Water management options for urban and rural Australia
Water reform in Australia
Tuesday 6 April 2010
Ken Matthews
Chair and Chief Executive Officer
National Water Commission
Mr Ken Matthews has an economics degree from the University of Sydney, and is a Fellow of the Institute of Public Administration and the Australian Institute of Management.
Early in his career (1975–1983) he held a series of positions within the Department of Defence and the Canadian Department of National Defence dealing with international policy and defence industry policy.
During 1997, Mr Matthews headed the Australian Government’s Wik Task Force in the Department of the Prime Minister and Cabinet, providing advice to the Prime Minister on Native Title.
Mr Matthews was previously the Secretary of the Department of Transport and Regional Services from November, 1999 to October, 2004, and from February, 1998 to October 1999, was the Secretary of the Department of Agriculture, Fisheries and Forestry.
He received a Centenary Medal for services to public administration in 2001, and was appointed Officer of the Order of Australia in 2005.
Mr Ken Matthews has been the Chair and Chief Executive Officer of the National Water Commission since March 2005. In this role, Mr Matthews is responsible for working with the States and Territories to implement the National Water Initiative and encourage national water reform.
Water Reform in Australia
Thank you everybody for coming along. I should warn you at the outset that I have no less than 42 slides. The reason I have so many is that I have a long story to tell, with several parts to it. I am going to be talking first of all about the National Water Commission's biennial assessment, a big review of how we have fared in Australian water reform.
[SLIDE: Outline]
I am going to talk a little bit about future reform directions in water. Then I am going to talk about a subject that it is difficult to get agreement on, but everyone is interested in: can we improve the ways in which we arrange, manage, fund, take decisions about and prioritise our water science in Australia? I should emphasise that these are just some personal ideas that I will be putting out.
[SLIDE: Biennial Assessment - Background]
The National Water Initiative was signed on to by all the governments of Australia to better manage our water. It is concerned with secure and sustainable water and addresses rural, urban and environmental water.
The National Water Commission was created to monitor whether governments were delivering on those promises. One of our requirements is to produce, every two years, a biennial assessment to be presented publicly to the Council of Australian Governments (COAG) reporting on whether those promises are being kept. The most recent assessment contains well over 100 findings and 65 recommendations.
[SLIDE: Our message to COAG]
What did we say to COAG? We said a lot. After five years we are still in trouble. Yes, we have made some progress as a nation, and yes, the National Water Initiative policy prescriptions are still the right ones. It is very interesting, I think, that even after five years no government in Australia has walked away from their commitments under the National Water Initiative, and no environmental groups, industry groups, science groups and so on, have walked away either. So this is an unusual document in that it continues to enjoy a lot of support.
But there have been delays in almost all areas of reform. At the same time, the bar is rising, and climate change is making it even more difficult.
We have said to COAG that it is really important that governments restore momentum and stay the course.
[SLIDE: Water reform: What’s going well?]
Let's be positive for a while, because I always seem to be grumbling and criticising water reform. What is going well? Well, we do have a national water reform framework, and even though the going has been tough, water reform is happening, and it wouldn't be happening otherwise. There are a lot of commitments that have been entered into in the National Water Initiative, and had those commitments not been entered into those things just wouldn't be happening. So, however we might lash ourselves for lack of progress, Australia has been doing things that wouldn't otherwise be done.
There is unprecedented attention and unprecedented budgets for water and for water reform, led by what the Commonwealth is doing in the Water for the Future program. If you think back even five years we were nowhere near that level of national attention and national resources.
Water markets are really important and they have been very successful in allocating the scarce water resources that we do have to their highest use.
Think about our cities. We have made a lot of progress in our cities in diversifying their water sources.
I think what has happened in the Murray Darling Basin is a set of first-class governance reforms. They are not perfect but they are so much better than they had been in the past. At last in Australia we are recovering water for the environment, and that is decades overdue.
[SLIDE: What’s not?]
What's not going well? Fifteen years after the commitment was first made, governments still haven't fixed the over‑allocation problem, although the water buy‑backs by the Commonwealth are certainly helping.
No less than 40 per cent of the water plans that were promised in the National Water Initiative are still outstanding. What's worse, others have been suspended, just because the drought is on. These plans, which were meant to be enduring plans out into the future, are simply being suspended.
I am arguing that our environmental aims continue to be unclear, and environmental flows are being cut in various water plans across Australia. There are continuing barriers to water trade. Our market, though it is good, could be a lot better.
Importantly, irrigation communities are unclear and lacking confidence. As they try to make long‑term decisions about where they could be – where their families, farms and communities could be – they can't see more than a few months ahead. The Commission thinks that that is a terrible situation to leave many of our rural communities in.
We have been arguing in this biennial assessment that it is very important that governments try to give the clarity about the future that they haven't been able to give before now.
In urban Australia we still have widespread urban water restrictions, which is an indication that our supplies still aren't secure.
To be blunt, governments are still bickering amongst each other. To be very fair to the state governments, we think that the resource constraints that most of them suffer under are making it difficult for them to make progress.
[SLIDE: Some overall NWC conclusions]
We concluded with some broad directions for COAG to consider. We have said to COAG that the National Water Initiative prescriptions are still the right ones. There are some good examples of things that are going right, but things have slowed down. We have drawn COAG's attention to the fact that many members of the public are unconvinced, particularly in those regional communities where there is a lack of clarity about the future and a good degree of skepticism. Rural and regional communities in particular, but many urban communities as well, are seeking better engagement in the decision‑making processes which affect their futures.
