February 22nd 2003

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Articles from this issue:

COVER STORY: Getting a grip on Japan

EDITORIAL: Kiwibank: lessons from NZ

CANBERRA OBSERVED: NSW Liberals in the spotlight as election looms

WATER: Farmers' water rights at risk in the Murray-Darling Basin

Sugar Summit held in Brisbane

STRAWS IN THE WIND: Destruction of wealth / Negative gearing

INTERNATIONAL TRADE: Free trade: where do we stand?

WESTERN AUSTRALIA: Protests in Fremantle

Deregulation and growth (letter)

Iraq and Zimbabwe (letter)

Time to get serious about Australia (letter)

QUEENSLAND: Dangers in Qld Nats' move to become 'relevant'

NORTH KOREA: Is time finally up for dinosaur regime?

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Farmers' water rights at risk in the Murray-Darling Basin

by Patrick J. Byrne

News Weekly, February 22, 2003
Disastrous drought has most farmers in survival mode, totally focused on surviving until the next rains. But if farmers don't soon become organised and active, they will be under longer-term threat from the erosion of water rights under plans being drafted by the Murray-Darling Basin Ministerial Council.

Pat Byrne reports.

The Murray-Darling Basin Ministerial Council says it is examining three possible targets, or "reference points", to cut irrigation allocations to farmers by 5%, 10% or 15%. The aim is to provide larger environmental flows down the Basin.

Most farmers are not yet aware of the proposals, the impact this will have on their farms, their profits and future investment.

By June this year, most of the decisions regarding future irrigation allocation in the Basin will start to be set in concrete by the Murray-Darling Ministerial Council, made up of the Federal and State ministers responsible for agriculture, land, water and environmental resources.

Final decision

The whole process is under the Council of Australian Governments (COAG) which will make the final decision on the water issues in October this year.

Until recent strong representation from some peak farmers groups, the Ministerial Council process was being driven substantially by environmentalists, particularly though the Water CEO's Group, which comprises the Chief Executive Officers of the Federal and State Ministers' Departments involved in the Ministerial Council.

The point had been reached where members of the Ministerial Council were ready to apply the 15% cut to water allocations without a phase-in time and without serious compensation to farmers. This represents 1,500 gigalitres of water per year, equal to the irrigation water supplied to the huge Goulburn-Murray Irrigation District in Victoria or to three Sydney Harbours.

It seems the likelihood of such drastic action has eased, but fundamental problems remain.

The Basin's agricultural output is $10 billion, of which $3 billion is from irrigated farming. Food processing is the largest manufacturing industry in Australia and it depends heavily on irrigated crops and pastures for a steady supply of high quality product.

In the mid 1990s, an interim cap was put on further diversions of water from the Basin until a comprehensive management scheme, embracing environmental concerns, was developed.

The current process is outlined in The Living Murray discussion paper (which is available from www.thelivingmurray.mdbc.gov.au). It says that farmers were to be informed on the issues involved by December 2002, formal proposals to be developed between April and September 2003, and the final plan to be adopted by the in October 2003.

The Living Murray outlines the broad issues involved in water recovery. "One important issue is whether water recovery will be voluntary, compulsory or some combination of the two. The Ministerial Council seeks community views on this.

"If it is decided to retrieve water for environmental flows compulsorily, the following mechanisms are available:

  • reduction of entitlements without compensation;
  • reduction of entitlements with compensation (compulsory acquisition of access rights); or
  • targeted structural adjustment (closure of uneconomic irrigation areas).

"If voluntary retrieval is decided on, the mechanisms could include:

  • water efficiency savings by individuals;
  • incentives to reduce water use; or
  • government buy-back through the water market."

Stage 2 in the process will commence in April 2003, after further information and analysis has been made available. This will include a second document on environmental flows, which will clearly set out the costs and benefits of the three "reference points". The Discussion Paper says:

"During this stage, community and government agencies will work together to:

  • evaluate the benefits and impacts of the three reference points;
  • seek views on a preferred way forward to address local and system-wide issues;
  • establish what's needed to manage and keep track of the social, cultural, economic and environmental impacts of any decision;
  • inform the Ministerial Council meeting of October 2003."

Who will pay

"There will continue to be a high focus on communities throughout the Basin, but it will also include the wider Australian community. Any decisions made about recovery of water are also likely to come at an economic cost – and this cost needs to be shared in a way acceptable to the Australian community."

The Victorian Farmers Federation (VFF) has criticised the report of the Water CEO's Group, which has strongly influenced the Ministerial Council's direction on the issue.

The VFF has pointed out that over the past century, Victorian farmers have invested in their farms on the confidence derived from a long history of conservative and consistent water allocation policies under the Victorian Water Act. For example, in the Goulburn-Murray Irrigation District, water allocation policy reliably delivers promised irrigation allocations in 96 out of 100 years.

The proposal to now review water allocation rights every 10 years "represents an erosion of rights currently held by Victorian irrigators ...

"Victorian water rights reduced to a 10-year tenure and subject to periodic review will only serve to distort the efficient operation of the water market. The value of water rights will effectively rise and fall according to the timing of the review and will thus erode the ability of farmers to plan for the long-term development of their farming enterprise."

The VFF also rejected the view of the Water CEO's Group that current water pricing policy does not include a cost for environmental consequences.

It asked why farmers solely should be held responsible for environmental concerns. Why not charge recreational water users for the erosion boats cause to river banks?

The issue of farmers' water rights, and their relationship to property rights, is complex and varies considerably from state to state. There is no simple formula to resolve the complex and contending issues.

Critics of the Ministerial Council process also argue that the idea that the Murray Darling river environment will restored only by increasing river flow is simplistic and falls well short of an array of other key environmental factors that have not been considered in the proposed management plan.

For example, fish spawnings and plant regeneration historically occurred in August-September when the mountain snows melted and flooded the low plains. But locks, weirs and diversions have been in place for over 100 years to time the river flood flows for December-January when farmers need irrigation water. Simply increasing river flow won't solve the problem of timing floods with spawning cycles.


The issue of water rights is going to be a major issue over the next year. To ensure farmers receive a fair deal out of the process, they need to become organised. The issue goes beyond those reliant on irrigation in the Murray-Darling basin, as all states have been seeking to impose various charges and limitations on water rights.

If you want assistance in forming committees to become informed on the issue and to stand up for farmers rights, call our News Weekly office on 03 93265757 and ask for Pat Byrne, or email: phocion@connexus.net.au

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