Thank you for inviting me here today.

I would like to acknowledge the traditional owners of the land on which we meet and pay my respects to elders past and present.

It’s good to be in Adelaide speaking with all of you.

I have just spent the last couple of days visiting southern Basin communities, listening to the hopes, concerns and aspirations of many people, including leaders in industry and in local and state government.

I heard a range of views about the nature and scale of the challenge of putting the Murray-Darling Basin back onto a sustainable footing.

And I also heard a great deal about the devastating economic and social impacts of this record-breaking drought on our rural and regional communities.

Unfortunately, the duration and severity of this current drought, which in effect has been building since 1997, is already beyond anything we have previously experienced.

It is significantly worse than either the Federation Drought or the 1940s drought, and it is seriously testing the resilience of irrigation communities over most, if not all, of the Murray-Darling Basin.

The last three years represent the worst three-year period for the River Murray since records were first kept. Inflows to the Murray over the last three years have been less than half of the previous historic minimum.

And Basin-wide, the average yield on water entitlements has been just 2500 gigalitres a year over the last three years - well short of the long-term average of almost 8000 gigalitres.

Severe long-term rainfall deficits continue to persist in the upper reaches of the high yielding catchments in the Victorian Alps and Snowy Mountains, restricting winter inflows into the River Murray System to historically low levels.

And we can’t ignore the recent findings from the South Eastern Australian Climate Change Initiative (SEACI), which show there is a clear link between rainfall reduction over south-eastern Australia and observed global warming.

While we all hope for the best, the outlook for the remainder of this year remains poor. Not only do forecasts suggest that the dry conditions are set to continue, but the Bureau of Meteorology is projecting the likely emergence of another El Nino event later this year.

Unfortunately, this drought has given us a sample of what the future might look like under climate change.

It also serves to highlight the wider challenges we face in the Murray-Darling Basin in responding to the history of over-allocation and declining river and wetland health.

Let’s just remind ourselves what we are dealing with here.

We are dealing with a legacy of over-allocation and mismanagement. We are remedying the mistakes of the past, where too many politicians ducked the problem and failed to take the responsible decisions to protect the future of the Basin.

We are facing one of the worst droughts in living memory.

And we are coming to terms with the reality of climate change.

These are challenges that demand that we work together as one Basin community – something that has become ever more clear to me during my trip through the Basin this week.

We need an end to passing the buck and an end to playing the blame game.

We need to focus on action, not on political posturing.

We need a willingness from us all to confront the problems together and to work together to solve them.

Yet still, in other quarters, there is a lot of chest-beating about the need to take over the Basin.

Instead of beating chests, politicians should understand the Commonwealth has already taken over Basin-wide planning, which will mean new, enforced, lower limits on water use.

Politicians should also understand that the fastest way we can start making a difference to the health of Basin rivers and wetlands is to purchase water from willing sellers, as well as investing in our irrigation industries.

There is no other take-over that counts. If we were to take the step that Mr Turnbull and others have proposed, we would achieve the same result that he and Mr Howard achieved: absolutely nothing.

Instead of rescuing the rivers we would be lining lawyers’ pockets. The rivers would be left to decline while the blame game was played out in courtrooms from here to Sydney for decades to come.

Let me say to you that the Federal Government will leave the chest-beating and the blame game to others. We are getting on with the job.

Under our ten-year, $12.9 billion Water for the Future plan, the Rudd Government has a plan to put the future of the Murray-Darling Basin back onto a sustainable footing.

There are three essential elements to the Government’s plan:

• a new Basin Plan that will set new, scientifically based, sustainable limits on water use;
• extensive investment in more efficient irrigation systems; and
• purchasing water from willing sellers to return to our rivers and wetlands.

Murray-Darling Basin Reform

These days, few would deny the Murray-Darling Basin's water resources are overallocated, or that the health of its rivers and wetlands is in decline.

When you add what our scientists are telling us about the likely impacts of climate change, the case for new, lower limits on water use is compelling.

Inaction is no longer an option.

That's why the independent Murray-Darling Basin Authority is developing a new Basin Plan, to be implemented from 2011.

It’s inevitable that the Basin Plan will entail a significant adjustment for irrigation communities. I’ll come back to this point in a moment.

But first I want to emphasise here how important the Basin Plan will be in defining and guiding a future for the Basin.

The most significant element of the Basin Plan will be a new, scientifically-based and sustainable limit on the amount of water that can be diverted from rivers and from groundwater.

All signs are pointing to this new limit being lower than the current limit – perhaps significantly lower.

The best way to secure a strong, viable future for irrigation is to start making this adjustment now.

State catchment and groundwater plans will need to be consistent with the diversion limits set in the Basin Plan from the time the existing state plans expire.

The Basin Plan will also address the use of environmental water, management of salinity and water quality, trading rules and arrangements for the management of storages in the River Murray during drought.