Governments continue to appear at odds and we have said to COAG, look, it is really important to restore that momentum. To do that, the states will need to have their policy and implementation capacity improved.
[SLIDE: Some specific recommendations]
This is the first of two slides about some specific recommendations. Among the 60‑odd recommendations here are some of the ones that people talked to us most about. We have recommended to COAG that it is important that what happens to water plans in droughts be spelt out. Water plans are meant to be enduring and secure plans for the future. If they change because there is a drought on, there is not much point in having a plan at all. So spell out the rules. Sometimes it is necessary for them to change. They need to be sufficiently resilient to deal with a whole range of climate outcomes and it is important to have spelt out in advance what will happen.
Sometimes there have been decisions made to cut environmental water flows. The reasoning, logic and evidence behind these decisions should be made transparent.
We have said that environmental water managers need to have their independence and capacity strengthened, including their capacity to draw on the best available science and resources.
We have suggested that in the Murray Darling Basin (MDB) it would be really important that there be interim and progressive guidance over time as the massive and very important task of producing the MDB plan is produced. Put out some guidance rather than whip the silk sheet off the new Holden. Let it all progressively come out and engage people in the logic and the process and the argument to get there.
We have said wherever there is groundwater and surface water it ought to be assumed that they are connected. That, if you think about it, is the reverse of what happens now. The default position now is that they are assumed not to be connected, unless proven otherwise. We think because groundwater and surface water are almost always ultimately – even if there is a long temporal delay – connected, they should be treated that way, so that you don't try to sell the same water twice.
We said that governments should commit to universal metering. Now, you might say that surely we do that anyway. Well, we don't. Across Australia there are many extractions of surface water and groundwater which are not metered. If you can't meter it you can't manage it.
We have argued that information given to those skeptical and uncertain communities, particularly in regional Australia, needs to be improved.
[SLIDE: Some specific recommendations cont’d]
We have said that there needs to be much better clarity about the environmental goals we are going to use this environmental water for. We are spending, as a nation, a lot of money on environmental buy‑backs. It is important that those goals be made quite clear. It is not sufficient just to have water made available and a non‑specific use set out for it.
We have said that over‑allocation continues to be a big problem in Australia and we, as a nation, should be publicly identifying where those over‑allocated systems are. We have been talking for more than 15 years about over‑allocation in Australian water, and yet we don't know which systems are over‑allocated. Nor can we define over‑allocation or agree on a definition of over‑allocation. It is a very sad situation.
We have argued that all the remaining barriers to water trade should be removed. We have said that there is this process called 'adjustment'. Economists talk about adjustment all the time, and it has some negative connotations. But adjustment is that natural process of change which will have some industries grow and others contract. Communities grow and others contract, and the growth bits can only happen if the processes of adjustment in the contracting areas are facilitated. So we think the policy setting should be in favour of adjustment. Many of the policy settings, on the contrary, are there to resist and slow those natural and desirable processes of adjustment.
We have argued to COAG that it is important to clarify just who is responsible for longer‑term urban water planning. If you are from Canberra think about who is responsible. Is it the ACT government? Is it ACTEW? Is it the water minister? Is it a collective responsibility? And that sort of microcosm applies in most urban areas. Just who is responsible for that longer-term urban water planning in the face of climate change?
Every city needs to have a longer-term strategic plan to deal with climate change, but who is responsible isn't clear.
We have argued that urban water restrictions should be returned to their rightful place. Many of us think that urban water restrictions are a jolly good thing and we should keep them in place indefinitely. That is not the view of the National Water Commission.
The National Water Commission thinks that water restrictions are really important as a reserve because we have a highly variable climate in Australia. If we built our system so that it could accommodate the worst of the troughs, then we would be gold plating to a one in 1000-year event. We can, instead, build our water systems in urban Australia to a one in 100 or 150-year event and then have water restrictions which kick in if it gets worse than that.
[SLIDE: Some specific recommendations cont’d (3)]
For the Murray Darling Basin, many of these recommendations are being addressed in the Basin Plan and in the new and expanded role of the Bureau of Meteorology – a fantastic initiative by the government to improve water data and the quality of water accounting in Australia through the Bureau of Meteorology.
There are some good investments that are happening in water metering as well. Some of what we have been suggesting is certainly in the groove, and other suggestions are now being looked at by officials in Commonwealth and state governments, and they will be putting advice to COAG later this year.
[SLIDE: Outline]
I have been giving you just a snapshot of the biennial assessment, our two‑yearly review of how water reform is going. A copy of the full report is available on the National Water Commission's website.
I am now going to talk about some future reform directions just for a couple of slides.
[SLIDE: Future directions: Continuing to work on the basics]
Let's not lose sight of the basics. We think the basics are still just as important as they were when the National Water Initiative was signed. Over‑allocation is still the central issue. We still, as a nation, haven't come to grips with it. As I have said, we can't even define it. We can't give a list yet of where these over‑allocated systems, both groundwater systems and surface water systems, are. We need to lift our game.
The basics include better water planning. There are three ways of managing water. You can do it through markets, through planning and through direct regulation. Water planning under the National Water Initiative has a special meaning. It is about getting all the evidence, the science evidence and the socioeconomic evidence, on the table and getting all the parties around the table to come up with a plan for how a particular river basin or water system should be managed. What is different about the Australian system is that the plan is put to the state government minister and it is eventually given statutory force.
