Trading scheme just does not hold water
BEAR with me. This is a story about water trading. The scheme involves spending $5 billion of federal taxpayers' money to create 900 gigalitres of water "savings" from the Victorian part of the Murray-Goulburn Basin. The water will be allocated a third each to the rivers, the Victorian irrigators and Melbourne (via the north-south pipeline).
This is a lot of water. It is equal to three times Melbourne's consumption. The savings are achieved by preventing the leaks in the main channels that distribute the water to each irrigator.
The water that leaks from the existing system seeps into the ground water and eventually finds its way into the Murray- Goulburn or the saline aquifers below the rivers.
In the good old days, before the overallocation of irrigation water entitlements began to stress the river system, the banks of the Murray were covered by trees whose roots would draw on the aquifer and prevent the water table rising.
The irrigators cut down the trees to produce more grass for their cows and crops.
The result has been a rising water table, lower on-farm productivity and increasing levels of salt and other contaminants associated with intensive farming getting into the river, compounding the already stark problems at the Murray mouth.
The farmers are not fools. They know this. The problem can be solved by planting trees. But saving what's left of the lower Murray requires months, not years.
The only way to improve the productivity of irrigation land and the quality of the water that eventually finds its way into the Murray is expensive laser levelling and the installation of irrigation pipes to prevent pools of water seeping into the aquifers.
The problem has been approaching for years. It has become acute because global warming has created permanent drought. This has concentrated the pollutants that are destroying the basin.
An interim solution for the farmers and a permanent solution to save the Murray-Goulburn is water from outside the basin. Water piped from Tasmania could flush the irrigated soils as well as the Murray.
The task would cost billions. But, as we have seen, so will the solution dreamed up by the Department of Sustainability and the Environment and their engineering consultants.
Unfortunately it has become apparent to me that the DSE, their consultants and the economic rationalists in the federal Treasury and the Productivity Commission (who are supposed to protect the national purse) all have a different agenda that is either knowingly or unknowingly quite hostile to the interests of Murray-Darling irrigators as well as the environment.
The engineering consultants employed by the DSE have a vested interest in creating opportunities for work building major infrastructure such as the north-south pipeline connecting the Goulburn River to the Melbourne water supply and the desal plant at Wonthaggi and its huge, custom-built pumps and generators.
The Victorian promise is that the investment in large-scale, off-farm infrastructure will save 900 gigalitres of water, and this will be split one-third to irrigators, one-third to the environment and one-third to the Melbourne water supply.
This excites the federal bureaucrats in the Treasury and the Productivity Commission who have a dream of a single water market.
The Victorian Government is making a gigantic step in this direction with the creation of a single market stretching from Mildura to Wonthaggi.
Interstate and inter-regional trading is on the fed's agenda.
The planned water market fits with the ambitions of the DSE, which controls the Victorian water register and would expect to control the market it is assiduously working to create.
The Premier, John Brumby, by refusing to co-operate with the other states, has extracted the promise of at least $2 billion from the feds to finance the first stages of the Orwellian-named Foodbowl Modernisation Project, where some stakeholders are more equal than others.
Brumby says he is helping the irrigators by providing them with more water.
But what Brumby is providing is paper water, which farmers will have to pay for irrespective of whether real water materialises or not.
Without real water, farmers will be forced to sell their water allocations for that year, and next, the water licence itself.
Once they have sold their water licence, the land to which it was attached may become worthless except as part of a tax-effective managed investment scheme for a Collins Street corporate farmer.
There is money in water allocation trading without water. One of the main risks in water trading is the threat of rain (or a pipe with real water from Tasmania). It is understandable that the Victorian Government wants to control the Victorian water market.
This may explain the acrimonious DSE takeover of the First Mildura Irrigation Trust, which has run without government control since 1895.
A high proportion of irrigators are already in debt. They can't afford on-farm remedial work and are forced to sell their water allocations.
With the continuation of global warming (which is the most likely cause of the series of drought years), the farmers will not be able to pay their share of the added burden of the modernisation program and will be forced to sell their water licences back to water authorities.
There is no wonder irrigators from north of the Great Divide protested in Melbourne about the North-South pipeline, which will take up to 75 gigalitres from the already stressed basin.
For their trouble, they were called liars by the Premier. They are even more desperate now. Suicide and bankruptcy is on the rise. What should concern the rest of the community is that the Premier's position lacks credibility, humanity and respect for good governance.
It follows a pattern evident in the lack of due diligence and openness in all major infrastructure decisions.