March 25th 2017

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Articles from this issue:

COVER STORY Decentralisation: an undeveloped country

CANBERRA OBSERVED Millennials feel they've been left out in the cold

EDITORIAL Gas, power crises are due to renewables obsession by Peter Westmore

WESTERN AUSTRALIA Barnett election wipe-out delivers WA to Labor

MULTICULTURALISM First among equals or an also-ran culture?

WEST AUSTRALIAN LAW Domestic-violence laws disregard basic rights

INDUSTRIAL RELATIONS Fair Work Commission's disastrous penalty-rates decision

OPINION Trump-Russia allegations are smoke and mirrors

FOREIGN AFFAIRS Don't laugh: this is serious. Revival of Maoist play is a propaganda coup in Victoria

RURAL AFFAIRS Without new dams in the Basin, we're up the creek

CULTURAL HISTORY Pascal without pressure

OPINION Scope for regeneration as Me Generation shuffles off

MUSIC Dying for exposure

CINEMA Kong: Skull Island: Ape-ocalypse Now

BOOK REVIEW How maritime England lost America

ENERGY Hazelwood is vital to Australia's power supply

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Without new dams in the Basin, we're up the creek

by Chris McCormack

News Weekly, March 25, 2017

The Federal Government has committed to building new dams. On the mighty Murray River, they should build Lock Zero near Wellington, South Australia, and dams on the Jingellic arm of the river in NSW and the Buffalo River near Myrtleford in Victoria.

These new dams are badly needed to stave off a catastrophe for regions like central Victoria, where the massive buyback of irrigation water under the Murray-Darling Basin Plan (MDBP) has been disastrous for farming communities in Victoria.

Predictions are that the next drought will tip major industries over the edge.

A report by TC&A and Frontier Economics entitled Social and economic impacts of the Basin Plan in Victoria has highlighted the effects water buybacks have had on the amount of water available for farming (the consumptive pool) and what this means for future agricultural production.

Recent high rainfall years and the need to repay debts incurred during the preceding drought have enticed many farmers to sell water back to the Government. Additionally, the premium paid to farmers for water allocations is leading to the view that some water is being traded purely for profit rather than farming, leading to a reduction in the amount of available water for agriculture.

The report states: “Because the Commonwealth is willing to pay a premium above the market rate for the saved water, the irrigator is also free to take advantage of arbitrage to replace the water assigned to the Commonwealth.”[1]

It continues: “because the Basin Plan reduced the size of the consumptive pool, Victorian horticultural demands as a proportion of full allocations against Victorian High Reliability Water Shares have risen from 32 per cent without the Basin Plan to 40 per cent with the Basin Plan. The Basin Plan has therefore constrained further investment and increased the risk of horticultural land being dried off in the next drought. … this risk would increase further in the other water recovery scenarios. Horticultural demands would rise to 46 per cent in the 2750-gigalitre and 51 per cent in the 3200-gigalitre water recovery scenarios.”[2]

The Federal Government has committed to increase the water recovered for “environmental” flows from 2100 gigalitres to 2750 gigalitres then to 3200 gigalitres (or the equivalent of six Sydney harbours) by 2024. Currently the amount of water recovered is just under 2100 gigalitres a year (four Sydney Harbours).[3]

The report goes on to say: “By reducing the consumptive pool of available water in years of extreme drought – when it is required to meet the fixed water requirements of horticultural biological assets (trees and vines) – the Basin Plan water recovery can be considered to have limited the expansion of horticultural investment.”[4]

The extent to which Victorian farms will be affected under the water recovery targets (the 2024 target taking more than 50 per cent more water than does the current recovery out of the consumptive pool) is addressed in their report. Under current water recovery levels, the report maintains that when existing plantings mature there will be a 110-gigalitre shortfall in the required water available.[5] The loss of this water will endanger 8550 hectares of productive land, or $162 million worth of produce.[6]

Under the 2750-gigalitre recovery plan a 193-gigalitre water shortfall will occur, putting 16,000 hectares of existing plantings at risk, or $306 million worth of investment.[7]

Given the 2024 target of 3200 gigalitres (six Sydney Harbours) of water recovered, there will be a shortfall of 241 gigalitres, which will jeopardise 20,000 hectares of plantings, or $381 million of existing investment.[8]

It is sheer madness that water is being recovered in huge volumes in the mistaken belief that sending this recovered water down the river will dramatically increase the health of the river system all the way to the river mouth at Lake Alexandrina in South Australia.

An article by Jan Beer (“450 gigalitres upwater not feasible on Murray-Darling”, News Weekly, February 25, 2017) reveals that recent record rainfalls in the spring of 2016 meant that flows in the Murrumbidgee, Murray and Goulburn rivers exceeded 60,000 megalitres a day for over five weeks, peaking at 94,246 megalitres a day at the South Australian border, the highest since 1993. Yet that was still not enough to breach the silted-over mouth of the Murray River.[9] This, despite the fact that these levels met or exceeded the Murray-Darling Basin Authority’s Constraints Management Strategy, which states that: “Regulated flows of up to 80,000 megalitres a day in the River Murray at the SA border have significant environmental, cultural and social benefits. These flows are necessary to inundate areas of floodplain in order to drive biological processes, improve water quality and remove salt out the system.”[10]

No salt was driven out of the lower lakes system in South Australia as the river mouth was not cleared as a result of persistent high-water flows, the highest in nearly a quarter of a century. The loss of momentum of the river flow as it disperses into the vast area of Lake Alexandrina means very high flows will not in and of themselves clear the mouth of the Murray.

