ADIC acknowledges final ACCC dairy report

Australian Dairy Farmers - 30-Apr-2018

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ADF clarifies comments on Murray Darling Basin Plan

Friday, October 11, 2019

ADF welcomes the opportunity to respond to questions around our recent Dairy Insight column in the Stock & Land and other newspapers.

The situation facing farmers in the Murray Darling Basin must be addressed before we lose more farmers. Fodder and water are trading at untenable prices and we recognise the impact at the family, farm and community level.

All dairy farmers can rest assured that ADF continues with its proud 77 year history of passionately representing the interests of dairy farmers.

The objective of the column was to share a view that drought is the major factor impacting on basin communities, including of course dairy farmers.

ADF has a long-standing position not to abandon the Murray Darling Basin Plan.

We have stayed firm in fighting to stop the federal government from buying back water once 1500GL has been recovered, as stated in the Water Act.

We have also urged that any plan to drain an extra 450GL from the Basin for the environment must be viewed as a last resort and only if there are neutral or positive, NOT negative, socio-economic impacts. This means a cost-benefit analysis and consideration of any future effects on communities.

ADF has also supported the ACCC investigation of the water market to validate assumptions of water use along the Murray River system, including irrigation and environmental demand and the impact of constraints, and to ensure greater transparency in water trading.

The Murray Darling Basin is home to around 1,330 dairy farm businesses with a value of production worth more than $2.6 billion, supporting over 3,000 direct jobs in the region. Dairy sits at the heart of the Basin community.

ADF continues to urge state and federal governments to consider any impacts the Basin Plan may have on dairy jobs and local communities.

But while this is paramount, we also urgently need an agreement between commonwealth and state governments to provide a national approach to drought preparation, response and recovery.

Pausing the Basin Plan misguided

Thursday, October 10, 2019

Angst in Murray Darling Basin over skyrocketing water prices is now at fever pitch.

Many groups are advocating for change to the Basin Plan. The Victorian Nationals want to terminate the additional 450 gigalitre (GL) recovery target. Some farmer groups in the Southern Riverina and northern Victoria want the plan paused or their state governments to withdraw. Members of NSW Farmers Association passed a motion at their July conference to lobby the federal government to hold a Royal Commission into the Basin Plan.

But while such decisions are being made in response to issues with the Plan, especially an assumption that it is responsible for many areas of the Basin now having zero water allocation, a solution is not as simple as pausing the Basin Plan.

The dairy industry has largely supported the Basin Plan, mainly because it is underpinned by science and economics. A plan that ensures a balance between irrigation and water required to maintain river, wetland and floodplain health is not just necessary, it is good policy.

The Australian Dairy Industry Council (ADIC) has argued through countless submissions to government that for the Basin Plan to have the most impact, the acquisition of water for environmental use must always be rooted in scientific and economic evidence.

Not only that, but the government must also ensure an open and efficient water trading market, coordination between water recovery programs such as irrigator buybacks and infrastructure reform, respect for individual property rights, and consultation with affected communities.

Investors, especially, have copped blame for driving up the price of water in an already stressed market.

In recent months, horticulture groups have urged Minister Littleproud to put a temporary ban on investors buying water and holding on to it for the next year. The government responded by announcing the Australian Competition and Consumer Commission (ACCC) will investigate markets for tradeable water rights in the Basin.

The ADIC has not joined this push to ban the Basin Plan or investors. Water policy experts, including Aither, have found the market to be working effectively and that high prices are the result of high demand and low supply caused by persistently dry conditions and below average rainfall.

Ultimately it is the devastating impact of drought that is most responsible for rising water prices.

Over the past 30 months, many parts of the Basin have received the lowest rainfall on record, particularly around the Border Rivers – a trend that is set to continue in 2019-20 given the Bureau of Meteorology’s forecast of below average inflows.

It is important to remember that water prices during the Millennium Drought in the early 2000s, prior to the Basin Plan, were significantly higher than they are now.

For most of that dark period allocation prices in the Southern Basin were over $500 per megalitre (ML), while in June 2007 it peaked at a whopping $1,400/ML in the Murrumbidgee.

