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Gittens on water « Previous | |Next »
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.

| Posted by Gary Sauer-Thompson at 12:43 PM | | Comments (14)
Comments

Comments

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.

Let's get the main point out of the way straight off.
I agree that the major cause of water loss is inefficient, uneconomic and overallocated irrigation.
But I don't know the basis for this: "City water prices are about 10 times the price of (admittedly, untreated) water for irrigation."
Is there something going on in the East about which I am unaware?
I'm an irrigator with a licence for many megalitres.
The water costs me nothing.
It's not cheap, it costs nothing.
Its not priced at 1/10 of city prices.
It costs nothing.
Nil, nix, zero, however you want to describe it.
Why should the cities, the river, anybody pay me for something that cost me nothing?
It's not my water. It's a national assett that I have been privileged to be allowed to use at the expense [as it turns out] of others including the environment.
OK it may seem that I'm playing semantics here.
I paid for the licence to take water from the river.
But the water itself cost me nothing.
OK I need tanks, pumps, pipes etc but they are all capital costs that add to the value of my property and the electricty is a deductible cost.
In fact if I were to sell my licence, just the licence, nothing else, I would make a substantial profit taking into account all costs and ignoring actual production such has been the increase in the value of my licence in the last 10 years or so.
So why should someone pay me for the water that is not mine and cost me....here it comes again...nothing?
I further agree that the Coalitions well thought out and costed scheme [that's sarcasm] is a direct subsidy to irrigators.
But I can't think of another way of stopping them wasting huge quantities of water that is needed in other places other than to buy their licences back [not necessarily all of the allocation but maybe say 10% or 20% of each of all existing licences], give them some job training etc and pay them for doing something useful [ sort of welfare to work or work for the dole for irrigators, they'll love that] even if that entails doing very little. At least it won't have such negative impact.
But unless I'm missing something that goes on elsewhere I can't see how it can be stated that water has a cost as far as irrigators are concerned.
And that they are "owed' for 'their' water.

Good analogy Fred.
One question I don't know where you are but as you have a water license and say the property next to you doesn't. Does this markedly increase the value of your property? Does the water license pass to the new owner if you sell?

Fred,
I do think that you are playing semantics with Gittens.

His point would be that rural water is underpriced. I'm sure that you would agree, given your argument that water is free. Gitten's next point would be that:

a rational approach to 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.

It would appear from your comments that you agree with Gittens on this as well.

So we agree that the core water issue in rural Australia is the overallocation of water licences by state governments and that pricing water to reflect its scarcity and cost of delivery is the best way to go.

We also agree that I further agree that the Coalition's Big water plan for the Murray-Darling Basin is a direct subsidy to irrigators.

That is a lot of agreement. I agree with you that the consequences of this are enormous for those regional communities whose economy relies on irrigated agriculture. The direction you point in --- give them some job training etc and pay them for doing something useful is the right one.

However, I don't see it as a sort of welfare to work or work for the dole for irrigators; more along the lines of paying them to restore a degraded landscape in those areas where irrigation is no longer sustainable, due to lower rainfall and lack of runoff.

The Nationals are having great difficulty in coming to grips with this kind of shift. Not surprising when they are still climate change denialists.

Les,
water "rights"--ie a licence to access water from a river to irrigate --is separate from the property (ie., land) title. So a Victorian dairy farmer can sell the water licence to wineyard in South Australia and still keep the land.

As Fred says this raises the whole question of what happens to the land when the water licence has been sold off. One suggestion, metioned by Fred, is for the ex farmer to become an environemtnal steward and to be paid to restore the land and brring back the biodiversity.

It is acute problem because global warming indicates that many farms are no longer economically viable.