As for inundation of floodplains, this can be a double-edged sword. The high flows inundating red-gum forest areas along the Murray for extended periods of time can result in water becoming too hot during the summer months, scalding the red-gum trees. This results in toxins being released and, together with the forest floor leaf matter, causes a hypoxic black-water event.[11] It is not just a matter of, put more water in the system and everything will be rosy.

The high flows of spring 2016 also saw massive losses associated with the flooding of pasture, farms and infrastructure and the resultant loss of income.[12] Yet, Environment Victoria is advocating for 4000 gigalitres (eight Sydney Harbours) of recovered water to be sent downstream in order to return the Basin’s rivers to “full health”.[13]

Under that scenario, one could only imagine the extent of the damage flooding would inflict upon the community. Environment Victoria maintains that 2750 gigalitres of water is enough to keep the Murray mouth open,[14] even though the events of last spring have already disproved this.

Hoodwinked by the green and vested-interest groups’ scaremongering during the last drought, with their shrill claims of climate change bringing to an end meaningful rain ever again, the Federal and State governments committed to buying back 40 per cent of the irrigation water across the Murray-Darling Basin in a new Water Act in 2007. The MDBP was legislated in 2012. The rise in the price of temporary water is a sobering illustration of the effects of the MDBP. Temporary water traded at $25 per megalitre in 2012, $70 per Ml in 2013, $130 per Ml in 2014 and $220 per Ml in 2015, at times reaching $300 per Ml. This is making farming uneconomical.[15]

Fuelling these exponential increases in the price of water is the Government’s determination that water storages will now allocate 70 per cent (previously 50 per cent) of their capacity to “environmental flows”, with a meagre 30 per cent destined for farmers.[16] In a vicious cycle, the reduced consumptive pools’ higher cost of water in turn means fewer farmers can afford to buy water, thereby forcing the price up even more as the cost of delivering the water to landholders is spread among fewer recipients.

The TC&A and Frontier Economics report states: “Socio-economic analysis that accompanied the Regulatory Impact Statement for the Basin Plan (MDBA, 2011c) warned at page 78 that ‘for the Goulburn Broken Region GVIAP (gross value of irrigated agricultural production) will be reduced by 12.9 per cent ($88.2 million), with the largest reductions experienced by dairy, meat cattle and hay’. The net result of these changes has been increased farming risk in Victoria’s irrigated dairy industry.”[17]

So, governments went in with their eyes open to the impacts of the plan, yet pushed ahead with its implementation and continue to raise the levels of water recovery, economic and social consequences be damned.

The report goes on to say: “Data from the Victorian Water Register also indicates however that the majority of Victorian irrigators who participated in the buyback, but remained in irrigated farming, were more reliant on allocation purchases after the buyback than they were before. Water recovery under the Basin Plan has increased water allocation prices (for given seasonal conditions), and there are now a large number of farmers (especially dairy farmers) highly exposed to water allocation markets given their reductions in held water entitlement.”[18]

The Campaspe Irrigation District is a salient case study of the effects of water buyback on irrigated dairying, which is semi-interruptible for only so long. They were forced to substitute feed for water and after five years with zero per cent water allocations, the district’s irrigators agreed to shut up shop entirely, cashing in all their water entitlements.[19]

So, what can be done to alleviate the current suffering and avert a calamitous situation in the next drought event?

One thing that could be done is to build the long-awaited Lock Zero at Wellington near the Murray mouth, where it empties into the estuarine Lake Alexandrina. This would prevent saltwater moving up the river and greatly increase the supply and reliability of fresh water to Adelaide and southern Murray irrigators. If this were complemented by automating the gates between Lake Alexandrina and the ocean to mimic natural estuarine flows, the need for massive freshwater environmental flows through the lake from the Murray River would be greatly reduced.

New water storages on the Jingellic arm of the Murray River and expanding the weir on the Buffalo River into a dam would increase the supply of water and reduce the risk of massive water price spikes to irrigation farming in a drought. In arid-to-desert regions like the fertile Murray-Darling Basin, reliable water supply is fundamental to farming.

If Australia were to bring back a development bank, this would negate the need for borrowing large sums of money in order to pay for these projects.

Successive governments have capitulated to the green agenda – that is, return the rivers to flows reminiscent of pre-European settlement – where socio-economic impacts are disregarded because the ideology of an almost human-absent nirvana is the driving force behind policy decisions.

The end result is rural communities dying and agricultural production and food security declining – along with the Government’s tax take.

If the Government is serious about Australia’s agricultural, social and economic sustainability, it should tear up the MDBP and send it down the river and out to sea, where it belongs.



[1] Social and economic impacts of the Basin Plan in Victoria, TC&A and frontier economics report, February, 2017.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Jan Beer, “450 gigalitres upwater not feasible on Murray-Darling”, News Weekly, February 25, 2017.

[10] Constraints Management Strategy 2013 to 2024, Murray–Darling Basin Authority.

[11] Russell Douglas, “Fight for our communities”, Deniliquin Pastoral Times, February 17, 2017.

[12] Jan Beer, News Weekly, February 25, 2017.

[13] “About the Murray-Darling Basin Plan”, Environment Victoria.

[14] Ibid.

[15] Patrick J. Byrne, “Crisis in dairy industry escalates to new level”, News Weekly, August 27, 2016.

[16] Ibid.

[17] Social and economic impacts of the Basin Plan in Victoria, TC&A and Frontier Economics report, February 2017.

[18] Ibid.

[19] Ibid.

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