Truth, lies and water

Australia’s water policies are washing billions of dollars down the drain

Quentin Grafton

Environment & energy, Food & water | Australia

6 March 2017

Policies on the Murray-Darling Basin are costing Australian taxpayers billions, and will leave the country high and dry when the next drought hits, Quentin Grafton writes.

Just as conventional conflicts are fought along battlefronts with troops and weapons, helped along by deception and subterfuge, so too are public policies in relation to the common good, such as energy and water, battles between truth and lies or cons. For many of our biggest policy problems, there is a battle to win ‘hearts and minds’ which is also a war of words, with both sides of the debate using deception and half-truths.

Sadly, Australian water policy and what has been (or rather has not been) delivered over the past decade is one of the greatest policy cons foisted on the country’s public. It’s a con that has seen more than $5 billion in the past 10 years spent on ‘recovering water’ by subsidising irrigators or buying water entitlements from willing sellers, yet for the huge price tag there is very little to show for it. To add insult to injury, some irrigators would have us believe that the Basin Plan is now responsible for all their woes.

Just over 10 years ago, in the throes of Australia’s worst recorded drought, then Prime Minister John Howard promised a National Plan for Water Security that was then to be delivered on by the newly appointed Water Minister, Malcolm Turnbull. This 10-point plan committed to spending $10 billion over 10 years to ‘fix’ the Murray-Darling Basin. At that time, there was a real concern among communities along the lower Murray that they may not have enough drinking water and that the endless ‘blame game’ practised by the states about water flows meant that the issue was going nowhere fast.

The plan was broadly welcomed by Australians keen for a resolution to a seemingly intractable problem of not enough water for communities, farmers and the environment. Thus, despite a change in government that year, the newly-elected Prime Minister Kevin Rudd double-downed on this plan, gave it a new name – ‘Water for the Future’ – and increased its budget by an additional $3 billion. Bipartisan support gave rise to a Water Act that provided the Commonwealth with the powers to act on behalf of the country in terms of how water is governed, in the national interest.

More on this: Australia needs to reinvigorate its stagnant debate on water policy

Fast forward to 2017 and let’s look at what has been achieved. There are those who would have us believe that all is well and that the Basin Plan, enacted in November 2012, is delivering better water outcomes for all. In this happy land of milk and honey and flowing waters, there are even those who claim that what was promised in terms of increased environmental flows back in 2012 is no longer necessary and that the money can be better spent on other things. Some falsely claim that water recovery has led to the loss of thousands of jobs even though the reality is that purchases of water entitlements from willing sellers supported an increased gross domestic product in the Basin region.

The superficial public message is that there must be ‘balance’ in the Basin and that the Basin Plan has forgotten about irrigation communities. These are falsehoods peddled to extract even more billions in taxpayer dollars where the many pay to enrich the few.

The Basin, and its rivers, is not only iconic to Australia, it also serves an essential purpose – not just to the irrigators who depend on it, but also to the communities and the environment that are nourished along its waterways. It’s too important to leave to misdirection, so let’s examine key myths one by one.

First myth: despite the initial promise it would be there, climate change was never included. This is despite the overwhelming evidence that climate change is already here and affecting the Basin. The consequence of this omission is that, whatever reduced diversions are achieved over the 10 years of the Basin Plan, they may already be undermined by higher temperatures and a more variable climate.

Some have suggested that climate change can be built into the next 10-year Basin Plan. But given that irrigator lobbyists were able to prevent climate change being included in any meaningful way in the 2012 Basin Plan, this may be a pipe dream.

Second myth: that the Basin Plan will reduce surface water diversions by 2,750 GL/year on average. In fact, the current Basin Plan increases the permissible extractions of groundwater in the Basin. Reductions in surface water diversions will, in fact, be much less than 2,750 GL/year because of ‘supply measures’ that are claimed to be equivalent to increased water flows and that could lower the planned reductions in diversions to only 2,210 GL/year.

More on this: Is Australia lagging behind in agri- environmental policy?

Importantly, water entitlements acquired to achieve reduced diversions in the Basin Plan were never fully utilised by irrigators so they cannot be fully counted as a reduced diversion. Further, the billions spent on subsidies to increase water use efficiency for on and off-farm irrigation have reduced the proportion of water that flows back into the river, which offsets calculated reductions in water diversions. In sum, despite the fact that the Commonwealth is 70 per cent towards achieving its water recovery goal, there is as yet no discernible change in Basin surface water diversions.

Where will this lead us when the next major drought arrives? We will be up the creek without a paddle, but it will also be a dry riverbed.

Third myth: that multibillion dollar subsidies to improve water efficiency have worked. In fact, average water application rates per hectare in 2014-15 are almost the same as they were in 2002-03. Yet, irrigators have, on average per person, received close to $400,000 over this period from the sale of their water entitlements and government subsidies to improve water use efficiency.