Gary, I guess I'll just have to agree with all you said, basically, as you point out, we are in agreement.
My only point I suppose was that there is an attitude out here among irrigators that it is 'their' water and nobody should be allowed to take it away from them.
And Gittens seemed to buy that ethos by implying that water has a price for irrigators when really it hasn't. I can use, at minimal cost, the water my licence allows year after year at no cost for the water itself. Urban dwellers pay for the water infrastructure and a price per kilolitre used [or even not used]. I don't.
My 'work for the dole' comments were a little tongue in cheek. Again out here, irrigators don't blink when, say, 500 workers lose their jobs at Mitsubishi. But the gods forfend that such should be considered for them.
And really the whole thing could be managed so that job loss is neglible, disruption to lives minimal and economic loss to Australia, after some initial costs, may actually increase given the subsidisation of irrigation and the non-essential nature of most of their produce [does the world market really need more citrus, grapes, cotton and rice?].Just like fishers have come to terms with regulation of catches etc so as to ensure fisheries have a sustainable future, so the same principles need to be applied here. Smart irrigators [like modest me] would be calling for decreased allocations, increased efficienies etc..
Basically it was a good article [I guess, I couldn't access the original. My computer is throwing tantrums] and really needs to be a high profile topic cos even if we have good rains this year, and in the future, the problem of a finite input of water and an unresolved assumed right to take out of our waterways an infinite amount is inevitably going to bite us again.
Good discussion, thanks.

Fred,
I was initially puzzled by your perspective and where you were coming from. Now I see where you are engaged in a critique of the mentality of the irrigation industry:

My only point I suppose was that there is an attitude out here among irrigators that it is 'their' water and nobody should be allowed to take it away from them.And Gittens seemed to buy that ethos by implying that water has a price for irrigators when really it hasn't. I can use, at minimal cost, the water my licence allows year after year at no cost for the water itself. Urban dwellers pay for the water infrastructure and a price per kilolitre used [or even not used]. I don't.

I agree. The water in the rivers and underground is publicly owned and its delivery to irrigators from our is rivers heavily subsidised, whilst irrigators only have a licence as an entitlement to access that water.

There are going to be great changes in the irrigation industries because of less rainfall and runoff, and the industry does itself little favours with its take no prisoners stance--no reduction in the over-allocations and its refusal to upgrade its water infrastructure without massive public subsidies.

I also agree with you, that the better approach is this one:

Just like fishers have come to terms with regulation of catches etc so as to ensure fisheries have a sustainable future, so the same principles need to be applied here. Smart irrigators [like modest me] would be calling for decreased allocations, increased efficienies etc.

So true. Climate change is here to say and less rain and run off requires smart thinking about how the irrigation industries and regional communities adapt effectively so they can continue to flourish.

Gary,
Just read your May 17 post "water woes".
Spot on.
Seeing as how you apparently are in SA perhaps you are familiar with the recent demise of the River Marne?
The Marne has, or had, the reputation of being the only tributary to the River Murray in SA.
I drive through it 2-3 times most weeks, over a causeway.
Once I got bogged when it came raging down after heavy rains.
But about 10 years ago, at the time of the grape and olive boom, everybody and their dog started planting such everywhere including in the eastern Mt. Lofty catchment area of the Marne.
Dams and bores sprang up everywhere to service the irrigation of millions of new olive and vine plantings. This resulted in the decrease of water inflow by infiltration into the Marne Valley.
It hasn't flowed since.I haven't got my tyres wet for years and I won't in the future.
It's a dead parrot.
A few years ago the State govt. placed a ban on further use of the catchment water table.
Too late.
Now who is to blame for this [which has been repeated all over the catchment areas of all our rivers in Australia AFAIK]?
Well for a start the local government bodies could have and should have refused permits to plant, build dams etc.. They could have as they have that power.
But they didn't.
And the state government could have forced them to do so, which they did eventually although I'm not familiar with the details.
And the irrigators themselves could have realised that there is a downstream effect to their actions.
But they didn't.
Even after the ban was in place there were lobby groups trying to get it rescinded.
Anyway the upshot of this is that now we have a dead river and the Marne is no longer supplying what little water it used to into the Murray.
Small scale example of a large scale problem.

