SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT BOARD LEVY PROPOSAL 2011/2012

Transcription

1 PP 240 SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT BOARD LEVY PROPOSAL 2011/2012 FIFTY FIFTH REPORT OF THE NATURAL RESOURCES COMMITTEE Tabled in the House of Assembly and ordered to be published on Tuesday 21 June 2011 First Session, Fifty Second Parliament

2 -ii-

3 -iii- PRESIDING MEMBER S FOREWORD I wish to thank all those who gave their time to assist the Committee during its consideration of the levy proposed by the South Australian Murray-Darling Basin Natural Resources Management Board for 2011/12. The Committee took evidence from Presiding Member Sharon Starick and Regional Manager Hugo Hopton on 25 March The Committee had reservations about NRM Boards proposing levy increases above the CPI (2.6%): the SA Murray Darling Basin NRM Board has proposed to increase its Division 1 levy by 38% and its Division 2 levy by 10%. Given that State Government departments are being required to operate under reduced budgets and the community continues to feel the effects of the Global Financial Crisis, levy increases above the CPI should be the exception, not the rule. Members also expressed the view that the Committee should not merely be a rubber stamp in the process of reviewing funding to Boards via the NRM levies. There should be sufficient time to fully consider all levies together in a broader policy context. The Committee would like to see the arrangements around the setting and collection of NRM levies reviewed as part of the Board s budget planning process for 2012/13. Members resolved to not object to the levy proposals because the SA Murray Darling Basin Board has made a commitment to keep future increases much closer to the CPI. Furthermore, the Board flagged its proposal to temporarily increase levy rates above CPI back in 2009 in order to be able provide a more evenly balanced funding base and to enable transition to a common Division 1 levy rate across the region. Members also heard that staff wages will increase by 2.5% under enterprise bargaining arrangements in the coming year. The Board may suffer a loss of Federal funding assistance when water related projects are wound down following the completion of the Basin Plan. By this time, it should be in a position to sustainably manage its budget commitments. It will be well placed to do so given that the Division 2 (water) levy makes up the major portion of its income. I commend the Members of the Committee, Mr Geoff Brock MP, the Hon Robert Brokenshire MLC, the Hon John Dawkins MLC, Mrs Robyn Geraghty MP, Mr Lee Odenwalder MP, Mr Don Pegler MP, Mr Dan van Holst Pellekaan MP, and the Hon Russell Wortley MLC for their contributions. Finally, I thank members of the Parliamentary staff for their assistance. 21 June 2011

4 -iv-

5 -v- TABLE OF CONTENTS PRESIDING MEMBER S FOREWORD... iii TABLE OF CONTENTS... v THE NATURAL RESOURCES COMMITTEE... 1 STATUTORY OBLIGATIONS OF THE COMMITTEE... 1 SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT BOARD S LEVY PROPOSAL... 3 Overview of the Region... 3 Submissions to the Committee... 3 Consideration of evidence... 3 Levy Proposal... 3 Social Impact Assessment... 5 Consultation... 5 State Government Funding... 5 Australian Government Funding Arrangements... 6 Other Funding Sources... 6 Summary of Funding Sources... 6 Levy Proposal - Statement to the Minister... 7 ABREVIATIONS... 8 REFERENCES... 8 APPENDIX 1: SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT REGION MAP... 9

6 -vi-

7 - 1 - THE NATURAL RESOURCES COMMITTEE The was established pursuant to the Parliamentary Committees Act 1991 on 3 December Its membership for the duration of this inquiry was: The Hon Stephanie Key MP, Presiding Member Mr Geoff Brock MP Hon Robert Brokenshire MLC Hon John Dawkins MLC Mrs Robyn Geraghty MP Mr Lee Odenwalder MP Mr Don Pegler MP Mr Dan van Holst Pellekaan MP Hon Russell Wortley MLC Executive Officer Mr Patrick Dupont Research Officer Mr David Trebilcock STATUTORY OBLIGATIONS OF THE COMMITTEE The has the statutory obligation to examine a Region s Natural Resource Management (NRM) plans that contains a levy proposal. Sections 80 and 81 of the Natural Resources Management Act 2004 clearly state the circumstances under which these plans are to be forwarded to the Committee. 80 Submission of plan to Minister (8) If a plan provides that the whole or part of the funds required for implementation of the plan should comprise an amount to be raised under Chapter 5 (in this section referred to as a levy proposal) the Minister must, within 7 days after adopting the plan, refer the plan to the of Parliament. Once the initial NRM plan (with levy proposal) has been considered by the Committee then in subsequent years only plans in which the levy proposal is increased by an amount greater than the CPI increase is referred to the Committee. Provisions of s81(10)(b)(ii) NRM Act as follows apply: 81 Review and amendment of plans (10) If (b) an amendment proposes (i) that a levy under Chapter 5 Part 1 Division 1 or Division 2 imposed in one financial year be again imposed in the next financial year; and

