National Water Market – Privatisation of the Murray Darling
by John E. CaldecottFor too long the problem with the Murray Darling Basin (MDB) has not been drought or climate change but as the people who are beginning to rally in large numbers over recent weeks in South Australian are being correctly told the crisis is man made; the MDB is being mismanaged and water has been over allocated by governments. (The Australian 3/9/08) National Water Commission chairman Ken Matthews said this week there were no national guidelines for dealing with over allocation. "Under current conditions, many significant waterdependent ecosystems are under threat," he said."
The member governments of the Council of Australian Governments (COAG) are behaving as if there is no crisis, no drought, no disaster evolving in the Lower Lakes and the Coorong and it is business as usual? the previous Howard Government's Management Investment Schemes has resulted in corporations buying up scarce water to establish new irrigation projects during the peak of the drought, the Queensland Government in 2007 tried to auction water licenses in the Warrego River until it was stopped by the Howard Government, the NSW Government until very recently 3/7/08 has stood idly by while up stream farmers steal and divert water from the Murray Darling, the Darling is bone dry, the Menindee Lakes has been experiencing significant problems with water quality (salinity) that had significance affects on the citizens of Broken Hill and their plumbing systems in 2004 (ABC TV Stateline South Australia 8/8/2008).
The Brumby Government is planning to pipe 75 GL (1 giga litre = 1 billion litres) of water per year from the Goulburn River to Melbourne and is ignoring calls from its own farmers for a moratorium to be placed on permanent water trade out of the district of origin during what has been a long and protracted drought 4/7/08. It is also planning to build 150 GL desalination plant at Wonthaggi in Bass to alleviate Melbourne's water problems. The South Australian Government is planning to build a 50 GL desalination plant, a weir at Wellington and for the first time in their history cut off the Lower Lakes from freshwater.
Not unsurprising significant opposition by the people who live in these regions is beginning to mount to opposing these plans in South Australia and Victoria. Around 10,000 people attended a rally at Goolwa on one of the coldest Sunday mornings of the year on 1 0August 2008 and the numbers attending South Australian rallies are being to grow.
State of Emergency Needs to Called
Also correct is the need for a State of Emergency to be declared across the entire MDB to ensure the viability of the entire river system given the neglect by state and federal governments and to address the consequences of a drought that is far from over.Those who rallied on the steps of the South Australian Parliament on 1/8/2008 were told of the need to be prepared to fight for the Murray Darling as was done to save the Franklin River. For too long the MDB has been treated as reservoirs of water and not as a living natural system of water environments that need conservation.
Royal Commission Required
There is however a desperate need for the systemic causes of the neglect, mismanagement, over allocation and market based water reforms to be investigated and determined before making long term changes to the governance of the MDB and for that the new Federal Government needs to show leadership and call a public Commission of Inquiry, a Royal Commission.
Clearly there are choices that need to be made if there is not enough water to go around particularly in times of drought. These are not choices that can be made by markets or politically independent national bodies established to support those markets? they must be made by government using political processes. The choices that need to be made are the river and domestic needs must rank ahead of export needs i.e. all high security water must be reserved for domestic needs. In terms of domestic needs choices need to be made to give priority to households that depend upon river water and irrigators that provide fruit, vegetables and diary products to the domestic market i.e. those that put food on the table of Australians where use of river water is justified.
The advocates of reform like the Wentworth Group of Concerned Scientists advocate the use of markets to manage water and to rely on a political independent body – both ideas are ill conceived and result from the idea that governments are incapable and markets are the only ones that can be trusted i.e. the tired privatisation agenda is the only viable solution, water must go to the most efficient (economic) user who can afford to pay, irrespective of the consequences, and because we are in a crisis we must act now.
COAG and the Market Privatisation by Stealth
Those who support water reform have been careful not to use the privatisation word and accordingly the public have not been told the truth by the Council of Australian Governments (COAG) that their water reforms are about enhancing the market privatisation of the waters of the MDB. What was once a license granted by state governments to extract a quantity of water by a property owner from the MDB has been unbundled into a marketable property right that can be owned by anybody with the capital to purchase or a bank to hold as a mortgage.
These licenses were never sold by state governments in the first place and the amount of water that a licensee can access as an allocation is controlled by state governments and needs to be charged for as it should be given the considerable public and continuing investment in the infrastructure of the MDB to recover a fair share of costs of the public infrastructure. It remains unclear to me how Australian governments achieved this monumental theft for markets without firstly gaining the direct approval of the Australian people via a referendum supported by changes to the Australian Constitution, this is truly an economic rationalist experiment on a grand scale.
COAG therefore is not a solution to our problems but one of the causes. It was a COAG meeting in 1994 that decided to establish an open market or free trade in river water instead of immediately addressing the over allocation of water and establish policies for its use such as giving priority to maintaining the health of the river system and putting domestic needs ahead of export markets. COAG meetings are not open to the public or recorded in Hansard when they should be.
Snowy Mountains Scheme Privatisation
Let us not forget that the Howard Government supported by the NSW and Victorian state governments tried to privatise the Snowy Mountain Scheme including its waters in 2006 but John Howard backed down in the face of a massive backlash by farmers, environmentalists and unions. The Australian website reported 2/08/08 that "The head of the Snowy Mountains HydroElectric Scheme has launched a new campaign to privatise the authority in a move that could reignite a fierce battle between the Hydro and farmers, environmentalists and unions." This is cause for considerable concern for Australians.