A water plan in our terminology has statutory force, which would give statutory protection to consumptive users of water and to the environmental and indigenous and other uses of the water. So water planning is really important. It is not just central planning. It is an integral part of managing water well in Australia.
There is a lot more that could be done to improve our water markets but I am not going to talk about that in any more detail here, except to say that water markets are an essential part of the package in the National Water Initiative.
Improving our environmental water management is absolutely basic. A good proportion of our water is used for very important environmental purposes and the Commission thinks that there is an onus on environmental water managers to be just as effective and efficient in their use of water as consumptive users should be. So we have every right as citizens to demand of our environmental water managers the same standard of efficiency and effectiveness, that is, the same bang for the buck, that we demand of consumptive users of water.
The basics also include data, knowledge and public understanding. All of that is related to the bottom of this slide. Generally, better water decision‑making processes, governance, if you like, by both public processes and governments across Australia. So the basics haven't changed, and I don't expect the basics will change for quite some time.
[SLIDE: Urban water ‑ coming out of the emergency]
Talking about urban water more specifically, I think we have reached a new phase in water management. Think back just two years, 18 months even, and the urban water crisis was very clear. The crisis was about security of supply. Will we have sufficient supply for our urban communities? We are now coming out of that emergency and in many areas of Australia we are, or shortly will be, coming off restrictions.
We should be thinking, as policy makers, about what next, after that crisis of ‘just spend anything’, and get those new supply systems, desalination plants and recycling plants and so on off the drawing boards.
Urban water now requires, we think, explicit strategic plans for each city for a changing climate future. The fact that we are over the immediate emergency doesn't mean the problem is solved. What it does mean is that we have been given a wake‑up call by climate change. We all need to have explicit strategic water supply plans for each of our cities.
It may be that we are heading for the next chapter of urban water, which is not only about secure urban water, but urban water efficiently provided.
There are different ways of providing urban water. Some of them are efficient, some inefficient; some are costly, some less costly. We are rational people and we should be trying to get it provided efficiently.
In short, we will be probably moving over the next five years from the water security emergency to technical and economic efficiency. That will be the new focus.
Future directions in urban water will certainly include water sensitive cities and integrated water cycle management. It is about treating the whole of the system within urban Australia as one. That includes, for example, recycling and stormwater and so on.
You would expect that Australia, as the driest inhabited continent, would be leading in the provision of water sensitive cities. But we have a long way to go. There are many other places doing better than us. We think that urban water, in years to come, will be focusing much more on regulatory reform, that is, health regulation and environmental regulation. There is a lot to be done that can improve those regulatory regimes.
Rural/urban trading: the dam is beginning – so to speak – to break on that and there will be much more rural water provided for urban communities where there are hydrological linkages.
There will be more third-party access and there will be more and more private sector involvement over time. That's not an ideological position. That's just an expectation about how the world is moving in Australia.
If you look at all the dot points on the slide titled ‘urban water’, each one requires the right institutional arrangements and improved governance. Governance is about decision‑making and being rational and evidence‑based. We haven't yet got that in place.
[SLIDE: Rural and environmental water …]
The Commission thinks that the situation with rural and environmental water is still a bit uncomfortable. Pressures will continue. There will be pressure for much more explicit planning for climate change and adaptation to climate change. Australia is actually applauded all around the world by other countries for the way we have been adapting to climate change in our water management. We often criticise ourselves, but other countries think that we are doing pretty well compared to them.
But there does need to be much more explicit planning, rather than the unfocused planning that may have been happening in the past.
We will need to deal better with adjustment pressures. I talked about adjustment pressures on regional communities, industries, families and individuals. We need to be much more sensitive, I think, than we have been in urban Australia about the impacts on rural and regional communities.
There will be pressure for clearer choices among ecological assets and watering regimes. We do have to make some hard choices about our ecological assets. Sadly, we won't be able to sustain all of our ecological assets into the future and we will, therefore, need to make choices. When we do make choices they need to be really well informed by science and evidence, and they need to take account of socioeconomics and the views of the community.
There will be pressure for greater accountability on both consumptive and environmental users. Stakeholders are demanding more access and information about water reform and want to participate in planning and decision‑making processes.
As we look forward ten years we can expect more of what happened over the last ten years. That is, communities will be demanding knowledge, access and participatory arrangements that allow them to join in decisions. We are all tired of federal/state and state/state bickering.
I am now moving to the third and final part of my talk. I am going to give you some personal ideas on how we can improve the way that water science in Australia is delivered for water management and water policy purposes and, generally, to improve the standard of water management across Australia.
[SLIDE: Science in Australia]
Australia is unlike almost all other developed countries in that we have a resource‑based economy. That means that the natural sciences are more than usually important in policy formulation in Australia.
If you stand back and compare us with, say, a heavily urbanised European nation, our public policy agenda is relatively rich in natural science issues. Think about forestry, mining and agricultural issues, water management, climate change: these things are very much the currency of our public discourse in Australia, much more so than in other countries.
So if we do have this natural science orientation in our public policy, it is the disciplines of the natural sciences and economics that have most to say about natural resource management. Some would say that engineering too has a lot to say about better natural resource management, and that is certainly true in the case of water.
Over time in Australia we have had various agencies, such as the Bureau of Rural Sciences and the now defunct Land and Water Australia, try to bridge that science‑policy gap. CSIRO has played the role for some time, but there is still a gap between our science effort and our natural resource management and our natural resource policy, including water policy effort.
