sorts of federal government programmes, including existing programmes which fund directly local government which is arguably unconstitutional.

We are very restricted now that that High Court case has been handed down to new programmes. The Government is making assessments about the capacity for existing programmes to continue, but with the new programmes, under the Constitution, we have to make payments which we think will be legal. The idea that we can go and fund the proponents that have been announced under this $25 million is wrong. We can't; that's the first point. The second point is the South Australian Government claims that if they accept this $25 million, they will lose $21 million of it through the Commonwealth Grants Commission process of assessment of the GST, the allocation of the GST. You would probably be aware over the last couple of weeks there's been a debate about the GST allocation amongst states. South Australia next year will get $1.36 for every dollar that we spend in South Australia. We are a net recipient out of the Commonwealth Grants Commission. So, the Commonwealth Grants Commission process has been well established over a long period of time and none of the states actually really agree with it. As you've probably seen in the last couple of weeks—except for when it benefits them, then they definitely agree with it. If it doesn't benefit them they want it changed and that's what the Western Australian Government's been arguing for in the last couple of weeks because this year they will receive 28 cents in the dollar for every dollar of GST spent in Western Australia.

The Commonwealth Grants Commission looks at every spend across the state, all their revenue and then makes a decision on what is described as fiscal equalisation amongst the states. Now, the South Australian Government claims that this grant programme will impact on one year of their Commonwealth Grants Commission decision to the tune of $21 million. Now, the point is they actually don't know that and they've got no way of knowing that because the Commonwealth Grants Commission itself works out the impact of each of the spending programmes. The claim that it would cost them $21 million is simply wrong and they just do not have the evidence to back that up. Even if you accept that they will lose some GST allocation by accepting this additional money, that argument applies through every spend that we have across the state. Every federal government spend that we make across the state impacts on the Commonwealth Grants Commission decisions. So, if they are so against this money being spent in South Australia, they would also be against the nearly billion dollars we're spending on the South Road improvements. We're spending $500 million on Darlington, $600 million on Torrens to Torrens. That's federal government money. It will also impact on the Commonwealth Grants Commission decision processes, of course, because every additional bit of revenue from the state, the Commonwealth Grants Commission considers.

So, the argument is a complete furphy. It is a complete and utter furphy. I think what they are really doing is basically, as part of the campaign to try and pick a fight with the federal Government on pretty much every issue, picking another example where it doesn't affect them electorally. There are no seats where Labor is interested, where these grant programmes will be rolled out, and they are making it impossible for us to come to an arrangement with them. And it is really unacceptable and we can't go on with just having $25 million sitting in abeyance forever. So, I've said to the state government, to Minister Brock and to the Premier that we have got until the Budget for the state government to agree to use this money. If they don't, then we will find another way through an existing programme to spend the $25 million in regional South Australia.

Now, that would be very unfortunate. Unfortunate for the Riverland communities and communities around Murray Bridge, where there are some very good projects, which were part of this, particularly the Murray Bridge Racing Club project. But we can't just leave $25 million sitting there to have a political game played against us by the state government. We want to get the money that we've allocated in South Australia out of the door and spent. So, the $25 million we will find a way to spend in South Australia and regional South Australia, but it will most likely be through a roads programme. It won't be to this programme unless the state government changes their mind and stops playing this game. Because what they are demanding in essence is for us to exclude this money from the Commonwealth Grants Commission processes. They asked the former Government to do that, the former Government said no. Catherine King, who was the then Minister, said no that request back in 2013. Each of the other states have the money and are spending the money. So, they're asking for a different treatment than the other three states on this money. It is just unacceptable; we couldn't possibly do it, even if we accepted their claim that they'd lose 21 million, which we don't.

I would remind you all—we want to spend what is federal Government money through this programme. It's been allocated to do that, the money's in the Budget, in my Department's Budget spend, but we haven't got the capacity to until the state government agrees to do so. If they don't agree to do so, we will find another way to spend that money in the state. It's unfortunate that Minister Brock has pulled out today, because I was hoping that you would be able to pass that message along. I know Neil Andrew and I've spoken to him about it, I've spoken to several mayors about it, I have spoken to Adrian about it. We are not interested in having a fight over this money. We want to spend it. It's quite a remarkable situation. I was actually talking the Prime Minister through it last week and he was completely baffled about a state government refusing to spend federal government money. There's not a cent of state government money in this programme. It doesn't require them to spend a cent; it just requires them to receive it, to pass it through to the proponents. That's how ridiculous this situation has become. So, any force you can bring through this group or through your separate groups, I would urge you to do so in the two weeks remaining until the federal Budget. But as I say, we can't just let $25 million sit in our accounts. I'll have the Finance Minister all over me saying what's that doing there, and that can go back into the broader Budget, if you don't mind. So, if we don't spend it by that date then we'll find another programme to do so.

More broadly, I think the other issue I should raise because there are so many mayors in the room is that the next round of the National Stronger Regions Fund will open in mid-May. That'll be round two. We're about to announce the successful proponents for round one. And there'll be about $200 million of projects we'll announce shortly from round one of the National Stronger Regions Fund.

We are looking for projects to spread across the country. The key point I would remind you all with this programme is that it is about economic development, about job creation. That's the projects we really are looking at. You'll see announced—and without giving too much away—there's one that's not too far from here as part of it. Projects which do create jobs into the long term. They're the ones that have been successful in the first round and that's what we're really looking to fund for this programme. I would encourage you to look out for that and stay in contact, either with me or with Tony Pasin if you're in Tony's electorate in Barker. It is an important programme the Government; we've got this round coming up that will close in July. And then we'll look to have another one later in the year. But it is our way of trying to work in regional communities, particularly, that have got economic disadvantage and are looking for job creation opportunities. So, that is something that is important for all of you and also other groups. It doesn't necessarily need to be councils. It needs to have co-funding; that is a very important part of the programme. It needs to at least half co-funded. It is an opportunity to get access to federal Government money up to $10 million or at least $20,000.

Finally, I might just mention again that when it comes to the roads programme we are spending more than we've ever spent before as a federal government. We're just about to announce the latest South Australian Black Spots programme, which has doubled this year and doubled next year for the Black Spots Programme around the country. Again, that's an opportunity for councils to get local pinch point roads, particularly where there's been incidents or there are likely to be incidents funded through that programme. It's doubled and we've doubled the roads recovery money for this year and next year also. And we're looking at doing more through the next little while—particularly through the audit that Infrastructure Australia has just conducted, which will just be shortly released, looking for the 15 year plan that's being released later this year.

So, there is plenty happening as far as federal government's concerned with infrastructure and regional development. The Murray Darling Basin will always be an important issue for both sides of politics. Can I say, I think it's something which goes beyond the day-to-day arguments in politics. We are a lot further ahead now than what we were, certainly six years ago or seven years ago, and there is still a way to go to improve the health of the system.

I think the steps we are taking are encouraging. The Murray-Darling Basin Authority under Craig Knowles and now Neil is working very well, I think. And the direction that the governments are taking together, I think means that we will get a better outcome in the future, and hopefully avert the absolute crisis that we saw some years ago. Thanks for being here and thanks so much for listening to me.