To put this in perspective, the Australian Bureau of Agricultural and Resource Economics (ABARES) is predicting an average annual water price of $473/ML in 2019-20 for the Murray trading zones.

While this is not good news, the best chance to increase water availability and lower water prices in the Basin is for the federal government to get behind large scale water supply projects to safeguard industries and Basin communities from drought and decline.

The ADIC has requested the government to commission the CSIRO to develop a transformational water supply blueprint for Australian agriculture.

The government, meanwhile, has announced the development of a National Water Grid to bring together water experts, scientists and economists to look at how large-scale water diversion projects could deliver reliable and cost-effective water to farmers and regional communities.

Ultimately, it is not the answer to simply abandon the Basin Plan. The dairy industry, together with the National Farmers’ Federation, other farmer groups, and federal government, are working to relieve pressure on irrigators while ensuring a healthy river system.

- Terry Richardson, ADF President

Australia's climate change policy needs to focus on a global response

Monday, May 27, 2019

Australia’s climate change policy has revolved around whether the climate is changing, to what extent has it been human induced and the country’s response, by way of an emissions reduction target. These issues were front and centre during the election campaign, with all political parties providing the electorate with vastly different policy approaches to consider. The problem with this debate is it has focused narrowly on what Australia is doing. It has completely ignored the role of other nations and Australia’s role in influencing their positions, in particular those countries who are underperforming or not participating.

The climate is changing, and humans are responsible for some of it

The International Panel on Climate Change (IPCC), and many other scientists across the globe, have demonstrated that the earth’s climate is changing. In their 2013 report they found surface warming increase of 0.85 °C from 1880 to 2012, ocean warming by 0.11°C per decade from 1971 to 2010 and global average sea level risen at the rate of 1.7 mm/year between 1901 and 2010. The panel attributed these changes to the earth’s nature weather cycle in addition to atmospheric concentrations of human induced greenhouse gases of carbon dioxide, methane and nitrous oxide increasing by 40 per cent since 1750.

The consequences of climate change vary depending on location. Rising sea levels, changing precipitation patterns and more frequent extreme weather events like heat waves will occur across the globe as temperatures increase. Some countries like Russia may benefit while others like Bangladesh will be severely impacted. Generally, countries closest to the equator will be most negatively impacted and less developed or low-income countries will have the lowest adaptive capacity.

The Abbott, Turnbull and Morrison Coalition Governments have been acting on climate change

In December 2015, the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement was signed by 196 countries, including Australia under the Abbott Coalition Government, to combat climate change. The agreement aims to keep global warming below 2°C from pre-industrial levels through nationally determined contributions (NDCs) to emission reductions. An NDC is a country’s statement on what emissions reduction target it is setting, how it intends to achieve it, what adaptation measures it will be pursuing and from 2020, report progress. The agreement also aims to significantly strengthen national adaptation efforts by enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change.

Under the agreement Australia, which is responsible for 1.45 per cent of total global emissions, set itself a target of reducing 26-28 per cent CO2-e below 2005 levels by 2030. This is comparable with most countries with similar or higher polluting profiles. The United States of America (12.1% of total emissions), Japan (2.82%), Canada (1.96%), Indonesia (1.49%) and Mexico (1.27%) are all in the 25-30 per cent reduction range. Brazil (5.7%) and South Korea (1.28%) are higher at 37 per cent and the EU (8.97%) is the highest at 40 per cent. The key concerns are China (23.75%) who are allowed to increase pollution to 2030, India (5.73%) who have an emissions intensity target translating to a significantly lower target than other G-20 countries, and other smaller countries who are not signatures to the agreement.

The Australian Government has been delivering various emission reduction initiatives to achieve its international targets. Under its flagship $2.55 billion Emissions Reduction Fund, a policy implemented by Tony Abbott as Prime Minister, has delivered over 700 emission reduction projects. These have reduced over 190 million tonnes of CO2-e from the Australian economy. As a result, the government’s review of its climate change policies found Australia to be on track to meet its Paris Agreement target and its second Kyoto Protocol target (another emissions reduction agreement), which requires emissions to be reduced by 5 per cent below 2000 levels by 2020. This follows Australia exceeding its first Kyoto Protocol target to limit emissions to 108 per cent of 1990 levels over the period 2008–2012 by 128 million tonnes of Mt CO2-e.

