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May 30, 2007
Ross Gittens has a good op-ed on water policy in the Sydney Morning Herald. He identifies the problem succinctly:
The nation's water problem comes in two parts. There's the destruction of our inland river systems because of over-irrigation, and there's the acute shortages of water in the capital cities - shortages that may just be the temporary consequence of a severe drought or may be a harbinger of the climate change to come.Irrigation accounts for about 70 per cent of all water use in Australia. Households take only about 10 per cent, sewerage and drainage takes another 10 per cent and mainly city-based industry takes the rest About 85 per cent of irrigation takes place in the Murray-Darling basin. City water prices are about 10 times the price of (admittedly, untreated) water for irrigation.
He adds that the obvious way to alleviate the cities' problems would be to allow them to buy some of the irrigators' water allocations. Many irrigators would make more money from selling water to the city than from using it to produce low value-added crops. For the cities, buying rural water would be a lot more economic than spending a fortune on recycling and desalination plants.
But Howard's plan doesn't contemplate such sales. Why not? It's contrary to National Party policy. The Nats don't want to see any decline in irrigation activity, no matter how ecologically damaging or uneconomic it may be. The Coalition is beholden to the Nationals.
What has been rejected is a water policy would concentrate on making sure water - city and rural - was correctly priced to reflect its scarcity and on maximising the opportunity for water to be traded in markets so it finds its most valuable use.
Gittens then addresses Howard's big plan in terms of rural water users and the irrigation industry:
The plan has two main elements and both are ill-considered and wasteful. The first is to spend almost $6 billion providing irrigators with modernised infrastructure, mainly lining or piping for their major water channels.The Commonwealth would pay $4 for every $1 the farmer paid. In return, the Commonwealth would get half the water "saved" for return to the river and the farmer would get the other half. Not a bad deal, eh? Especially when you remember that much of the water "saved" through reduction of seepage and run-off would have found its way back into the river, anyway
This is the Government subsidising improvements that irrigators hadn't considered worth making themselves - mainly because their water's so cheap they don't mind wasting it. This is the Government picking a single, infrastructure solution to the farmers' problems and, in the process, trying to keep irrigators right where they are.
It ignores the Productivity Commission's findings that "'saving' water via major infrastructure works is often costly compared with other options" and "subsidies that seek to improve the uptake of particular technologies or practices solely to increase the productivity of water use are likely to be ineffective".
Gittens then says that:
The plan's second element is to spend $3 billion buying back from farmers the grossly excessive (and hence often unfilled) water entitlements given to them by state National Party ministers, particularly in NSW. Not bad if you can get it. Trouble is, the Howard Government's tender to buy back entitlements under an earlier scheme has just collapsed because the price the farmers demanded was too high. They think they're sitting on a goldmine - why wouldn't they?
Th plan is a giant subsidy to the irrigation industry. So much for good economic rationality.
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I think if I was building a new house I would install underground tanks with a recycling system and a solar unit on the roof for power. Around $20,000 or so without the rebates. Seems good value.