[SLIDE: Water science in Australia]
Water is often a location-specific issue. Think about how water compares with, say, nuclear physics or nanotechnology, which are independent of place. But in water management we need science in the hydrology of Australia's unique floodplain rivers and our unique aquatic ecology. I have often argued over the years that the sorts of science problems unique to Australia also require a science effort unique to Australia. Although we can rely on other countries to provide science principles and science frameworks, we can't rely on other countries to tell us about our specific hydrology or ecology and so on.
[SLIDE: The water reform cycle]
The National Water Commission participates in a policy reform cycle, which I will just walk you through. At the top is the National Water Commission. We do assessments and audits, such as the biennial assessment, about what is going right and wrong in water policy. In the course of that we identify or we ‘diagnose’ issues that need to be tackled. The ‘prescription’ part of it, the policy development part of it in response to the diagnosis, is the responsibility of governments across Australia, and they are implemented by agencies and government departments, and so the cycle continues.
We often take a diagnosis and incubate it for a while in the National Water Commission to try to encourage people to consider it and perhaps pick it up and run with it – eventually it might be accepted and in good time it can be handed over. I am not pretending for a moment that we were the only source of the following idea, but we did run hard with the need to improve water data in Australia, so we incubated that diagnosis for a while. We are delighted now that the need for better water data is well accepted by the governments of Australia and it has been handed over to one of Australia's national treasures, the Bureau of Meteorology.
[SLIDE: An NWC diagnosis …]
We have been pushing very hard for better science and better access for science to water policy. There are two recommendations shown on this slide, one from February 2008 and one from October 2009, are about the need for a national water science strategy, because when you stand back and ask whether we have a national strategic approach to water science in Australia, most people would say, no, we probably haven't. Yet, good water management, as I say elsewhere on this slide, really should be science- and evidence-based.
[SLIDE: Some water science needs]
This slide gives some examples of water science needs. I won't go through these painstakingly but will just point out how big the science agenda is that we need in water. Even for the water reforms that we are interested in, we need more and better science in all the areas of forecasting, climate forecasting and the like.
We need to analytically, objectively and in evidence‑based ways identify those environmental assets and the watering regimes that are necessary to sustain them. We need to uncover and analyse the environmental externalities. We need to improve our environmental water management.
I have already talked about the onus on environmental water managers to be just as effective and efficient with their use of water as consumptive users. I am really just making the point that there is a long list of strategic issues where we badly need science, and in my view we haven't really got as good a service as we need.
[SLIDE: A national water science strategy]
We lack a national policy‑led water science strategy. I am not saying that national water policy priorities should be the only source of priorities for water science. I am saying as well that water science should be much more influential in shaping national water policy. So there are two sides of this coin. We need water policy-makers and water managers to be able to guide the national water science effort. But we also need national water science participants, scientists, to be much more influential than they are at the moment in shaping national water policy.
COAG, to its credit, has called for a National Water Knowledge and Research Strategy. I am told that work is now well underway on that.
[SLIDE: Specifically what’s needed?]
More specifically, what is needed? I think that Australia needs a clearer strategy for its water science. It needs better resource allocation, which means better allocation of the budgets and the human talent that can be brought to bear.
We do need policy and management‑led science budgets. But I will make the point again that that is not the only source of inspiration for how water science should be. Scientists have a lot to contribute to the basic end of the spectrum as well.
We need clearer budget-setting processes. We need budget predictability, particularly for the basic end. One of my concerns is that basic water science is vulnerable, more vulnerable than applied water science. And applied water science is itself still vulnerable, partly because it is somewhat randomly generated. I will try to elaborate a bit more on that.
We need more coherent institutional arrangements. There is a good measure of fragmentation, and I wonder whether we are using our national research infrastructure as well as we could. We certainly need better user/provider connectivity. That is, science users/science providers.
Related to those institutional arrangements we need improved governance. There are three, perhaps four, elements to this. The first one is, we do need much better policy input to the science effort to guide it. We also need much better science input to the policy effort to suggest where some water management and water policy priorities should be, according to the science view of the world. We need science input into water management.
Now, what does that mean? It means that the world isn't just about policy. The practical world of water management is about practical managers of consumptive water and environmental water. Scientists have a lot to say about that. So science input into water management is every bit as important as science input into policy. And we ought to be able to set up our governance arrangements so that water science has a higher profile with ministers, in state governments in particular.
We also need clearer roles. There is a good deal of confusion about who is responsible for what.
[SLIDE: Possible elements of the national water science strategy]
This slide shows some possible elements of a national water science strategy. I am not going to go through them, but you can see the table of contents for improved national strategic planning for our water science effort.
One thing that has been suggested to me that would be very important is number 9 on the list: Arrangements for a long-term water knowledge repository. There is a lot of water knowledge out there, and half the problem is trying to extract and retain it.
[SLIDE: Water science institutions]
Institutions matter. Institutional arrangements matter. Institutions are more than agencies and buildings. It is about the way that agencies and players and entities interact with each other in governance and decision‑making.
The salutary thing about institutional arrangements is that they can thwart even the best of intentions and the best scientists. So if you are struggling in the wrong institutional structure it is very difficult to be as effective as you could be. It is true that governments across Australia have made significant investments in water research in recent years, but my view is that despite that progress – and there has been progress – capacity is still fragmented.
We are still dissipating our effort. We lack critical mass in important areas. Our processes for priority settings, such as they are, are unconvincing – that is the nicest word I could find – and applied research is more readily funded and certainly more secure than basic research or pre-competitive research.
