Murray Irrigation Ltd - An example of irrigator autonomy

1. Murray Irrigation Ltd - An example of irrigator autonomy Murray Irrigation Ltd - An example of irrigator autonomy Bill Hetherington, Chairman May 2005 INPIM

2. Our location Murray Irrigation area of operations

3. Murray Irrigation Limited area of operations New South Wales Victoria

4. The region • Area 748,000ha • 1.2million MLs/year (1,200 million m3) • $300 million farm gate production • 25,000 population • 2,400 properties • 1,600 farm businesses

5. Self determination • Late 70s early 80s irrigator dissatisfaction • 1987 Government established irrigator (farmer) advisory board • Irrigators involved in operation and management • 1989 Commercial arm of government established • 1995 over 700 irrigators votes for fully irrigator owned water supply company Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

6. Separation • Corporate structure & governance • Constitution – shares, water entitlements, voting • Financial viability – business planning • Staff structure • Legal - Relationship with government - Relationship with shareholders - Separation deeds – funding, infrastructure etc. • Taxation Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

7. The Compnay • Unlisted public company • Shareholders, farmers are customers“Like a co-operative” • Board elected by irrigators • Eight local directors (irrigators) from four geographic areas • Two external directors • Asset value $700 million ($393 structures, $307 earthworks) Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

8. Relationship with NSW Government • Water Management Works Licence • Water access licence – water sharing • Bulk water supply and pricing ($3 million) • Environment Protection Licence $24/ML (or 1,000m3) includes drainage • Funding deed for assets renewal Land Water Management Plan funding ($120M Gov. $380M landholders) • Integrated reporting and audit Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

10. Relationship with Commonwealth Government • Taxation • Funding for environmental initiatives • Inter-government agreements • Water reform, COAG, NWI • Water for the Snowy and Murray Rivers • Murray Darling Basin Agreement • Australian Competition and Consumer Council • Australian Securities & Investment Commission Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

11. Farmer participation • Election of board members • 8/10 board members farmers • LWMP Working Groups • Focus group • R&D committee

12. Communication • Weekly news sheet (fax and email) • Weekly radio program • LWMP newsletters • Annual magazine • Quality Accreditation –improvements register • Field days • Shareholder meetings

13. Business viability • Water price • Fixed charge ($9.25/ML or 1,000m3 + drainage) • Variable charge ($11.35/ML or 1,000m3 + drainage) • Includes asset maintenance & renewals contribution $1.55/ML and supply variation levy ($0.75/ML) • $22M since 1995 for future asset • Not for profit, water price set to break even Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005

14. Efficiencies~ delivery • 3-5% improvement • 30,000-50,000ML saved a year30-50 million m3 • 9,600ML perstaff member9.6 million m3 • $24/ML or $24/1,000 m3 full cost recovery

15. Efficiencies ~ technology • Automation • Telemetry • Remoteoperations • Measuringlosses • Investment $1 million/year

16. Efficiencies ~ performance • Staff costs 26% • 40 hour week • Maintenance 90% in house, 10% contract • Capital 90% contract, 10% in house

17. Environment~ accountability • Operating licences • Accountable to shareholders,community and government • Monitoring and testing • 1.8ML/ha irrigation intensity1800m3/ha • Rice soil suitability

18. Land and Water Management Plans • $500 million • Started 1995 • Shareholders involved • Government $59 million,shareholders $285 million to date

19. Salt interception • Wakool TullakoolSubsurface Drainage Scheme • Protects 50,000ha • 150,000-180,000tonnes of salt a year

20. Innovation ~ water exchange • First live 24hr exchange • 24 hour/ 7dayaccess • Water on farm same day (MIL) • 60,000ML(60 million m3) worth $12Msold in 2002/03

21. Innovation ~ hydro plant • Green power • On main supply channel • Supplies national power grid

22. Innovation ~aquaculture • Joint research project • Growing fish in saline groundwater • Commercial trials underway

23. Farm wetlands • Watering of stranded wetlands • Uses irrigation system to supply water • Partners are:NSW Wetlands Working group, MIL, landholders • Positive ecological response

24. Businessdevelopment • Company focus traditionally on efficiency gains • Current business is a legacy from government • BDU charged with managing change

25. Innovation~ MILCast • Precast concrete products • Complementary business • Returns help tokeep down water price

26. Current challenges • Opening up of trade • Financial viability of irrigation schemes • Local impacts • Environment a buyer • Modernisation of existing infrastructure • High cost • Attracting new investment

27. 10 years on • Independent and innovative • Representation of interests • Applied research and analysis • Positive input to public policy • Responsive to farmers needs

28. Sound future • Property right to water • Security for investment • Low salinity water 60EC (0.06 dS/m) • Diverse soils, temperate climate • Environment protected • Costs controlled • Technology providing advancements in service and efficiency Eighth International Seminar on PIM, Tarbes, France May 9-13, 2005