I rise today to speak to the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. The bill before us today would fulfil a longstanding commitment of the Greens to create a register of water holdings by foreign nationals. Indeed, this is the second stage of our foreign agricultural reform package, following last year's passage of legislation to develop a Register of Foreign Ownership of Agricultural Land and to lower the Foreign Investment Review Board's threshold of agricultural sales to foreign investors. As part of that package, the government agreed to the development of a foreign water holdings register. It is because of the hard work of Senator Siewert and Senator Whish-Wilson, and before them Senator Milne, that we are here today debating this bill.
A register of foreign water holdings will increase the transparency of our relatively new water markets so that the public has access to information about who, where and how much water is held by foreign citizens. Since the beginning of the water reform period in the 1990s, we have seen water trading have some limited successes in incentivising water efficiency and returning environmental flows—despite the best efforts of some on the government benches, including Minister Barnaby Joyce and his cheerleaders. Potential abuses of power in water entitlements and allocations, particularly in times of drought and water scarcity, have been identified, so the concern amongst both policy experts and farmers is real. One of the first steps in dealing with these problems is to make information on market concentration and ownership structures better available to the public. Building broad awareness of the risks, opportunities, dangers and the current state of the concentration of water ownership by foreign investors would lay the groundwork for future tackling of problems with our water markets.
This brings us to the bill before the Senate today. From 1 July 2017, foreign persons will be required to register their legal interests in registrable water entitlements and contractual water rights with the Australian Taxation Office. A stocktake period will be conducted between 1 July 2017 and 30 November 2017. A foreign person who holds a registrable water entitlement or a contractual water right on 1 July 2017 will have until 30 November to register that entitlement or right with the ATO. A person who holds a registrable water entitlement or a contractual water right on 1 July 2017 but disposes of it before 30 November will not need to register that interest. Following the stocktake period, foreign persons will be required to register their registrable water entitlements and contractual water rights, or changes to their holdings, 30 days after the end of each financial year.
With this information, the ATO will publish an annual register of the proportion of Australian water entitlements held by foreign persons, the level of foreign interests in water by country of origin, the level of foreign interests in water ownership and lease, and the use of water rights held by foreign persons. Most importantly, our discussions with the government have indicated that the government's intention is to record holdings within surface and groundwater basins as defined by water planning instruments, including water resource plans, in each of the water-trading jurisdictions. This register would then produce the level of foreign ownership by water system. For example, in the Murray-Darling Basin there are 20 surface water resource plan areas, 22 groundwater resource plan areas and six combined groundwater and surface water resource plan areas. Foreign persons registering in respect of water holdings in the Murray-Darling Basin would be expected to register against the relevant surface, groundwater or combined water resource plan areas.
There are still some privacy implications for investors that will affect how detailed the data is going to be, but we have it on good faith from the government that they will attempt to maximise the degree of information without imposing onerous costs or breaching privacy law. Although the Greens were pleased with the first release of the land register, we were disappointed with the lack of granularity and detail that is in the foreign land register. We believe that what is being promised for the water register will be a significant improvement on the situation with the land register. By building on both the successes and the limitations of the agricultural land register, this bill will be a win for accountability and transparency in our water markets.
This debate needs to be held in the context of the changes that are happening to our climate and the knock-on effect of these changes on the hydrological cycles in our major river systems. I am still hopeful that the world is going to see sense on climate change and that we will take the required action to prevent dangerous and irreversible climate change. It is difficult to still feel optimistic, given the positions put by our current government and some of the crossbenchers here, but I am hopeful that we will act. But if we do not meet our global climate targets—and again, with the current positions held by governments here and the incoming Trump presidency, it is not looking promising—Australia is going to continue to shift to being an even more water-scarce country.
At this stage of the year in 2016, we are generally feeling a bit more relaxed about water flow, because across much of the country, and particularly across the Murray-Darling Basin, we had an exceptionally wet winter. But what global warming means is that those dry years that we have struggled through in the last 15 years are going to come around more and more frequently, and the years like the one that we have just had will become very rare indeed.
The South Eastern Australian Climate Initiative, which was a joint project of CSIRO, the Commonwealth, the Victorian state government and the Murray-Darling Basin Authority, found in their phase 2 study that two degrees of warming—and we are currently heading for three or four degrees of warming—would result in approximately a six per cent decline in rainfall and a 20 per cent reduction in run-off in the Murray-Darling Basin. To take the Murray-Darling Basin as an example of the impact of climate change on water markets, it is hard to see how we are going to equitably manage a 20 per cent decrease in run-off in a system that is already proving impossible for the current government to manage. In the basin today there is massive competition between flows sufficient to support struggling estuarine and river mouth ecosystems and the demands of the communities upriver, the irrigators and farming communities. It does not even bear thinking about the impact of four degrees of warming and beyond on these conflicts.
Worse, under conditions of water stress and drought, when water is scarce and farmers are desperate, there is always the potential for the formation of large oligopolies and exploitative behaviour by water traders. Market concentration is a very real threat. The flow-on of this concentration into food, fodder and fibre prices could have very large impacts for our rural communities. So it is through measures such as the one in this bill that we are going to be able to ensure that our water-trading system remains as equitable, transparent and fair as possible.
I want to clarify here that, although the Greens remain cautious about the role of foreign investment in Australia's water, we are equally cautious about domestic investments.
As I was saying, on the issue of water holdings and private water holdings, I want to clarify that although the Greens remain cautious about the role of foreign investment in Australia's waters we are equally as cautious about large domestic investors. And the Greens are committed to working towards greater transparency in the agricultural land and water holdings of all investors, not just foreign ones. This chamber knows from experience that market concentration and abusing differences in knowledge held by different parties are by no means tactics that are unique to foreign investors. These same abuses are part and parcel of the business model of many domestic Australian investors. So, the Greens will continue to investigate options for greater detail in public registers of these assets, although we do appreciate the existing limits on the tax office in both protecting privacy and balancing information collection with the costs of reporting requirements.
In conclusion, I want to comment on the amendments that have been circulated in the chamber. The Greens will be supporting the amendment by Senator Leyonhjelm. We did not support Senator Leyonhjelm's original amendment to insert a sunset clause into the Register of Foreign Ownership of Agricultural Land Amendment (Water) Bill 2016. And although we disagree with the necessity of a Productivity Commission review of the legislation within the next five years, we believe that Senator Leyonhjelm has put forward this compromise amendment in good faith and we will support it to ensure as broad a consensus as possible on this bill. I commend this bill to the Senate.