[SLIDE: Example: urban water research in south-east Queensland]
This slide shows an example that was given to me by a science colleague in Queensland. All sorts of institutional initiatives have been taken with the best of intentions in south‑east Queensland, but there are many overlaps in topics and mission. They are all drawing on the same relatively small pool of researchers.
[SLIDE: Institutional arrangements matter!]
Institutional arrangements do matter. I would ask those of you who are water scientists, do you feel fully empowered in influencing the policy agenda and the water management agenda? Many have said to me that they feel disempowered.
At the same time it is difficult for science users, including policy makers and water managers, to connect as well as they would like with science providers. It is difficult to access science output in a user‑friendly form and on time. This is a common plea of the science policy people; but my view is that policy makers sometimes don't invest enough time, effort and sweat themselves to understand the science.
Integration of disciplines will be a really important part of water science in the future but it is very difficult to get that integration.
It could be that new funding formulas and incentives and disincentives for academics dealing with the Australian Research Council and other bodies may be discouraging interdisciplinary work. It could be that the newer or newish arrangements focus on excellent work in chemistry, physics and so on, but interdisciplinary work is much more difficult to be recognised for.
Some of that national strategic and basic science may be being displaced by tactical work. My argument is simple: I think we can do better. Institutional arrangements matter. They are not well structured at the moment and I think we can do better.
[SLIDE: So what's wrong with the system we have?]
This is a rather blunt slide, but it is my summing up of some of what I have already said. We lack a strategy. We lack priority-setting processes, which should be more effective. The budget-setting processes are not as rational as they could be. We worry about interdisciplinary and integrated work, which is really important for good water management. Science/policy and policy/science links are weak. There are research needs which are going unmet. Basic research is vulnerable. I come back again to intergovernmental alignment. We haven't got nearly enough of it.
[SLIDE: Possible features of a better national water science system]
What might be some possible features of a better national water science system? What about this: a national water science strategy based on a three‑yearly cycle. Within that three‑yearly cycle there would be an annual needs and capabilities forum involving water science users, policy makers and water managers, as well as providers. Importantly, the providers would for the first time be at that forum as equals, equal with the policy makers, because they would be bringing the capabilities part of the equation at the same time as the policy makers and water managers would be bringing the needs part of the equation.
As a result of that forum, there would be an annual statement of water policy directions and science needs, sponsored by the Commonwealth water minister.
To do this effectively we might need a national water science provider coalition, which I have called Water Science Australia. And through this coalition, science would be inside the water policy system for the first time.
[SLIDE: What might ‘Water Science Australia’ look like?]
What would this coalition of water science providers look like? Well, it would be national. It would extend broadly into economics and social sciences as well. It could be structured so that there is a board, 50 per cent science providers and 50 per cent science users, with an independent chair, which allows a bit of creative tension and a bit of push/pull between the science users and the science providers. It would provide advice to the Commonwealth minister about resource allocation and science priorities. It would be responsible for nurturing not only the applied end but also the basic end of water science. The basic end of water science has been living a bit hand‑to‑mouth.
[SLIDE: What might ‘Water Science Australia’ look like? Cont’d]
It would have a strong identity, a corporate identity, as the national champion – which isn't there now for water science. But member organisations of that coalition would, of course, retain their prior identity. In that respect it would be similar to other structures that you have seen, such as centres of excellence and the like.
It would have a close understanding of needs, because it would be inside the water policy process. Remember that sequence, that hierarchy down from the strategy, the annual forum and so on. And it would be inside and informed by its 50 per cent board members, who would be inside the system, not outside looking in.
It could require demanding levels of commitment of time by researchers. I picked a number here, not less than 25 per cent, because any higher than that might be difficult for university academics. But I have seen coalitions and groups where providers are offering 1, 2 or 5 per cent of their time. And for me that is just not credible.
There would be a high quality science agenda – this is about excellence and improving the water science effort in Australia. This coalition would be providing national intellectual leadership to water science. There would be processes of continual national peer review and international peer review.
[SLIDE: Why a new institution?]
Why a new institution? Well, it is actually not a new institution. It is a coalition of existing institutions and agencies. It would provide a national focus, which is lacking now. I guess I am trying to draw a picture of complementary national capacity for the first time between the policy makers and, to some extent, the managers of water and the providers of water science.
So it would build, for the first time, the capacity for the provider side of the equation to interact as equals with the user side of the equation. This is essential if science providers are to be brought inside the water policy system.
[SLIDE: Possible roles of WSA]
What would Water Science Australia be doing? It would be an informed broker of science services. It would know its business. It would know about water science. It would obviously be a clearing house for collaboration. Too often, I think, we tend to leap to ‘let's try to minimise duplication and overlap’. Perhaps because I am an economist I also see a place for rivalry and competition, competitive tension, to make sure that things happen as quickly and as thoroughly as possible. So a clearing house for collaboration or competition.
It would provide that science input to water policy and to water management. It would provide interpretation services, trying to make science more accessible to managers and policy makers. It could arrange for the sale of services to the private sector. It would recommend budget allocations and it would be a national champion and gateway. We don't have an effective gateway to international water science at the moment.
[SLIDE: More strategic and predictable budget arrangements]
We need more strategic and predictable budget arrangements for water science. It could be in three parts. The first part would be triennial. We know that science needs that forward horizon and reasonably predictable budgetary outcomes. Triennial baseline funding would keep the coalition ticking over and would have a particular emphasis on basic and pre-competitive research.
