Philosophical Conversations Public Opinion Junk for code
parliament house.gif
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
South Australian Links
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Murray-Darling Basin: nothing changes « Previous | |Next »
November 17, 2010

I have to agree with Brian Toohey's argument in his Rethinking the Murray–Darling buybacks at Inside Story that what happens with irrigation water in the Murray-Darling Basin is one of the great public policy failures of recent Australian history. This failure is not just the past--it is also being continued by the Gillard Government.

His argument is that despite COAG agreeing in the 1990s that full cost recovery would apply to “all rural surface and groundwater based systems” except for some small community services that meet social and public health obligations, the Australian Government has no intention that the $5.8 billion public investment to upgrade commercial irrigation infrastructure will not be recovered.

In line with Rudd’s approach, Gillard has no intention of recovering a cent of this public spending from the irrigators who benefit. The $5.8 billion is meant to “save” water by reducing leaks and seepage from canals and pipes, with half the savings going to irrigators and half retained for the rivers. Much of the savings, however, would have found their way back to the rivers and groundwater systems as part of the basin’s normal hydrological processes.Apart from large-scale spending on off-farm engineering works of direct benefit to farmers, at least $720 million has been allocated to upgrade on-farm irrigation infrastructure. This spending gives an even bigger boost to the value of these farmers’ properties without any of the costs being returned to the public purse.

Toohey adds that the water minister, Tony Burke, proposes to spend more money on infrastructure, this time to create extra water for irrigators by diverting it from wetlands and other environmental assets intimately linked to the basin’s rivers. Again, farmers won’t pay a cent for the extra water.

It is a policy failure because it amount to a gigantic public subsidy for the irrigation industry, which regards the water flowing into the nation’s rivers or underground aquifers as belonging to them. They erroneously consider a water access entitlement as giving the irrigator the right to a guaranteed amount of water; and a right without any responsibility to use this water in a way that ensures the sustainability of the Murray-Darling Basin.

We still have the state subsidising water development, standing behind Big AG, and ensuring that the irrigation gets its water at the expense of the wetlands. So it is a surprise to find Graeme Batten in his A response to the Guide to the proposed Murray-Darling Basin Plan at Online Opinionthat a simple and rapid reduction in water allocations to irrigation communities is not acceptable unless the effects are countered by measures that lead to improved water delivery and utilization efficiencies.

Batten's argument that Irrigators deserve recognition for the gains in the more efficient use of water they have made already is fair enough, but his argument that an increase in the efficient utilization of the water available through public investment in infrastructure upgrades and funding research and development of water-efficient irrigation carefully avoids COAG's user-pays principle that was endorsed by the 2004 National Water Initiative.

| Posted by Gary Sauer-Thompson at 11:38 AM | | Comments (9)


The para concerning Tony Burke says it all. What's gone on for decades has been put down to ignorance, but that excuse could not possibly retain validity in light of what's occurred during the first decade of this century, alone.

you say: "What's gone on for decades has been put down to ignorance..."

Or they knew what was happening and didn't care. The economy ruled.

paul says that the ignorance "excuse could not possibly retain validity in light of what's occurred during the first decade of this century, alone."

Toohey points his finger on it when he says that the Gillard Government keeps surrendering to the basin’s irrigators.

Gary, I'm not up to date, will there be full cost recovery + return on assets for the NBN?

Pink bats? And proposed compensation to installers.

LPG fuel conversions?

Stimulus payemnts + interest?

What Toohey mistakes is that the infrastructure spending is not for the benefit of farmers but to preserve production and to maintain communities at a moderately higher cost per ML returned to the river. Cost recovery comes down the track in the form of capital gains tax and income taxes that wouldn't exist in the absence of productive ability. Infrastrucure spending is an investment, buybacks are non-productive spending.

An unfortunate theme that Toohey presents is that the irrigator is to blame. I find it disappointing because all I want to do is farm, and produce. I've purchased all my entitlement along the way and was never issued any free. I didn't allocate the water entitlements and I sought and received all the necessary govt approvals for my infrastructure. Is it really fair to ruin me financially by proposing that govt simply allocates me less water because it's cheaper?

"ensuring that the irrigation gets its water at the expense of the wetlands"

Once wetlands were swamps, and now irrigators are being blamed for decisions made by govts in a different era. The public mindset on the environment has changed with affluence, I have no problem with that, but I'm still locked in to paying for my assets and hopefully making a living along the way.