8 - 2 - (ii) that the amount to be raised or recovered by the levy in the next financial year will be an amount that exceeds the amount raised for the last financial year adjusted to take into account increases (if any) in the CPI during the 12 months ending on 30 September in that last financial year, the procedures set out in section 80(8) to (16) must be followed when the plan is amended. The Committee must within 28 days of receipt of a NRM plan, consider the levy proposal in that plan, as required under s80(9) the NRM Act as follows: 80 Submission of plan to Minister (9) The must, after receipt of a plan under subsection (8) (a) (b) (c) resolve that it does not object to the levy proposal; or resolve to suggest amendments to the levy proposal; or resolve to object to the levy proposal. Other provisions of the NRM Act detail the process to be followed should the Committee decide to proceed in accordance with s80(9)(b) or (c) but are not discussed further in this report.

9 - 3 - SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT BOARD S LEVY PROPOSAL Overview of the Region The SAMDB NRM Region supports a population of approximately 126,000 people and extends over more than 5.6 million hectares, from the Victorian and New South Wales borders to the catchment boundary along the Mount Lofty Ranges, to the Murray Mouth, and up to 14 kilometres into the Southern Ocean. This is one of South Australia s most ecologically diverse and agriculturally productive regions. It supports a wide range of flora, fauna, natural environments and human activities. (SAMDB NRM Board [2009a] p1) Submissions to the Committee The Committee received no formal submissions regarding the South Australian Murray Darling Basin NRM Board levy or activities with the exception of the written submission and presentation received directly from the Board and referred to in this report. Consideration of evidence Levy Proposal Division 1 $1,448,500 - $1,993,500 - (38% increase) SA Murray Darling Basin NRM Board proposes a 38% increase for 2011/12 in Division 1 levies then levelling off to a 3% increase 2012/13 and 2013/14. This is the same magnitude increase that was flagged in 2009 (SA Murray Darling Basin NRM Board [2009b] p45). The Committee initially objected to the increased levy then following the appearance of Board staff at a hearing determined not to object. Division 2 - $5,779,250 - $6,350,822 - (10% increase) The SA Murray Darling Basin NRM Board proposes a 10% increase in Division 2 levies in 2011/12 levelling off to a more modest 3% increase 2012/13 and 2.5% in 2012/14. This is the same magnitude increase that was flagged in last year s business plan. In 2009 the Committee initially objected to the increased levy then following the appearance of Board staff at a hearing determined not to object. Variation from CPI Both Division 1 and Division 2 levy increases for 2011/12 are significantly higher than CPI (2.6% for the period). However, in 2012/13 and the following year the increase should be much closer to the CPI. % increase (estimate) % increase (estimate) SA MDB 2009/ / /12 % increase 2012/13 (estimate) 2013/14 (estimate) total div 1 $1,058,562 $1,448,500 $1,993,500 38% $2,053,500 3% $2,104,838 3% total div 2 $5,210,354 $5,779,250 $6,350,822 10% $6,541,553 3% $6,705,092 3% div 1 + div 2 $6,268,916 $7,227,750 $8,344,322 15% $8,595,053 3% $8,809, % Table 1: Proposed increase in NRM levies for 2011/12, 2012/13 and 2013/14