So there would be a reasonably predictable and stable foundation for the coalition as it went about its business. On top of that there would be targeted allocations – part B in the slide – to grow capacity in the areas of need for future science.
Where would we identify those areas of need? We would take them from the national annual statement of water policy and science needs that I was talking about before. So there would be an analytical rational process of identifying where we need our future capacity in water science, and part B funding would try to grow that capacity so that we could be there, ready with the science, at the fall of the ball.
Targeted allocations to grow capacity are a really important way of being strategic about the expenditure of our scarce science dollars in Australia.
Then to part C on the slide: all members of the coalition would like to know what is likely to be coming as requests for applied science in the future. That would come out in the process of developing the annual statement, through government and other users of applied science indicating their priorities over the next 12 months, and some indication of their budgets for science purposes.
[SLIDE: More strategic and predictable budget arrangements (cont’d)]
In this budget process the member organisations of the coalition would identify their own capabilities and capacities as they relate to the strategic research plan. They would receive the baseline funding (part A), particularly for basic and pre-competitive research, and part B, the capacity-building funding, in areas that are likely to be important in the future. Part C funding would be arranged through this broking and dealing with each other.
[SLIDE: What's different?]
So what's different about all that? Well, unlike now, we would have a coherent national water science strategy, this time developed with some real input by science providers, and it could be issued by the minister.
Unlike now, there would be a structured national process for delivering the necessary science underpinnings for water policy and water management. Ask yourself, is there such a thing now as a structured national process for deciding where those science efforts and investments should be? There would be a transparent and a publicly defensible budget-setting process. Why is that important? It is not just good public administration. If it is transparent and the water community can explain to the community how it is making its decisions about budgets, then we are a long way ahead of most other sectors of the economy. That is a firm foundation for continued budget allocations.
Unlike now, water science providers would be participating as an equal in the water planning and strategic management process, and they would be inside the national water management system rather than outside knocking on the door and asking to be admitted.
[SLIDE: What's different? (cont’d)]
My suggestion would be that half of the directors, the people representing the purchasers, should be serving executives of science‑using organisations. We tend, in Australia, to just find some eminent people, you know, a recent retiree who has a good reputation. That's very different from having a serving executive of an agency or a firm which is actually using the science. So my suggestion would be if we were to structure a Water Australia Board with 50 per cent provider directors and 50 per cent user directors I would actually use the practising executives of science-using organisations.
Water Science Australia would account to the minister for its performance. That would, in itself, engage attention for water science at the political level. One of the points I made earlier was to wonder whether ministers are sufficiently engaged in water science. This would be one way of capturing that attention.
[SLIDE: A world class priority setting process]
It would have a world‑class priority-setting process. This slide sums up some of what I have been saying. There would be a national water science strategy, which isn't shown on this slide. From that, each year there would be a national needs and capabilities forum involving both the users and the providers. That forum would yield an annual statement of water policy directions and science needs, which would be pretty handy, I would have thought, for people taking decisions about managing their own agencies, their own efforts, their own priorities and their future directions.
It would be a rolling annual statement – so it would be revised year on year – a three‑year research plan which the board of the Water Science Australia coalition would produce. It would, of course, produce an annual rolling program of research, as any good agency would do.
[SLIDE: Determining applied research priorities]
I emphasise again that I am not only talking about applied water science, I think it is really important that we perform better as a nation at the basic pre‑competitive end as well. But we could have a more analytical approach to applied priorities along this structure, which will be familiar to many of you, I am sure. On the Y axis how important is this topic? What is the consequence of failure or success? How big is the potential yield? And on the X axis, is this a tractable problem? Has there been progress and success to date? Would there be synergies with other work, and are there opportunities to advance collaboration by funding particular projects? So we would try to find ourselves in quadrant four.
[SLIDE: Conclusion: Radical but necessary change]
My conclusion is that this would be a pretty radical change, but I think it is necessary to force some change in water science in Australia. If there were to be reform of water science arrangements it would be not only important but, I think, overdue. It is a capacity-building initiative for the water sector because we are trying to improve the way we, as Australian citizens, we as a nation, manage our scarce water. There is a capacity problem, an effectiveness problem, and possibly an efficiency problem in the use of water science to that end. So I want to empower water science to build its capacity so that we can improve our water management nationally.
It would be congruent with our national political priorities. Water is so important across Australia that taking an initiative in this water science area would be totally consistent with the focus of all Australian governments. It would improve bang for the water/science buck, which would be better allocation of scarce budget resources, and it would empower water science providers.
It saddens me that some of our most outstanding minds are not being properly utilised in the national water management effort. It could be that there would be, in this, some ideas that could be adopted by other sectors.
I will end with a caveat. I am really just offering these ideas for people to have a think about. They are not National Water Commission recommendations. In the spirit of the Academy's own philosophy I am putting out some ideas that people might be interested in.
Discussion
Question: I must say that for an economist you spent a lot of time on the science and not much on economics, which is very interesting and exciting to hear. Can I ask, is there an agreed methodology for the pricing of water, and would it be reasonable for a component of that water price to be devoted to scientific research?
Ken Matthews: The general principle for good pricing of water is to make sure that pricing captures the full costs. The best way, I think, for the science community to think about that would be to see that there are a number of externalities involved in use of water. Environmental externalities are the best example. To the extent that they are not being properly captured in the price, then it might be possible to legitimately raise the price of water – which many people are keen to do – so that it is used more wisely, provided that the increments to the price were used for environmental science purposes.