The re-elected Morrison Coalition Government will continue with its current policy of meeting the 26-28 per cent it set in 2015. It will do this largely through a $3.5 billion Climate Solutions Package, which it announced on 25 February 2019. The package includes a $2 billion Climate Solutions Fund (an extension of its original Emissions Reduction Fund), investment in energy efficiency adoption and building the Snowy 2.0 Hydro Electricity Project.

The ALP wanted stronger action on climate change through a higher emissions reduction target

A Shorten Labor Government would have committed Australia to an emissions reduction target of 45 per cent on 2005 levels by 2030 and net zero pollution by 2050. This would of positioned the country as having one of the highest targets in world. It was intending to do this by focusing primarily on transitioning to renewable energy sources quicker than the government. It set a 50 per cent renewable energy adoption target by 2030 to be achieved through initiatives such as a $2,000 rebate for solar batteries for 100,000 households and doubling the original investment in the Clean Energy Finance Corporation by $10 billion.

A higher emissions reduction target costs the Australian economy

BAE Economics modelled the economic impacts of Australia’s two emission reduction targets. They estimate:

Cumulative Gross Domestic Product (GDP) loss of $62 billion under the 26-28 per cent scenario versus $472 billion under the 45 per cent scenario. This is a significant impact given the total size of the Australian economy is $1.3 trillion.
Real average wages to decrease $2,000 per annum under the 26-28 per cent scenario versus $9,000 per annum under the 45 per cent scenario.
Full time job losses of 78,000 under the 26-28 per cent scenario versus 336,000 under the 45 per cent scenario.
Electricity prices, which are already at excessive highs, to increase $93/MWh under the 26-28 per cent scenario versus $128/MWh under the 45 per cent scenario.

The advantage for agriculture is it was to be excluded from the 45 per cent target. This significantly reduces the impact on the sector compared to other sectors. However, agriculture would experience indirect costs passed on by those directly impacted. BAE Economics estimate that for the livestock sector, which includes dairy, a decline between 0.7 to 2.6 in output will occur depending on the scenario.

The impact of Australia’s emission reduction target depends on responses by other countries

The difference between the two targets of the major parties is 19 per cent. This translates to 0.27 per cent of total global emissions (based on Australia’s current 1.45 per cent contribution). Assuming all countries remain the same by way of emissions, the impact of this on the climate is negligible. If other countries were to increase their emissions, then Australia would be in deficit both in terms of environmental and economic impact.

Australia’s politicians are ignoring the benefits and issues with the Paris Agreement

While global aggregate emission levels resulting from NDCs are expected to be higher over the reporting period, their implementation will lead to sizeably lower aggregate global emission levels than in pre-NDC trajectories. Unfortunately, estimated aggregate annual global emission levels resulting from implementation of NDCs do not fall within the scope of least-cost 2°C scenarios by 2025 and 2030 (a key target in the agreement). However, by lowering emissions below pre-NDC trajectories, the NDCs contribute to lowering the expected temperature levels until 2100 and beyond.

Despite these achievements there are significant concerns surrounding the consistency, fairness and compliance with the Paris Agreement. Each country is required to submit its NDC every five years from 2015 to 2030. Based on the 2015 reporting:

Only 174 countries have submitted their NDCs. Of these submissions 161 were submitted on time. This leaves 22 countries without an NDC.

There is significant variation in each country’s emission reduction targets – type and number.

Reporting processes not only vary but are inadequate in terms of specificity, coverage and transparency/comparability.

Australia needs to advocate for improvement to the Paris Agreement and adoption of a standardised emissions reduction target for all countries

Climate change is a global problem requiring a global solution that is fair and equitable. This translates to all countries participating and adhering to a standardised policy framework. There should be one emission target type applied across all countries with calculation based on a ratio of total emissions (total Mt CO2-e) and wealth (nominal GDP). It should not be up to one country like Australia to run down its economy to achieve an aspirational target while others do nothing or worse, continue to increase emissions in the pursuit of economic prosperity. Adopting a standardised approach ensures the policy response is not only effective (at achieving the 2°C cap) but proportionate to who is causing the problem and their capacity to pay.

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