Fourth myth: that all is well with the environment in the Basin. While some iconic sites have been watered in a tiny proportion of the Basin, and greater stream flows due to rain have helped the general health of riverine environments compared to the worst years of the drought, the single most important measure of average flows at the Murray Mouth is not sufficient in the Basin Plan, as argued by the CSIRO in an independent scientific review in 2011. Indeed, dredging resumed this January to keep the Murray Mouth open, and we are not even in a drought. Most importantly, funding for an independent audit of the river health of the Basin has been discontinued while the National Water Commission responsible for auditing water governance performance was closed in 2014.

Millions of Australians live in cities outside of the Basin, so does this matter to them? Yes, it means a great deal. In the time of big budget deficits, we can no longer afford to have billions of taxpayer dollars washed down the drain and not be told the truth. History tells us that the next big drought is coming. It’s high time we paid attention to what is happening and what we are being told. We must actually fix what is broken rather than pretend all is well.

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 new research on water reform and planning in the Murray-Darling Basin is published in Water Economics and Policy.

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3 Responses

  1. SteveWhan says:

    Not surprisingly communities in the basin have a very different view to this rather one sided assessment, as do irrigators.

    It is hard to see how the article can allege claims of job losses are false without showing evidence of that and without taking into account the recent economic impact assessment undertaken by the MDBA in the Northern Basin, which confirms broad community impact, including job losses. As CEO of the National Irrigators’ Council I have issued a brief response (link below). I note recently Prof Grafton’s view was contradicted by the very positive evidence the Commonwealth Environmental Water Holder gave to Senate estimates about success of their watering programs and by the MDBA. Very real progress that has been made in watering many of the environmental assets in the basin in the first few years of the plan and over a longer period we have seen very obvious improvements in the efficiency of water management and in salinity in the basin. The CEWH now has 2400GL of water that it did not have before this process started to add to existing environmental flows.

    ABS figures do show that, since they started to provide statistics for the Murray Darling Basin, there has been a significant reduction in the number of hectares irrigated, a reduction in the quantity of water used and an improvement in litres per hectare.

    NIC would argue that restoring the environmental health of the river is about a lot more than just ticking off targets for GL of water. We want to see action through complementary measures that improve the habitat and eliminate pest species.

    http://www.irrigators.org.au/assets/uploads/20170307%20Grafton%20Criticism%20of%20Irrigators%20Not%20Justified_342.pdf

    Steve Whan
    CEO National Irrigators’ Council

  2. SteveWhan says:

    Apologies for out of date link on previous comment, correct link to media release is http://www.irrigators.org.au/assets/uploads/20170307%20Grafton%20Criticism%20of%20Irrigators%20Not%20Justified_693_new.pdf

  3. Quentin Grafton says:

    I would urge all readers to read my piece for themselves and make up their own minds based on the facts I present, which I summarise as follows.

    The ANU research using Australian Bureau of Statistics data shows, at a Basin scale, that the water application per hectare in the Murray-Darling Basin was virtually same in 2013-14 as it was 2001-02. The ANU research using Murray-Darling Basin Authority data shows that at a Basin scale that the surface water diversions for consumptive use in the Murray-Darling Basin were virtually the same in 2013-14 as they were 2002-03. It is worth noting that dredging at the Murray Mouth resumed in January 2017 to keep the Murray Mouth open yet the Basin is not in drought and one of the objectives of the Basin Plan was to keep the Murray Mouth open without the need of dredging 95% of years. The outcomes identified in the ANU research stand in direct contrast to the following evidence: more than $5 billion has been spent on water recovery in the past 10 years, about 70% of the planned water to be recovered for the environment has already been acquired, and the Basin Plan was enacted in 2012. Further, the ANU research confirms earlier findings identified by the Productivity Commission that the cost of acquiring water via irrigation subsidies (in terms of entitlements) is at least twice as expensive in terms of dollars of expenditures as water recovered via the voluntary sale of water entitlements by irrigators. Thus, in sum, the ANU research shows that the Commonwealth has acquired water over the past 10 years in the most expensive way, at great cost, and to date with little result, in terms of either Basin-level water application rates or overall diversions.

    In addition, and since my opinion piece was published, the 2016 Australian State of the Environment (SOE) Report was published with a specific report on Inland Water. Its independent findings (and with which I had no involvement) on the Murray-Darling Basin are entirely consistent with my conclusions. Namely, according to the SOE and for the period since 2011, and for which the there is a somewhat adequate degree of confidence, the assessment grade is very poor and deteriorating for the state and trends of inland water ecological processes and key species populations in the MDB. It is also observed that there is “widespread loss of ecosystem function”. The SOE also observes that in terms of the state and trends of inland water flows and levels in the MDB that the assessment grade is poor but stable, and further notes that “Longer-term downwards trends in flows seen in nearly 50% of stations, with no change in trends evident since 2011.”

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