Question: Nice talk, Ken. It was very comprehensive. Can I come back to the urban environment, because I think this is the one that is probably easier to manage. We know how many people are going to be living in urban environments. You mentioned that during periods of drought there are going to be restrictions and that over the next few years there might not be restrictions and so on. Does the Commission have any handle on what sort of per capita water levels, metered water levels, are within the bounds for planning for the eastern seaboard, for example? In other words, how many litres am I going to be allowed a year in the planning process for the urban environment?
Ken Matthews: The general approach to water management, particularly in urban Australia – and this is a bit counter‑intuitive to many people when I say it – is eventually to get back to a situation where people can use as much water as they need. That isn't irresponsible. My picture of the future is not that a hundred years from now we have elderly people continuing to carry buckets out of the shower.
We need to design a system which, by both demand management and supply augmentation, will provide sufficient water for a modern community to get on with its needs. Some cities in Australia will always need more than others because they are more densely settled. They have fewer gardens, more high-rise, different climate, different topography and different soils.
So the approach that is the best in those circumstances is to have a system which is independent of quotas and independent of geographic location and that encourages efficient and wise water use. It certainly shouldn't be unbridled waste.
In fact, the Commission is considering putting out a set of guidelines about basic good management of water, which might include, for example, not watering your garden in the heat of the day. That is responsible and wise water use.
We do need to move beyond regimes such as you can only irrigate on Tuesday and Thursday afternoons. We do need to have a system which doesn't set quotas or even targets to individuals, but allows the supply and demand arrangements to find their optimum position, just as we do for the other essentials of life, such as pharmaceuticals, food, shelter and so on.
The future for water in urban Australia ought to be responsible but not regulated to constrain use to someone's arbitrary artificial target level.
Question: As a former director of Land and Water Australia I can say there is real value in having small strategic organisations that are involved in that kind of strategic assessment. I guess my question is how do we get as much power behind your proposal to make sure there is advocacy for it?
I have a second question. For about 20 or 30 years in Australia we have put the mantra out that we can't manage water without managing land, or the catchments to that water. You focused almost exclusively on water. By that do you mean the entire water cycle, including the precipitation and land-use side of water? Are you really strictly focusing on the water resource?
Ken Matthews: On the first question. What I'm doing is just putting some ideas out there. Let's see if there is some discussion of them. If they are of use to anyone, then that would be a bonus. So I'm not going to ram advocacy down people's throats. There are some ideas out there, and if they survive on their merits, that's good.
On the question of water in natural resource management more broadly, yes, it is obviously better that we treat water as one among a range of natural resources. It is obviously better that we have water properly nested within broader natural resource management. We need to find arrangements which have automaticity about them so that the water management fits neatly with broader land management and vegetation management and so on. We need to be careful we don't have partial solutions which do something dramatic with water but have unintended consequences on other natural resources. The short answer is, yes, we should nest water management within wider natural resource management as well.
Question: My question really follows the previous one. In the early part of your talk you referred to the links between water management and climate change. My question relates to that. The bottom line of water balance, of course, is precipitation. I would like to ask a question about forests. Is there any evidence that massive forest clearing leads to a decrease in local precipitation, an increase in local temperature; and conversely, do you believe that massive tree replanting will lead to an increase in precipitation and low cooling?
Ken Matthews: Look, I am sure there are people in the audience tonight who can answer the first question better than I could. But I can say something about your second question because that is a form of water interception. If there are plantations planted across an environment there will clearly be impacts on the available water. I talked about the linkage between surface water and groundwater, and that is a linkage, there is an evapotranspiration linkage with groundwater. Large‑scale plantations would almost certainly have an impact on groundwater and they would be quite likely to change the flow of surface water to storage and, therefore, what is available for consumptive or environmental use elsewhere.
The National Water Initiative has things to say about this. That is, if plantations are to be planted in a region which is at full allocation, or approaching full allocation, then they should acquire an entitlement to that water, like anyone else. That makes a lot of sense. I think as we plant more plantations to try to fix carbon, we will be impacting on water. We need to have a system which is going to accommodate those additional plantations.
I mentioned before that other countries have expressed a lot of admiration for Australia's approach to water management. The reason they are doing that, in many cases, is because the climate change adaptation character of Australia's water management is something that many other countries are interested in. They feel that Australia has already taken initiatives to manage scarce and variable water, and to deal with plantations in this water balance, as the National Water Initiative does. But the nexus will need to be very carefully managed, the nexus between water, climate change and carbon.
Question: I was wondering if you see a role for the development and expansion of technologies that you mention, such as using recycled water and desalination, if the institutional problems and allocation problems aren't first addressed?
Ken Matthews: I am a pragmatist. I think perfection can be the enemy of progress. So I would keep working, as we have been, on desalination and recycling. Recycling has many advantages over desalination. But, and this might be a slightly unpopular view, I think it is important that we also have desalination as part of our suite of options in urban Australia. We have come from a world where our cities depended on the local dam in the mountains. That was a very fragile, vulnerable arrangement.
We now need to build a portfolio of less climate dependent sources of supply. Desalination will be one of them, particularly on the seaboard, though increasingly I think if you look out 10 years we will be desalinating inland saline groundwater supplies as well. But desalination will be in that suite of supply options. Recycling will be another, stormwater capture, water sensitive urban design will be another, rural urban trading will be another, and so on. So we need to keep working on all those fronts, even as we are sorting out better science and institutional arrangements.
