What are local management arrangements (LMA) for channel irrigation schemes?

Local Management Arrangements (LMA) would mean that distribution irrigation assets are transferred from SunWater to new entities that would be owned and controlled by irrigators in the scheme. For government to transfer the irrigation assets, irrigators within the schemes need to support local management and demonstrate how they would run them as long-term viable businesses.

What areas are included?

There are eight distribution schemes that are supplied water by SunWater and make up about 30 per cent of the irrigated land in Queensland.
The schemes are:
•    Bundaberg Distribution System
•    Burdekin-Haughton Distribution System
•    Emerald Distribution System
•    Eton Distribution System
•    Lower Mary Distribution System
•    Mareeba-Dimbulah Distribution System
•    St George Distribution System
•    Theodore Distribution System.

What water assets are included? Does it include the dams?

Local management only relates to the transfer of assets associated with SunWater’s distribution schemes, such as channels, pipes and drains. Local management will not consider bulk water supply assets, such as major dams.

What is the process for determining if local management is achievable?

Each scheme has provided the state government with a business proposal that outlines how irrigators could run its scheme more efficiently over the long-term under local management arrangements. In response the government established boards appointed to represent the interests of customers, undertake further investigation of the option and negotiate terms of the transfer with government on their behalf.

Transition companies have been formed for schemes at Emerald, Eton, St George and Theodore, where a strong commitment to the concept of local management has been demonstrated and where government has determined that the schemes can be financial viable under local management.

Investigation boards have been set up for schemes in Bundaberg, the Burdekin-Haughton, Mareeba-Dimbulah and the Lower Mary, to allow further investigation on how local management could operate in these areas and prepare updated business proposals for their schemes.

Transition schemes have received an offer from government and are required to consult with their customers and advise government if they wish to continue by 31 January 2017, with a decision to be finalised in late 2017.

Investigation schemes have received feedback on their business proposal and have the opportunity to undertake further investigation and lodge an updated proposal by 31 October 2017.

Why do the offers to include separation payments?

Separation payments to individual schemes are to ensure the scheme remains financially viable while implementing changes to ensure the cost of running the schemes is reflected in the price charged to irrigator customers. The amounts relate to the individual characteristics of each scheme and are based on an assessment of the schemes’ business proposal which considered the size of the scheme, condition of the assets and the price customers pay for the water.

What would local management mean for irrigators and their communities?

If local management proceeds, this will mean water will continue to be delivered to the channel scheme by SunWater. From there, its distribution would be the responsibility of the local legal entity. With management no longer based in Brisbane, there will be closer links between the local owners, the customers and employees of the scheme.

What are the potential benefits of local management?

Local management has operated successfully in NSW, WA and SA. Some of the benefits include management of schemes that is specifically tailored to local needs, the potential to implement more innovative ways of operating the schemes and greater flexibility in setting scheme service standards.

Will local management mean cheaper water for irrigators?

The future price of channel irrigation water supply will depend on how the new local entity intends to operate the scheme given the costs and the proposed level of service. This investigatory stage gives the interim boards the power and information they need (due diligence) to say how they would run the schemes in the long term. In the case of the transition schemes, the new boards will present scheme customers with information on proposed future prices, before customers decide whether they support a move to local management.  Bulk water will continue to be supplied by SunWater, with bulk water prices set by the Queensland Competition Authority.

Will the schemes continue to receive Community Service Obligation payments from the State? 

No, post transfer no  Community Service Obligations (CSOs) will be paid as the CSO has been taken into account when calculating the separation payments, which, with revenue raised from customers, enable the schemes to remain viable. 

What about management of the environment?

Locally managed operations will remain subject to government environmental safeguards and compliance and the interim boards will have to address this matter in their proposals.

When will the transition schemes be locally owned and operated?  

Subject to reaching final agreement on the terms of the transfer, and there being sufficient support from irrigators, local management will be implemented in each transition scheme in mid-2018. 

What happens if local management fails and the schemes need to be returned to Government?  

Once a scheme has moved to local management it will be the responsibility of the management and the scheme customers to ensure that the scheme remains viable over the long term and there will be no recourse to Government once LMA is implemented.

What is SunWater’s role? 

SunWater is the current owner and operator of the channel irrigation schemes, and will continue to run and maintain the schemes until they transfer to local management.  SunWater’s participation in the project is regulated by the “Direction to SunWater Limited”.  This means that SunWater will provide information and assistance to the State to assist with the project in accordance with the Direction.

SunWater is committed to ensuring the long-term success and sustainability of all of the schemes and will be assisting the Local Management Entities to build their knowledge and capacity to operate and manage the schemes effectively and efficiently through the transition process.

Is local management compulsory?  

No it is not.  If a majority of customers in a scheme choose not to progress to local management, then that scheme will remain with SunWater.

More information?

The local boards will lead the consultation with the irrigators and the wider communities of each scheme. For contact details for your local representatives contact the project team by emailing admin@lmairrigation.com.au.