In developing the Basin Plan, a critical task for the Authority is to consult with key stakeholders, farmers and communities, as well as State and Territory Governments.

I expect many of you will be involved, directly or indirectly, in these consultations over the coming months and years. Indeed, I hope you will.

Importantly, the final decision on this new Basin Plan will rest solely with the Commonwealth Minister – an arrangement all Basin jurisdictions are agreed upon.

This means the Basin is being managed for the first time as a single entity and a connected whole.

A further focus of our plan for Basin reform is to make the water market fairer, faster and more transparent, so water can go to where it has most value.

A more efficient water market also helps farmers by enabling them to adapt their own businesses to changing circumstances – such as a future with less water.

This was backed up by the recent Productivity Commission report on Government Drought Support, which confirmed the importance of effective water markets in helping irrigation farmers cope with current drought conditions, and to better prepare their farming enterprises for the future.

There are many, many irrigators across the southern Basin who have all been making good use of the annual allocations market.

To put it simply, the Australian Government respects water entitlement as a property right, and believes people should have the right to sell their water assets, or buy someone else’s water assets.

We have been very clear about the fact we want to see a removal of impediments to farmers and irrigators being able to use the water market as and when they wish.

In the current drought conditions a free and fair water market is perhaps more important now than ever before.

With all this in mind, we welcome the agreement with the Victorian government on the phased lifting of the four per cent annual cap on permanent trade out of irrigation districts as part of a wider agreement on water market reform and purchasing water for the environment.

Commencing last financial year, this agreement is delivering at least 460 gigalitres of water entitlement over five years to the Murray-Darling Basin’s rivers and wetlands.

We are also working with the New South Wales government towards them lifting their embargo on the sale of water entitlements to the Commonwealth.

I now want to move on to the Rudd Government’s considerable commitments to investing in irrigation communities in Water for the Future.

Not only is Water for the Future our biggest climate change adaptation program, it is also the biggest structural adjustment program in the history of the Murray-Darling Basin.

I wholeheartedly support the view that food security, and a vibrant and profitable irrigation sector, must be valued and supported through this change and adjustment process.

A strong and vibrant future for irrigated agriculture, and for the communities and industries that depend on it, is central to the Federal Government's vision of putting the Murray-Darling Basin back onto a sustainable footing.

The billions of dollars that the Rudd Government has committed towards modernisation planning, reconfiguring irrigation systems, improving on-farm and off farm water efficiency, purchasing water from willing sellers, and planning for a future with less water present major opportunities for Basin communities.

Investment in irrigation

A total of $5.8 billion is earmarked by the Government under our Sustainable Rural Water Use and Infrastructure program – almost twice the amount committed to water purchases.

Some of our first investments last year were for both irrigation Hot Spot assessments and irrigation Modernisation Planning grants; grants that are intended to assist in the development of plans to upgrade regional irrigation systems.

And we also contributed $99 million towards Victoria’s Wimmera Mallee pipeline, and commenced work with the New South Wales Government under our $400 million commitment to reduce the massive evaporative losses from Menindee Lakes, and to help secure Broken Hill’s drinking water supplies.

Last year the Government also committed $3.7 billion to Basin State Priority Projects.

For the most part these projects entail the modernisation of irrigation delivery systems, both on and on-farm; projects that will result in improved efficiency and productivity of irrigation water management and use.

One example of a project that is now well underway is the Lower Lakes Pipelines project in South Australia. Construction is now near completion on pipelines to provide much-needed water to Lower Lakes communities – including the vital irrigation communities of Langhorne and Currency Creeks.

These are unprecedented investments to help meet an unprecedented challenge: enhancing the long-term viability and resilience of irrigation communities in a future with less water.

These Priority Projects will also generate water savings to be shared between irrigators and the environment.

Given the scale and scope of all Basin State priority projects, good planning is an essential pre-requisite and unfortunately this takes time.

I do, however, remain mindful of the time that it is taking for some of these projects to get underway.

I reiterate that the Australian Government stands ready to invest as soon as project business cases have been submitted and subjected to due diligence assessment.

In addition to the commitments I’ve just outlined, the Government has committed a further $300 million for on-farm irrigation efficiency projects in the southern connected Basin and the Lachlan.

This program will help irrigators modernise their on-farm infrastructure in partnership with organisations such as industry groups, irrigation water providers and catchment management authorities.

Again, the water savings achieved from on-farm works will be shared between the farmers and the environment.

Funding guidelines and application details for this program will be released soon.

We are committed to giving irrigators the best possible opportunities for having viable and profitable farming operations in a future with less water.

We are committed to providing them with the security and certainty they need in a sustainably-managed Basin so they can make decisions for the future.

Our vision is for a vibrant future for irrigators and farmers in the Basin, and for the industries and communities they support.

Strengthening Basin Communities

Another program that I want to highlight is our $200 million Strengthening Basin Communities initiative.