Question: I might have misunderstood you, but you said fairly early on in your talk that you were going to choose between ecological values – to keep some and sacrifice others. I found that a worrying statement, given that ecological health underlies human health and, indeed, human survival. I really hope that you will listen to the scientists about the importance of ecological values before you actually make decisions about those sorts of sacrifices.
Ken Matthews: I absolutely agree with you. I understand that you feel strongly about that, as do I. The bad news is that there is one more slide, which might illustrate that very question.
[SLIDE: Can’t we take the ‘politics out of water’?]
Some people say, can we take the politics out of water – which is another version of your question. My answer is that science and data and evidence are really important for those decisions, but ultimately they are societal decisions. There is a list on the slide of some questions which are quintessentially science decisions. Which environmental assets should we be nurturing? For example, how big a red gum forest? Having chosen which one, how big? How green a wetland? How often should we be having ecological events? How resilient do we want the system to be? So those decisions really do need to be science rich, indeed science adequate, but I don't think they can be science determined.
They are political societal judgments in the end. The mistake I think we have made, as a nation, is to leave them as societal choices without enough science in them. So we probably agree with each other on that. But those choices, those judgments, those trade‑offs, will always be necessary. We need to have good public decision‑making processes, transparent processes: who decides under what criteria in what timeframe, with what evidence, using what process of logic and analysis, and informed by what science, before we can take those very hard decisions. They are hard decisions, but we will have to take them. There will be choices that have to be made between different ecological assets.
Question: That was a wonderfully visionary talk. I hope your vision comes about. I was particularly interested in your repeated emphasis on interdisciplinary research. We have heard from the policy arena for several decades about the need to coordinate such difficult to manage research, to get rid of fragmentation overlap, et cetera. But having watched the response to this over the past 20 years or so, I have noticed a very large increase in transaction costs. I am wondering if you – you have no doubt thought about the problems of transaction costs and interdisciplinary research – can think of ways of reducing them.
Ken Matthews: It hasn't been top of mind, but it is my strong view that integrating better between our silos, between our disciplines, including both within the natural sciences and into the social sciences and economics and so on is a really important objective that we haven't been doing well.
It partly relates to the last slide, because if we are to make informed and rounded decisions as a society we need to have well-integrated input from all the different disciplines. It is difficult to do. There are high transaction costs, but it is well worthwhile.
To end on a positive note, the decisions or the science advice that tends to stick with policy makers and water managers is the science advice that is wrapped in an integrated way.
If it is very uni‑dimensional it stands less chance. It's less robust. But when society takes those hard decisions it will want to get a whole lot of inputs, and that interdisciplinary integrated approach makes it just so much more important. So successful scientists try to be as broad as possible.
Question: I would like to raise the question of the politics, sociology and science of the Commission's work when it ends up with the sort of disaster that was predicted 15 years ago by National Farmers Federation, and the outcome in a town called Worcester in northern Victoria, which basically is having all its community industries closed down as a result of your policies. Would you like to comment on that?
Ken Matthews: The National Water Commission is as concerned as you are about communities. The impact on communities and the impact on families within them, the impact on individuals, rural suicide, all these awful outcomes of structural change are something that we all need to be taking very seriously.
Those processes of change are inevitable. One of the points that I made earlier in my talk was, we think it is important to try to align the incentives so that those processes of change happen as smoothly and with as much support as possible than they would otherwise.
Governments, both federal and state, have provided quite a bit of adjustment assistance in various forms to facilitate those very hard decisions. But if your question or comment was a plea for consideration for those communities, then I couldn't agree more. It is something that we try to bring out in our biennial assessment, that there are real people who are affected by these processes of change. As a nation we haven't really managed those processes of change in a way which is as empathetic or sympathetic with them as perhaps we should have.
Question: I am very encouraged by the idea that there should be more evidence‑based decision-making about water in this country. But I did have concerns about the fact that there was some very easy acceptance of the fact that privatisation of water resources might be part of the issue. I was also a bit concerned to hear you talk about people in cities being allowed to use whatever they want.
It seems to me there are some policy settings about keeping control of water and keeping control of the pricing and availability of water that might in fact argue against privatisation of it very strongly.
The other thing is that certainly overseas there are examples of people using pricing very carefully in terms of how they actually contain usage. And as you move to things like desalinisation the energy costs are huge, so the energy itself is also counteractive to good environmental outcomes in terms of its consumption.
I just have some concerns about seeing us go to a situation where there is a drought and there is water on one side of the street and not on the other because it is privatised – which has happened in England, for example.
Ken Matthews: Fair points. First of all, I certainly wasn't promoting privatisation of water. The point I hope I made was that I expect that there will be greater and greater private sector participation in various forms of water. I think that will apply all around the world. But I see no evidence that any government in Australia at this time wants to privatise. I hope that reassures you.
If we make sure that the price of water generated through a desalination plant includes an allowance for the impact of carbon dioxide emissions into the atmosphere, that is capturing the externality and it will regulate the use of water better than would otherwise be the case. But I think you were making a comment as much as a question. I hear the comment.
Graham Farquhar (Chair): Thank you, Ken. I would like to say that the Australian Academy of Science would be very happy to work with you on any aspect of promoting these ideas and having them discussed. The Academy works closely with its sister academies, the Academy of Social Sciences as well, of course, as the Academy of Technological Sciences and Engineering.
