The Productivity Commission (PC) is continuing its lonely war on behalf of taxpayers and economic efficiency with its latest document on the Murray-Darling Basin Plan (MDBP), an interim report on its review of the implementation of the plan.
For more than a decade, the PC has railed against trying to achieve the water-recovery goals of the MDBP through anything other than water buybacks, particularly targeting taxpayer funding for “efficiency measures” such as on-farm irrigation infrastructure, which amounted to taxpayers paying farmers and irrigators for investments they should have made themselves, and which were much more expensive per gigalitre of water saved than water buybacks. The National Water Commission also fought the good fight against this scam — a particular favourite of the Nationals — before the Abbott government abolished it for being too independent.
The PC’s interim report takes aim not merely at “efficiency measures” but also at two other shortcuts that have been incorporated into the plan: “supply measures” (“which allow for achievement of equivalent environmental outcomes with a lesser volume of water. Examples include using pumping stations, regulators and levees to deliver water to lakes and floodplains without creating overbank flooding”) and “constraints easing” (“to overcome some of the impediments to delivery of water down the system. They can include changes to physical features such as crossings and bridges, as well as negotiating easements where private land is flooded”).
Back in 2018, the PC warned about each of these, saying that the associated risks were high and that the measures weren’t progressing as quickly as they should. However, it held out hope that supply measures, which can be developed by state governments, could prove cheaper than water buybacks.
In the intervening five years, however, and with the “reconciliation” deadline ostensibly looming next June (the government is currently proposing to move that to 2026), supply measures and constraints-easing, due to foot-dragging by states, have provided less than half of the amount intended, leaving a 315-gigalitre-a-year shortfall, while “efficiency measures” have contributed less than 6% of the amount allocated for them.
In contrast, virtually all of the 2075 gigalitres/year of water scheduled to be obtained through water buybacks or large-scale infrastructure has already been obtained — in fact, much of it was obtained before the plan commenced in 2012. That’s despite the Nationals imposing a ban on water buybacks in 2015.
The MDBP has been accompanied by a constant litany of complaints from the Nationals, irrigators and some regional communities that water buybacks destroy Basin towns. And there have been some impacts on smaller communities:
People who sold water entitlements were compensated at market prices, with proceeds often funding on-farm capital works, or market exits. Larger and more diverse regional centres in the Basin have largely adjusted to less water. However, there have been negative socio-economic flow-on effects in some small irrigation-dependent communities, particularly following major irrigators selling large parcels of entitlements. Some Basin communities saw agricultural employment fall rapidly, without offsetting growth in other employment areas (the negative effects have only been slightly tempered by improvements to tourism resulting from improved ecological outcomes).
But what’s remarkable is that there has also been a marked increase in agricultural production: the PC says “the gross value of irrigated agricultural production in the Basin increased by about 12% between 2013 and 2018, despite the volume of water used in irrigation declining by over 16% over the same period”.
This is exactly as economists predicted: once water was tradeable, and lower-value users could sell water either into the market or to the government, the overall efficiency of the Basin improved. And it’s exactly the kind of productivity growth that we’re being told Australia is currently lacking — but it’s unlikely you’ll hear anyone trumpeting the great productivity success story of water buybacks.
The PC’s interim recommendation, unsurprisingly, is to get back to water buybacks. “The Australian government should develop a renewed approach to water recovery, including staged voluntary purchases. Waiting until reconciliation (now proposed for the end of 2026) to address the shortfall will perpetuate uncertainty for Basin communities and risks further increasing the cost of water recovery.”
And if there are cases where small communities are affected by buybacks, there should be “a commitment from Basin governments to assist communities, where warranted, to transition to a future with less available water. Adjustment assistance should build on the evidence about what programs work and the regional economic context.”
The PC also wants to see Indigenous peoples more engaged as partners in the implementation of the plan. “Basin governments should publicly report on how water resource plans deliver on First Nations objectives and outcomes, and strengthen the capacity of Aboriginal and Torres Strait Islander peoples to engage in Basin Plan activities.”
Labor needs to move swiftly on the plan, even though this is only an interim report. The MDBP will always be sabotaged by the Nationals while the Coalition is in power. Water buybacks should resume as quickly as possible; they will help further improve the productivity of a crucial sector of the economy.