10 - 4 - Table 2, from the Board s Business Plan, shows the proposed Division 2 levy rates for 2011/12: PRESCRIBED RESOURCE River Murray class 2 and class 6 water access entitlements 1 River Murray class 3a, class 4 and class 5 water access entitlements 2 River Murray class 3b water access entitlements 3 ALLOCATION /14 /SHARE (ML) Rate TOTAL ($) Rate TOTAL ($) Rate TOTAL ($) 180,000,000 3,062,700 unit s 566,000,000 unit s 25,900,000 unit s 1.61c 0.515c 0.495c 2,898, c 2,914, c 128, c 2,988, c 2,999, c 132, c 3,074, ,392 Angas Bremer 6,400 ML 5.15/ML 32, /ML 33, /ML 34,768 Noora /ML /ML /ML - Mallee 402 ML 16.10/M 6, /M 6, /M 6,840 reticulated L L L Mallee 5 58,100 ML 5.15/ML 299, /ML 307, /ML 315,628 Mineral Sands 6,000 ML* 5.15/ML 30, /ML 31, /ML 32,595 Mining 6 Peake, Sherlock 1,800 ML 5.15/ML 9, /ML 9, /ML 9,779 & Roby Marne 6,000 ML 5.15/ML 30, /ML 31, /ML 32,595 Saunders EMLR /ML /ML /ML - TOTAL 6,350,822 6,541,553 6,705, River Murray class 2 water access entitlements = Urban water use country towns. River Murray class 6 water access entitlements = Urban water use metro Adelaide. 2. River Murray class 3a water access entitlements = Irrigation and Holding. River Murray class 4 water access entitlements = Recreation. River Murray class 5 water access entitlements = Industrial and Industry (Dairy). 3. River Murray class 3b water access entitlements = Irrigation & Holding (Qualco Sunlands Groundwater Control Trust) 4. The only licence issued in this resource is for environmental purposes and is exempt from the levy. 5. Where the water allocation is specified in Irrigation Equivalents (IE), there is an area-based NRM water levy rate of $46.48 per ha IE in the Northern Zone and $38.37 per ha IE in the Southern Zone. 6. The levy amount collected for Mineral Sands Mining is based on the volume of water taken under section 128(b) of the NRM Act The Eastern Mount Lofty Ranges water resource has not been included. A levy will be raised upon completion of the Water Allocation Plan for this resource. Table 2: Division 2 levies for each class of entitlement River Murray Prescribed Watercourse (SA MDB NRM Board [2011c] p41)

11 - 5 - Social Impact Assessment The Board employed an independent consultant to assess the social impact of the levy proposals. This assessment was discussed in the Business Plan and the following conclusions were made: Division 1 levy Based on the principles of fairness, efficiency and governance established by the Board and the investigations undertaken, the Board has adopted pursuant to section 95(3)(a)(i) the value of rateable land as the basis for determining the regional NRM levy. On the basis of the analysis undertaken, the Board concludes that the regional NRM levy does not place an unreasonable family, business or social burden on property owners in the Region. (SA Murray Darling Basin NRM Board [2011c] p42) Division 2 levy The key outcomes of the analysis were that the NRM water levy comprises a small proportion of variable and total costs For moderate profit and lower water-using industries, the levy has a minimal impact on farm profitability. For marginal operations the impact on farm profitability could be significant. The analysis showed that the lower profit margin and higher water use industries are the industries where the NRM water levy could have a noticeable impact on enterprise profitability. Consultation (SA Murray Darling Basin NRM Board [2011c] p43) Consultation on the Draft Business Plan commenced on 13 December 2010 and concluded on 18 February The Board mailed out information to approximately 570 stakeholders inviting comment on the Draft Plan and levy proposals. It also did ed 530 stakeholders inviting comment via a standard questionnaire. The Board commented that the based medium was for more successful in generating feedback. Two rounds of advertising were also conducted via media releases throughout the region. There were also three community consultations sessions; in Berri, Murray Bridge and Goolwa. However, these were poorly attended (20 people in total) (SA Murray Darling Basin NRM Board [2011a] p12). The Board received 55 comments and 23 written submissions (including one online), in which 55 comments were raised. The key messages were: Support for a continuation of the Board's extensive work program; Recognition (particularly by local government) of the Board's approach to community engagement; Concern that the financial burden on levy payers is too great and that the State Government should provide more funding to the Board; and Support for the regional NRM levy proposal generally, but some concern, particularly from the Riverland, about the NRM water levy increase. State Government Funding (SA Murray Darling Basin NRM Board [2011a] p13) The State Government makes an ongoing investment into natural resources management in the SA Murray Darling Basin NRM Region through the State NRM Fund. The method by which funds are allocated to regional NRM boards is based on a set of agreed principles that take into account the relative resources and funding needs of each board rather than allocations being made on historical grounds. The Board has included zero for 2011/12 which is a realistic assumption based on recent advice and on the priorities chosen for funding through the program. The Board has estimated that it will receive $1,199,055 in State Government grants in 2011/12, comprising $652,000 from the State Complementary NRM Program, $160,000 from Department of