Is the govt bowing to "irrigator power", or is it being fair and just - to the farmer, to towns and to those who depend on the Basins produce now and in the future.

Rojo makes at least four distinct defenses. First, he says that other people have received subsidies and haven’t been asked to repay; that is a defense based on equity. Second, he says that recovery will come in the future via taxes on irrigators, so there is no issue. Third, he says he has complied with laws and regulations and to change these in a way that disadvantages him is unfair. Fourth (and related to Third), he says that the “public mindset” has changed but the laws (and entitlements) governing farming haven’t, so to regard him as an environmental miscreant is unfair.

It seems to me that all recipients of subsidies which come under review might make these defenses. Does that mean that no subsidy can ever be withdrawn or modified? Commonly, when a subsidy is withdrawn some kind of transitional arrangements are put in place whereby recipients have an opportunity to adapt to a reduced-subsidy regime or to exit. I’m not familiar enough with the Murray-Darling proposals or the National Water Initiative to say whether that is the case with irrigators like rojo. In any case, maybe it is these transitional arrangements we should be talking about, rather than just trying to preserve subsidies in place which, because of our new mindset, we no longer think are viable.

But those transitional arrangements should take into account the benefits that rojo and his fellow irrigators have received in the past. As I commented a few posts ago, there are heaps of rural and regional communities which have survived only because of subsidies paid by non-rural people over many years. Irrigators like rojo need to bear in mind that people in non-rural electorates are increasingly impatient with demands for continuation of that regime.

There is another objection that rojo didn’t make which might have been more telling than the objections he did make. That would have been to say that subsidies to irrigators (and to rural and remote communities generally) are the price we pay for cheap food in the cities. To the extent that the Australian tax system is progressive, that amounts to a payment from the rich to the poor to enable them to eat well. The alternative would be to discontinue subsidies to farmers, allow food prices to rise, then subsidise the purchase of food by the poor by something like the US food stamp programme. Rojo could then have said that since some kind of subsidy would be needed anyway (to avoid food insecurity), we may as well continue with the one we’ve got.

The counter to that would be to say that in fact the majority of the price paid for food in the cities doesn’t go to farmers at all; it goes to the grocery oligopolists. To some extent, reduction of the margins obtained by Coles and Woolworths could fund increased payments to farmers, which could go some way – maybe all the way – towards compensating farmers for the withdrawal of rural subsidies including subsidies to irrigators.

Politically, an alliance between farmers and city voters to squeeze the oligopolists might have a better chance of success than a simple demand by farmers to continue existing subsidies regardless of environmental consequences

Gordon, "It seems to me that all recipients of subsidies which come under review might make these defenses"
What subsidies do you believe I as an irrigator have been given?

My "defense" via NBN, Pink Bats etc is a descriptor for hypocrisy not me saying that because someone receives a subsidy I should too. See above question.

"defense" by taxes is merely questioning the return via future tax revenues resulting from the NBN, pink bats and lpg conversions. Versus continuing to produce food and fibre with water saved(some return on monies spent) rather than simply bought back(no return).

Reform in the MDBA isn't about farming practises but returning an amount of water to the river because it needs more flow. I would again state that I have done nothing wrong investing in irrigation albeit at a time when it was socially acceptable, and I would question the fairness of being ruined by Toohey's solution.

It would appear a great deal of Australian wealth originates in rural and regional Australia, so I'd be questioning the real worth of some of our non-rural "subsidy" providers.

Then we look at urban cities having to pull in resources from rural areas eg Melbourne/Adelaide pipelines because they've stretched the limits of their own resources. Though I agree water should flow toward it's highest value and that would be cities watering lawns, washing cars and filling pools.

My "telling" objection that I didn't make is because it isn't actually true. Australians aren't supplied with cheap food via virtue of subsidies to us poor rural folk. They are supplied with cheap food because we have such a high income compared to most other parts of the world. The recent release of data suggesting that more than half our food(presumably supermarket sales) is imported ahould give some credence to my statement.

Food security could be a reason to subsidise farmers, but I believe you are misguided on the subsidies you think Australian farmers get.

"This spending gives an even bigger boost to the value of these farmers’ properties without any of the costs being returned to the public purse. "

What is second hand drip tape worth?

The farmer has contribute money to the infrrastructure and to give up entitlement, so net worth of the property doesn't change much if any.

that would be "has to contribute money to the infrastructure" in the order of 20%, and give half the expected water savings back in entitlement.

Really not a morning person, sorry.