Yes, our farmers are the next biggest rent seekers in the country after miners. After farmers it is the property industry.
To be honest, most farmers there have been there for generations and were promised in true Country Party style that they could farm the wy they have always been doing for generations into the future. Always drawing on as much water as they want. Clear land as they see fit. Us diesel petrol forever for their tractors and harvesters and ploughs. Climate change has only in the last generation or so been on the horizon. Now it is coming to bite them on the bum they don’t want to know. They have been there for generations, some for well over 1 century, and they complain all the time. No one would stand a city person complaining the way they do. Griffith and Leeton should never have been built. The climate is dry, the land only arable with tons of water and it has to be fertilised continuously. That western part of the Riverina should have been left as sheep country and it was only the prevalence of flooding in the late 19th and early 20th centuries that saw the need for yet more food production far from any major market or overseas transport hub. Thos dams should not have been built. Burrendong equidistant between Wellington and Mudgee. Waste! Carcoar Dam? Waste! The few farmers on 7.30 report around Cowra region were whingeing their brains out over the fact Labor got in and axed the raising of the Wyangalla Dam wall by 10 metres at a cost saving of $4 billion. Excellent! The Dam was built in 1956 and was small. Probably the right size. It was massively extended in 1972. Still not enough for these farmers who also complain against God when the dam was at 3%, where it has been for many years due to constant drought. I know the place well.
We just don’t have the country to support agriculture in the way many people want.
Years ago the Nationals separated the ownership of water rights and farmers (irrigators), leading to accountants, large companies and other unrelated-to-the-land types buying up water rights. Changing their value as a consequence. Is this a cause of this huge muck up of the Murray Darling water usage?
It was a huge windfall scam, one of the biggest in Australian history, benefitting land-holders and the Nats. So now it’s money first and everything else a long way last.
There’s no law that says country towns must be protected from job losses. The rest of the country is littered with dead towns that lost population as farms and machinery upscaled. Not to mention mining towns, shafted (pun) by FIFO.
Another example of the obsession with the National Party. Water trading, not the bogey it is claimed, was established from the 1980s by mainly ALP governments. If anything, it was resisted by the National Party.
There was a good ABC documentary on the Macquarie River about six weeks back, called “Following the Flow.” At one point, bemoaning the lack of water and the propaganda put out by Big Farms about how river towns were dying due to the MDBP, a local cockie said that the main reason towns were disappearing was because seasonal workers had been replaced by automation. Prior to that, the seasonal workers spent their money in the towns for months at a time, adding to the prosperity of the places. “But you won’t see Big Agriculture complaining about automation,” said the cockie. “No. It’s gotta be government and the greenies.” (This is not an exact quote, but the gist of it is there).
Not all country towns are equally deserving of support from the Nats. It seems cotton farming areas in Queensland and Northern NSW are much more deserving than any other places further down the Darling and then the Murray. If only Barnaby the former accountant for cotton farmers in Queensland had never gone into politics.
The Nationals still hold the federal electorate of Parkes which has western NSW along the Darling but also the northern cotton towns on the Darling and tributaries. However the NSW electorate of Barwon which covers only the west of NSW and not the main cotton areas is now held by an independent (who was previously Shooters, Fishers etc Party when first elected, but re-elected as an independent). It does not seem likely the Nationals will get it back. Water played a big part in that shift.
A useful summary by Bernard Keane of the latest report by the Productivity Commission on the Murray-Darling Basin Plan and the continuing efforts of the PC to bring sense to Australian water policy. Unfortunately, like the initial comments from Crikey readers, too much emphasis in the article on the faults of the National Party with insufficient acknowledgement that water policy is a longstanding bipartisan failure of Australian politics and public administration. By way of example, Malcolm Turnbull, Minister for the Environment when the flawed basin plan was conceived in 2007, boasted that he did not need advice from the Commonwealth Treasury and the Department of Finance. Following a change of government, Senator Wong did nothing to correct the inherent flaws of the plan – as pointed out by Bernard Keane, undue and expensive reliance on public investment in purely private irrigation infrastructure. Almost as dodgy as the flawed financing aspect of the plan were claims that these projects were actually water saving.