12 - 6 - Environment and Natural Resources for ongoing work associated with the Lower Lakes and $387,055 from the Native Vegetation Council. It also expects to be reimbursed $206,000 for payroll tax. This gives a total of $1,405,055 in State Government funding for 2011/12. Australian Government Funding Arrangements (SA Murray Darling Basin NRM Board [2011b] p4) The Australian Government s Caring for Our Country initiative commenced on 1 July The Board has a confirmed baseline funding of $4,741,000 per year until June An amount of $150,000 has been included for the competitive pool funding at this stage. In addition, the Board will receive $420,600 1 in other Commonwealth funding, giving a total of $5,311,600 for 2011/12. Other Funding Sources (SA Murray Darling Basin NRM Board [2011c] p37) The Board is anticipating that it will receive interest of $100,000 in 2011/12. It is also expecting to receive $650,000 in fees and charges for pest control and $200,061 from Grants and other contributions. The Board anticipates it will carry forward $410,385 in funds into 2011/12 to undertake its programs. This gives a total of $1,360,446 in other funding for 2011/12. Summary of Funding Sources (SA Murray Darling Basin NRM Board [2011b] pp 4-5) Figure 1 summarises funding for the SA Murray Darling Basin NRM Board for 2011/12. Total estimated funding for 2011/12 is $16,421,423. Figure 2 summarises funding sources for all of the regions. SA Murray Darling Basin NRM Region $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Federal funding State funding Division 1 levy Division 2 levy Other Figure 1: Estimated funding SA Murray Darling Basin NRM Board 2011/12 (SA Murray Darling Basin NRM Board [2011c], p37) 1 Neither the Business Plan nor the submission to the specify the exact source this funding. It is assumed that it is related to the various programs referred to in the Business Plan [2011c] on page 15, and that the Board has made or will make bids for Commonwealth funding related to these programs.

13 - 7 - $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 Other Division 2 levy Division 1 levy State funding Federal funding $5,000,000 $0 A&MLR AW EP KI N&Y SAAL SAMDB SE Figure 2: Comparison of funding for NRM Regions, 2011/12 Levy Proposal - Statement to the Minister The Committee s resolution regarding the SA Murray Darling Basin NRM proposed levy for 2011/12 was forwarded to the Minister for Environment and Conservation on 9 May The has considered the levy proposal for the South Australian Murray Darling Basin Natural Resources Management Board for 2011/12. The Committee noted that the levy proposed in this plan is consistent with the proposal put to and approved by the Committee last year. While the Committee has reservations about NRM Boards proposing above CPI increases, in this instance Members have resolved to not object to the levy proposal for the South Australian Murray Darling Basin Natural Resources Management Board for 2011/12. The Committee would like to see the arrangements around the setting and collection of NRM levies reviewed as part of the Board s budget planning process for 2012/13.

14 - 8 - ABREVIATIONS CPI Consumer Price Index NRM Act Natural Resources Management Act 2004 NRM The Board Natural Resources Management South Australian Murray Darling Basin Natural Resources Management Board REFERENCES SA Murray Darling Basin NRM Board (2009a), Regional NRM Plan, Volume 1 - Strategic Plan , Government of South Australia, 28 April 2009 SA Murray Darling Basin NRM Board (2009b), Regional NRM Plan, Volume 4 - Business Plan , Government of South Australia, 28 April 2009 SA Murray Darling Basin NRM Board (2011a), Evidence provided to, Committee Hansard, 25 March 2011 SA Murray Darling Basin NRM Board (2011b), Submission to the, SA Murray Darling Basin NRM Board s Levy Proposal for 2011/12 SA Murray Darling Basin NRM Board (2011c), Regional Natural Resources Management Plan Business Plan to

15 - 9 - APPENDIX 1: SOUTH AUSTRALIAN MURRAY DARLING BASIN NATURAL RESOURCES MANAGEMENT REGION MAP