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Murray Darling Victoria Deal

Estimates & Committees
Rachel Siewert 29 May 2008

Standing Committee on Environment, Communications & the Arts

Senator SIEWERT-I am aware of the time so I may have to put quite a lot of questions on notice. I would like to pursue a bit further the issue that Senator Birmingham raised and that is around the $1 billion allocation to the fruit bowl project. I refer to the claims that were made that there was going to be, I think, 100 billion litres of water saved by that project. On what basis were those claims made? Who provided the figures for that? I think it was actually 200, of which the river would get 100.
Mr Borthwick-They were estimates put on the table by the Victorian government.
Senator SIEWERT-Did you do any assessment of those claims?
Mr Borthwick-No, we did not assess those claims but we wanted to make sure, through the due diligence process, that they could be verified.
Senator Wong-I would refer you on this, Senator, to paragraph 22 of the MOU.
Senator SIEWERT-Is this the one about due diligence?
Senator Wong-Correct.
Senator SIEWERT-I appreciate and I have read the issues around due diligence-that it will be undertaken. What happens if you are not able to get the 100 billion litres of water for the $1 billion that has been allocated?
Senator Wong-Senator, I am not going to go beyond what has been agreed in the MOU at this stage, and I would refer you to that. We have agreed in principle to fund 90 per cent of the total project cost up to $1 billion, subject to a joint due diligence assessment et cetera. Our negotiations are proceeding in respect of the due diligence. I am not going to speculate about where that goes from here.
Senator SIEWERT-You have committed $1 billion. I understood it was on the basis that 100 billion litres of water would be returned for that $1 billion. What happens if it is in fact not correct, once that due diligence is undertaken? You have not undertaken any assessment of the amount of water Victoria said was accessible through that project. We have all heard of the Auditor-General's report in Victoria that has fairly strong words to say about stage 1.
Senator Wong-Senator, as I said, I would refer you to the MOU. We are progressing the due diligence discussions and negotiations with Victoria. As you will see, the MOU says this is subject to a joint due diligence assessment and the delivery of half the gain and additional flows around 100 billion litres.
Senator SIEWERT-Did Victoria provide any figures to back up their claims that they could provide the river with 100 billion litres of water?
Senator Wong-In which context, Senator?
Senator SIEWERT-When you were negotiating this agreement, did Victoria provide any figures to back up the claim that they would save 100 billion litres of water?
Senator Wong-They are Victoria's figures. That is the information the Victorian government and I think Victorian officials gave to us in the context of negotiations. As I said, this is obviously subject to a due diligence process within the context of the in-principle agreement that is outlined in the MOU. I think the reason we are probably not going to be able to assist you is that I am really not going to speculate ahead of that negotiation and due diligence process about the outcomes.
Senator BIRMINGHAM-Just on that point, can I confirm, as a principle in applying the terms of this MOU and the IGA, that due diligence for any priority project will ensure that, to the best of the
Commonwealth's knowledge in undertaking that due diligence, the nominated water savings for that priority project will be delivered if it is undertaken?
Senator Wong-I am sorry, I do not understand the question
Senator BIRMINGHAM-The question was: when you are undertaking due diligence for any project, will part of that due diligence be ensuring that the nominated water savings can be met?
Senator Wong-The answer in the broad is yes. What I have made clear publicly is three criteria to guide investment in priority projects put forward by the states. I have made that clear I think in two speeches. They are: projects must be able to secure a long-term sustainable future for irrigation communities in the context of climate change and reduce water availability in the future; projects must deliver substantial and lasting returns of water to secure real improvements in river health; and projects must deliver value for money.
Senator SIEWERT-What happens to the agreement if the due diligence shows that the savings cannot be made? What happens to the agreement?
Senator Wong-I am not going to get into that. I am not-
Senator SIEWERT-Was that discussed?
Senator Wong-I am not getting into that hypothetical, Senator.
Senator SIEWERT-It is not a hypothetical. When you were negotiating the agreement-
Senator Wong-It is a hypothetical because we do not know what the results will be. The MOU specifically recognises the need for a due diligence process and that is what the Commonwealth is engaging in.
Senator SIEWERT-Let us move away from a hypothetical around Victoria. If due diligence on any project is not met, what happens to the agreement? Surely that was discussed with the states. If the projects they put up do not meet those requirements-and Victoria came on board because it was given the carrot of a billion dollars-what happens if they do not meet due diligence? I reckon the Australian community has a right to know.
Senator Wong-Well, due diligence means exactly that.
Senator SIEWERT-If it does not meet that, what happens to the agreement? Does Victoria pull the pin?
Senator Wong-I cannot speak for the Victorian government. What I can say is what we agreed when we were negotiating. We agreed in principle to fund up to $1 billion, 90 per cent on a 90 per cent project cost basis, of the stage 2 project subject to a joint due diligence assessment et cetera.
Senator SIEWERT-Did you not discuss what happens if it does not meet it?
Senator Wong-It is quite clear what that means, Senator. As I said, I understand where you are going on this but we are not going to speculate about where that due diligence notion goes to.
Senator SIEWERT-Due diligence I presume means that it is delivering against those criteria and it is actually delivering the savings that were articulated in the media.
Senator Wong-Sorry?
Senator SIEWERT-I am presuming that the savings that were articulated in the media are the basis on which those negotiations were carried out, which is the 100 billion litres.
Senator Wong-Due diligence discussions occurring in the context of what was agreed in the MOU that I have read to you.
Senator SIEWERT-So you did not put any requirements around the amount of water that would be
Delivered?
Senator Wong-I cannot assist you any further, Senator. The MOU reads as it is. That is the context of the due diligence discussions.

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