December 22nd 2012

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Articles from this issue:

FRONT COVER: Picture Credit

EDITORIAL: Hard landing likely for Australia's economy

CANBERRA OBSERVED: Julia Gillard's survival strategy for the New Year

WATER POLICY: Disastrous Murray-Darling Basin Plan is now law

ENVIRONMENT: Australia signs up for Doha cash grab

EDUCATION: Kirby attacks state aid to non-government schools

AUSTRALIAN SOCIETY: The left's long march through Australia's institutions

LABOUR RELATIONS: How to make unions accountable to members

POLITICS: The challenges that await Australia in the New Year

ENERGY: US to achieve energy independence in 15 years

ECONOMIC AFFAIRS: Time to reappraise the Washington Consensus?

OBITUARY: International advocate for family values dies

CINEMA: Well-crafted tale about an ageing pro

BOOK REVIEW A divided calling

BOOK REVIEW Atheist philosopher now sceptical about Darwin

POEM: Enlightened Willie's Prayer

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Disastrous Murray-Darling Basin Plan is now law

by Patrick J. Byrne

News Weekly, December 22, 2012

The Murray-Darling Basin Plan of federal Water Minister Tony Burke has been passed into law after disallowance motions failed in both houses of parliament.

After Mr Burke recently signed the Plan, disallowance motions were put to both houses.

In the House of Representatives, only five MPs supported the motion — Coalition members Michael McCormack, Sharman Stone and Alby Schultz, along with Queensland independent Bob Katter and the Victorian Greens’ Adam Bandt. In the Senate, only the Greens opposed the Basin Plan on the grounds that it didn’t take enough water for the environment.

The Basin Plan was part of the Howard government’s federal Water Act 2007, which itself was a political over-reaction to what was no more than one of Australia’s periodic, decade-long droughts.

Since 2004, federal and state governments have cumulatively taken 2,536 gigalitres of water out of irrigation production, partly for the Basin Plan and partly for a number of other water projects, according to Tom Chesson, CEO of the National Irrigators Council. (A gigalitre is equivalent to the volume of 1,000 Olympic-size swimming-pools).

The final take will be at least 3,000 gigalitres, and possibly up to 4,000 gigalitres, depending on the how the Basin Plan is implemented.

This is despite the warning by Craig Knowles, chairman of the Murray-Darling Basin Authority (MDBA), at a public meeting last February in Swan Hill, north-west Victoria. He said, “If we take 30 per cent of the water out of this commitment, we’ll have a damaging, severe, devastating effect. I agree with that on the record now.”

The total average flow of the Murray-Darling Basin rivers is about 24,300 gigalitres. Until 2004, this water was allocated as follows:

• 11,431 gigalitres (47 per cent) for irrigation farming, with a very small amount for towns, plus 110 gigalitres for Adelaide; and

• 12,969 gigalitres (53 per cent) for environmental flows.

Once the federal government has finished buying water, and following the acquisition of water for other projects, the new average annual allocation in the Basin will be:

• a maximum of 8,400 gigalitres (35 per cent) for irrigation farming and human use; and

• a minimum of 15,900 gigalitres (65 per cent) for the environment.

Indeed, the final distribution ratio between farmers and the environment could be 30:70, depending on how the Basin Plan is finally implemented.

The change in allocations will have far-reaching consequences.

First, it means that the basin’s huge dams are now primarily storage reservoirs for environmental flows, not for drought-proofing farmers.

Originally, these dams ensured a permanent supply of water for agriculture in a basin that is subject to 12-35 years of dry periods, followed by 12-35 years of relatively wet periods. The original allocations from these dams were designed to drought-proof the basin’s farmers for 95 to 97 out of 100 years.

This allowed farmers to manage the risk from highly variable rainfall, thereby ensuring regular supplies of low-cost food to consumers, avoiding shortages and soaring food prices in a drought.

However, with the new Basin Plan dictating that 65-70 per cent of dam storage space must be reserved for environmental flows, there will be no water left for farmers even in a relatively short two-to-three-year drought.

Whole irrigation districts will now face the certainty of going bust from “human-induced” droughts.

Second, the huge acquisition of water will see most irrigation districts lose a critical mass of farmers.

Irrigation districts are built on main channels of water supplying tributary-like spurs that in turn supply local farmers.

The federal government is spending billions randomly buying water from farmers. This means that on average, if seven out of 20 farmers along a spur have their water purchased by the government, then it’s no longer economical to continue supplying the remaining 13 farmers.

The cost of maintaining an irrigation spur and supplying water to 13 farmers is no less than for supplying water to 20 farmers.

Consequently, the assets (land and equipment) of the remaining farmers become “stranded” from the irrigation main channel, as it is no longer economical to supply water to fewer farmers. At this point, the remaining farmers are forced to sell their water entitlement, or face bankruptcy as the cost of obtaining irrigation water becomes prohibitive.

The “stranded assets” problem is occurring across almost every irrigation region, threatening to bring about the collapse of irrigation districts.

Third, the loss of irrigation farming seriously damages regional communities.

On average, for every job on the farm there are four to five jobs in transport, storage, food-processing, engineering and farm supplies.

Regional towns are shrinking, property values are falling and businesses are closing as the farmers shift from high-value irrigation agriculture to lower-return dry-land farming, or simply going out of business.

As the Basin Plan terminates farmers’ livelihoods, Australians can expect to face shortages and soaring prices of many food products.

Patrick J. Byrne is vice-president of the National Civic Council. 

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