Fred,
you are dead right about the poor old Marne. And it stands for what has been quietly allowed to happen in SA.

There are other Eastern Mt Lofty tributories of the Murray River or Lake Alexandrina. The Angas Bremer is another one. And the catchment is in a similar situation to the Marne for similar reasons. However, things are looking up.

Your question:

Now who is to blame for this [which has been repeated all over the catchment areas of all our rivers in Australia AFAIK]?

is the right one. Your answer points in the right direction:
Well for a start the local government bodies could have and should have refused permits to plant, build dams etc.. They could have as they have that power. But they didn't. And the state government could have forced them to do so, which they did eventually although I'm not familiar with the details. And the irrigators themselves could have realised that there is a downstream effect to their actions. But they didn't.

The irrigators in the Eastern Mt Lofty Ranges just pumped the water out--ground water, then the river water, then they captured all the run off in their dams from the rains. So the local rivers died.

Some local councils went along in the name of development, whilst others fought it --eg., Alexadrina. But they had few powers. The SA state Government (both Lib & Labor) was at fault- ---things were unlicenced; or the licences were fiddled. They didn't about environmental flows. All that mattered was irrigation.

All the time SA was pointing the finger at the upstream states for not returning water to the Rver Murray . --it was hypocrisy.

Without racking my brainz too much, I'll share a recollection of a point made during one of the many debates about the Cubbie Creek salinity-creation monstrosity in God's Own Country, Queensland.
Namely the uneven terms involved in cost of water for one irrigator (Cubbie cotton ) against many others.
If rorting of the system on the terms that appear to exist concerning the above (as described by investigators like Phil Dickie, for example) there must be at least some resentment between irrigators, also.

Paul,

as I understand it Cubbie simply bought up all the water licences to harvest water.Is that right? What does Dickie say?

From memory the Beattie Government wanted to buy Cubbie Stratain but the local irrigators would not support them--nor would the Howard Governemnt.

Is that right?

Phil Dickie is apparently a Gold Walkley-winning journalist(involving the Fitzgerald Commision that ended the Bjelke-Petersen era) . Has followed the Cubbie Creek saga doggedly since the 'eighties inception of it during the last years of Jo-Burg, when Darling water allocations downstream from a dam were handed out to National Party cronies for nothing, or virtually cost free.
Dickie observes that Cubbie receives water allocations of roughly the amount that would fill Sydney Harbour (200,000- 500, 000 ml pa), depending on the weather, for $3,700 a year.(seem to recall the cost was increased a little, around 2004).
The water is stored or "parked" in vast, shallow dams through an obscure and obsolete regulation regime, thus encouraging exponential evaporation. Last and this year, the papers reported, Cubbie had actually run dry and not got a harvest, due to its inneficient water storage.
By contrast, a farmer downstream, a Mr.Ray Kidd, was:
"paying $30,000 a year for his allocation of 1,000ml" but "pays even when the government can't supply the water"(Dickie).
The article referred to is to be found in the "Brisbane Institute" journal under the title of, "Water Management Queensland Style", from late 2000; although Dickie updated it about 2005. Easily located by simple Google, for anyone interested.

PS, have idea I remember the IPA(or CIS?) hack "Dr" Jennifer Marohasy, who regularly appears to defend Cubbie Creek at her blog, claiming that Cubbie was not on the Darling.
But Dickie, in effect, probably refutes any claim of that nature by explaining the various name- changes of the Darling as it courses through Queensland.
Hence, the irrigators and farmers downstream who have complained vociferously about Cubbie and its impact may not have been imagining things when they complained of massive water access deterioration in recent times. The quarrels have been bitter and made their way onto TV current affairs more than once.

Gary + Paul,
the Phil Dickie article on water management of the St George Irrigation Area.
is here.

On another water issue plans are afoot to dam the Clarence Valley and then use it as a "milch cow" for its excess or surplus water that can be used to provide water for SE Queensland.

 
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