High and dry

Policies on the Murray-Darling Basin have cost Australian taxpayers billions. Quentin Grafton and John Williams ask, where did the money go and what did taxpayers get in return?

As tempers fray from the disallowance of an amendment to reduce the water recovered for the environment in the Northern Basin, we should spare a thought for what is actually happening to our rivers in the Murray-Darling Basin (MDB).

ABC’s 4 Corners program last year revealed alleged water theft in the northern part of the Basin and led to several investigations. Their conclusion? Measurement and regulation of water extractions in the Basin’s north has been grossly deficient for years.

Indeed, possibly as much as 75 per cent of surface water diverted by irrigators in the north is not even metered. This is despite Prime Minister John Howard allocating half a billion dollars in 2007 to improve water monitoring and metering in the Basin.

But water extractions are far from the only problem.

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An additional significant concern is the $4 billion that has already been spent through infrastructure subsidies and grants, with billions more still on the table, to increase on and off-farm irrigation efficiency. The money was intended to modernise irrigation infrastructure and to restore stream flows and flooding patterns needed for healthy rivers and wetlands.

Taxpayers have got very little for their money. Instead of buying water rights directly from irrigators who were willing to sell them, much of the money for water recovery has been spent subsidising irrigation infrastructure. Indeed, twice as much has been spent on subsidies than on buying back water rights.

Australian water recovery through infrastructure subsidies is a confidence trick. Since 2007, the Australian government has spent $4 billion on infrastructure subsidies that have gone primarily to irrigators. The money has been spent on the premise that this increases stream flows. Yet, irrigators’ lobby groups would have us believe that the Basin Plan is responsible for their economic woes.

Continuing to spend more billions on irrigation infrastructure with few, if any, public benefits without an expert, independent assessment of the effects on stream flows, or even a cost-benefit analysis, destroys the core purpose of the Basin Plan to increase stream flows.

Infrastructure subsidies have provided very large private benefits to irrigators who have accepted the subsidies. But despite all the money paid out, the Basin has been left high and dry. Infrastructure subsidies were supposed to increase irrigation efficiency. But the average volume of water per hectare applied by irrigators across the Basin was similar in 2014-15 to what it was in the early noughties when water storages were at comparable levels, and before billions were spent on irrigation subsidies.

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Despite the focus of current Australian policy, water is not just for irrigation but serves a valuable purpose when it stays in streams and reaches the sea. These stream flows benefit communities and the ecosystems that are nourished along waterways, and also irrigators by ensuring their water diversions are sustainable over the long term.

While some sites have benefitted from environmental flows, they represent only a tiny area of the Basin. Flows at the Murray Mouth, for instance, remain inadequate. Indeed, dredging to keep the Murray Mouth open is now a common occurrence while bird breeding numbers are in decline and there is a record algae bloom at the Mouth.

The 2017 State of the Environment Report gave a ‘poor’ assessment of inland water flows in the Basin and also reported longer-term downward trends in flows since 2011. This same Report observed a widespread loss of ecosystem function. In November 2017, the Wentworth Group provided similar conclusions and observed that there is no evidence to date to demonstrate Basin-wide improvements or that long-term deterioration in key river conditions has stopped.

There are many reasons why the 2012 Basin Plan is not delivering on the key objective of the Water Act (2007) to “protect, restore and provide for the ecological values and ecosystems of the MDB”. But the most important is that water measurements and water accounting that should have accompanied irrigation subsidies have been grossly inadequate.

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It beggars belief that up to 75 per cent of surface water diversions in the Northern Basin are not metered. On top of that, governments have not adequately measured return flows from farmer’s fields to streams and aquifers. Nor have they comprehensively accounted for the reduction in return flows from increased irrigation efficiency.

Taxpayers need to ask, how did this happen despite the expenditure of many billion on water recovery?

The publicly available data on return flows from irrigators’ fields is very limited. Nevertheless, we calculate that infrastructure subsidies may have actually reduced net stream flows in the Basin. The difference between what we calculate, and what the Australian government claims has been the net change in stream flows, is huge – more than all the water in Sydney Harbour. This difference is because governments have failed to account for water flows from fields to streams and groundwater.

Little wonder then that we have yet to see the public benefits, at a Basin scale, that were promised back in 2007. This is why we need a comprehensive, independent scientific audit of what is happening in the Basin.

Another Basin drought is coming. When it arrives it will be high noon. The Australian public will find that infrastructure subsidies did not increase stream flows in the Basin. Despite spending billions on irrigation infrastructure, we will find that we left the river not high, but dry.

Quentin Grafton is Editor-in-Chief of Policy Forum.net and the Director of the Centre for Water, Economics, Environment and Policy at the ANU Crawford School of Public Policy. His opinions are provided in this capacity. John Williams is an Adjunct Professor at ANU Crawford School of Public Policy and a former NSW Commissioner of Natural Resources and Chief of CSIRO Land and Water.  They are signatories, with 10 others, of the ‘Murray-Darling Declaration’ (https://murraydeclaration.org/) on 5 February 2018 that explains what is wrong in the Basin and water reform, and how to fix it.