Right across the Murray Darling Basin, it goes without saying that local government plays a crucial role, providing a range of essential services to their communities.

Your regional presence, knowledge and connection with the community makes local government an essential participant in how we plan for a future with less water.

Up to $20 million of funds from the program will shortly flow to local councils across the Basin for this purpose.

This assistance will enable local governments to undertake an informed review of their plans to account for these risks and identify opportunities for the future.

The program will enable rural communities, including those involved in irrigation, to better manage the challenges that lie ahead by finding practical, lasting solutions to living with less water.

While in Deniliquin on Wednesday, I announced the second part of the Strengthening Basin Communities program which will turn many of these planned solutions into real water savings initiatives that contribute to securing local water supplies.

The Rudd Government will fund up to 50 per cent of the total cost of each approved project to a maximum contribution of $10 million.

Projects that could be supported include recycling and reuse, stormwater capture and reuse schemes, desalination, and water sensitive urban design initiatives.

I strongly encourage local governments to consider participating in this program.

For our part we want to see communities in the Murray-Darling Basin prosper into the future and the Strengthening Basin Communities program is one of our key commitments towards this end.

Water purchase program

I now want to talk about the Government’s program of purchasing water from willing sellers to put back in our rivers and wetlands.

One of the core objectives of the Commonwealth Water Act (2007) is

“To ensure the return to environmental sustainable levels of extraction for water resources that are overallocated or overused; and To protect, restore and provide for the ecological values and ecosystem services of the Murray-Darling Basin...”

On this there is bipartisan support.

The Rudd Government has pledged $3.1 billion to purchasing water from willing sellers to return to the basin's rivers and wetlands as a key means of restoring the balance between production and environmental uses.

Even with the limited water allocations available right now, our water purchase program is realising environmental benefits.

To date a total of 10.9 gigalitres has been allocated to the environment in NSW, Victoria and South Australia.

As at 31 August 2009, the Australian Government had secured the purchase of 545 gigalitres of water entitlements at a cost of $840 million.

These entitlements are expected to yield an average of 343 gigalitres per year of water for the environment.

The imperatives for sharing more water with the environment at sites across the Basin are clear.

As I mentioned earlier, we now know that 20 of the Murray-Darling Basin’s 23 river valleys are in poor or very poor health, largely as a result of the over-allocation and over-use of the Basin’s water resources.

The Murray-Darling Basin Authority has been assessing more than 19,000 water bodies across the Basin and has identified some 1,200 with conditions that could lead to formation of acid soils.

The current extended drought, combined with the emerging impacts of climate change, is compounding these problems.

Without sufficient water, the basin's ecosystems – which include numerous wetlands of national and international significance – will continue to deteriorate.

I’m often asked why we are buying water now, instead of waiting for the new Basin Plan in 2011.

Firstly, there is a pressing need to protect the Basin’s rivers and wetlands and to restore them to health. This is not just an environmental imperative; it can also provide significant economic and social benefits for regional communities.

Secondly, by buying water from willing sellers, and by investing in irrigation efficiencies too for that matter, we are smoothing the transition to the new, lower limits on water use that we all expect in the Basin Plan.

We’re bridging the gap, if you like, between current and future ‘caps’ on water use.

It is in everyone’s interests to start adjusting to this change now, because if we don’t, we face a far tougher and more abrupt cut in the future.

To date, hundreds of farmers across the Basin have taken the opportunity to sell water through our purchase program since it began early last year.

Without question, the Government's purchase program is providing irrigators with more options in managing their way through these tough times.

By selling water, irrigators are better placed to retire debt, invest in farm upgrades, diversify their operations, or exit irrigation with dignity.

The purchase of water entitlements from willing sellers is helping irrigators to manage on their own terms the likely reality of a future with less water, all in a way that fully respects the property rights of irrigators.

Conclusion

In closing, I want to return to the theme of this MDA conference; water innovation – challenging the drought.

In the Murray-Darling Basin, I believe the rewards from innovation will endure well beyond this current drought.

Perhaps the most pressing need for innovation is to help us do more with less water; to grow more crop per drop.

This necessity for improved water efficiency is already driving a great deal of innovation across a range of areas.

I have faith in Australians’ resourcefulness and capacity to innovate. I have no doubt these will be demonstrated by your communities in meeting the challenge before us in the Murray Darling.

Meanwhile, we are continuing to roll out our own plan to help meet the challenges of the future.

But we’ve still got a long way to go, and we need your help.

As leaders in your communities, you would be well aware of how much more can be achieved when different groups who ultimately have a common interest unite.

The common interest of all of us is to restore the Murray-Darling Basin to health and provide your communities with a strong and vibrant future.

I look forward to continuing to work closely and constructively with Basin communities, governments, irrigators and stakeholders as we work towards this goal.

Thank you.