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Malcolm Turnbull on water: a disappointment « Previous | |Next »
March 2, 2006

Even though Malcolm Turnball walks on the dark side of politics I have a soft spot for him because of his consistent advocacy of water reform, when reform to ensure sustainablity is being blocked in both urban and rural Australia. Turnbull has argued for the need for efficient markets in water, greater accountability of water use, innovation in water technology and private sector investment in the water sector.

Now Parliamentary Secretary to the Prime Minister with responsibility for water policy, Turnbull continues to advocate water trading in relation to the National Water Initiative. So what is the case he makes in yesterdays Australian Financial Review?

Water markets enable value to be set by free choice of people in the market, not by government decree. Markets are better at picking winners than governments. As long as recurrent charges for water access and delivery are properly priced so as to recover the costs of provision ..... the most important (but not the only) test of whether water is being used efficently is whether that user is making a profit.

Turnbull then adds:
Water markets enable us to adjust to change and to reallocate water resources over time in response to changes in market requirements and environmental conditions.They also let us deploy resources efficiently.

He then argues that though there is water trading in Australia, it is severely constrained. Consequently, some of the barriers to trade need to be removed so the water market can create its own momentum.

What do we make of this argument?

Well, it is fine as it goes. We do need water trading and water markets. But note that Turnbull's concern is with efficiency in the allocation of the use of water resources and making a profit. This is a very one sided understanding of the governance of water, and a distortion of the goals of the National Water Initiative. The latter states:

The National Water Initiative (NWI) is a comprehensive strategy driven by the Australian Government to improve water management across the country. Australia’s highly variable and often scarce water resources are crucial for our economic, social and environmental wellbeing. We need to continue to improve the productivity and efficiency of our water use, while maintaining healthy river and groundwater systems.

Turnbull nowhere mentions the strategic goal of 'maintaining healthy river and groundwater systems.' That is why he disappoints. He reduces the key part of the National Water Initiative to 'promoting the efficient operation of water markets. ' Markets by themselves will not deliver more environmental flows. That requires government intervention. To date co-operative federalism has not delivered environmental flows to the Murray-Darling river sytsem.

You would expect the Parliamentary Secretary to the Prime Minister with responsibility for water policy to both understand that the twin strategic aims of the National Water Initiative, to defend them from those who say no no no to the ecologically sustainable use of water, and to address the failure to deliver environmental flows. Malcolm Turnbull is walking on the dark side with a slight green wash.

| Posted by Gary Sauer-Thompson at 12:06 PM | | Comments (2)



Turnbull's market based approach will also affect an area of the economy that, for sound social and economic reasons, has been paying less for water, that is agriculture.

If profit making is the objective water corporations will favour sectors that in the short/medium term can bid the highest price ie households and the booming mining sector.

Agriculture is by comparison a poorer consumer but this may be temporary condition - however the "market" will not concern itself with longer term trends.

Furtheremore demand for water far exceeds supply in Australia and as population increases this will raise the price of the existing easily usable supply of water.

Also corporations may tend to ration out existing water to the highest bidders for current profit performance rather than take a "loss" by investing in infrastructure for longer term benefit.

So all this suggests that unregulated profit making in water is harmful.


there are some sections of agriculture that are high value--wine and horticulture---and they take water from the low value dairy farmers in a water market. This shift is already happening.

It is true that demand for water far exceeds supply in Australia in southern Australia. Hence the need for water recycling in the capital cities.

Infrastructure renewal is a big big problem.It will only happen (be funded) when it is tied to a more sustainable use of water.