The Howard Government also introduced farmbased managed investment schemes which have been labelled as a 'disgrace' by South Australia's Water Security Minister (The Australian 25/7/08) for distorting agricultural markets. These schemes are purely selfserving for their investors and where MDB water has been purchased by these corporations they are currently free to use the purchased water to produce products for overseas markets. COAG has used the new water market to expand the irrigation industry during one the most significant droughts in our recent history. Something is seriously wrong when those with money can buy whatever water they need whilst the rest of us including the river system have to go without or put in place expensive desalination plants with their considerable environmental baggage. Australians must control the waters of the MDB for the common good and not corporations, private investors or free trade agreements.
The establishment of a national (politically) independent body, advocated by the water reform movement, is no solution as in whose interest is this body going to serve and how is this body going to be accountable to the people of Australia? Handing control to the Federal Government is also not a solution for as we have seen the federal government can't be trusted to make the right decision let alone represent the people of South Australia with its limited representation in the House of Representatives compared to the eastern states.
Former South Australian Premier Don Dunstan would never have allowed the management of the Murray Darling to allow the Lower Lakes and the Coorong to dry up. He must be turning in his grave given COAG's priority to establish water trading as a management solution. The Australian Editorial 5/8/2008 pointed out that 5,300 billion litres (5,300 GL) was diverted from the MDB in 20067 for farming, town and other uses was the lowest in a quarter of a century due to the severity of the drought. COAG has failed to ensure the Murray Darling gets a fair share of water to conserve the river as intended by our founding fathers in section 100 of the Australian Constitution.
Federal Government's Competition Policy
The market reform agenda was forced on states by the Commonwealth under the guise of Competition Policy in the mid 90's and none of the parties, including the media, involved in supporting water reform have been brave enough to explain to the Australian people that establishing a market in river water is privatisation. It also explains why progress has been so slow and neither the government nor the reform movement have initiated a public inquiry such as a Royal Commission or sought democratic authority to establish a national water market to implement the privatisation of the water of the Murray Darling. It is being done by stealth by the reform movement without publicly surfacing what is precisely wrong with current policies, management arrangements and governing laws.
In these circumstances a Royal Commission must be held to determine what is wrong with the management of the MDB and its governance and to make recommendations to address the problems even if that requires changing the Australian Constitution.
Apart from the NSW Government's $105 million RiverBank scheme as far as I am aware state governments have not purchased water from the Murray Darling because clause 100 of the Australian Constitution bestows water rights to the states and the state governments license the use of river water and regulate its use. Why purchase what you own, control and whose flow depends upon the vagaries of the climate? The NSW Government's RiverBank scheme purchase of "water access licenses" underscores the point, why is it purchasing a water access license it granted in the first place?
The Rudd government is the first Australian Government in history to purchase river water in 2008 and presumably is using clause 51 (xxxi) of the Australian Constitution to overcome clause 100 now that a water market is operating between states. The Commonwealth is purchasing water licenses from "willing sellers" within a state and not from state governments. The whole idea of purchasing water from "willing sellers" lacks any strategic focus on the part of governments as to what purpose the water was being used, its reliability (security) and whether it is being used to serve domestic or overseas markets. There is a risk the wrong water is being purchased from "willing sellers". Compensation as part of any structural adjustment of water allocation needs to be looked at on a case by case basis and be jointly funded by state and federal governments.
The Queensland government tried to auction water from the Warrego to the market in 2007, despite the drought, but was eventually stopped by the Howard Government. The selling of water licenses by a state government also needs to be stopped as it is another foundation stone in the market privatisation of the waters of the Murray Darling.
Exporting Water
Professor Randy Stringer of the University of Adelaide recently pointed out in a University of Adelaide Water Wednesday lecture on 2/7/08 that Australia exports a net 4,000 GL of water in agriculture products. This data comes from 2001 figures on page 137 of Farmhand's "Talking Water" report 2004.This begs the question just how much of MDB's water is being used for export that has been either extracted or prevented from flowing into the river systems, it is time Australian knew the precise use of MDB water by all users, again this needs to be a matter addressed by a Royal Commission.
As recently as 28/6/08 Cubbie Station in Queensland announced that it plans to expand to grow food crops and wants to capitalise on world food shortages and high prices. Fair Water Use
Australia attributes the water storage capacity of the Cubbie Group to be around 537 GL of MDB water. Just 50 GL of water held by the Cubbie Group would save Adelaide the expense of building a desalination plant! This is an unacceptable outcome of current water policy and clearly a market solution is not going to be the answer as markets can only put their selfinterest first, not the collective interests of the rivers and the citizens of Australia as a whole. This can only be done and must be done by governments acting for the will of the people.
Alternative Policies and Strategies
At a time when climate change needs to be taken into account, societies and economies need to be redesigned to ensure goods and services are produced and consumed with the least consumption of resources by the supply chain. This means our food needs to be produced as close as possible to the point of consumption and the needs of local markets must rank ahead of interstate and export markets. It goes without saying that looking after the end to end health of the Murray Darling needs to bean absolute priority and the needs of Australian citizens who directly rely upon that source of water supply and for food.
If the Federal Government truly has the interests of the Australian people and MDB at heart they should be announcing a Royal Commission, an open and transparent public Commission of Inquiry into its supply including water with held from the river (public and private), ground water, what the water is used for (type of crop to meet a domestic or export market), the health and environmental condition of dependent ecosystems, its management including ownership, the impact and consequences of water reform, current governance and propose policies, actions that need to be adopted by governments to address Australia's cyclic weather patterns and the consequences of climate change. Terms of reference for a Royal Commission and State of Emergency scope have been developed for Fair Water Use (Australia) and posted on Fair Water Use's web site.
Given the current state of affairs, COAG need to think carefully and begin the redemption process by declaring a State of Emergency in the MDB. A moratorium must be placed on water trading during this period. The reliance on the water market is not a substitute for effective water policy designed to secure the health and competitive position of Australians given climate change.
Effective water policy includes the states taking control of all water including that withheld from the Murray Darling by private interests and ground water for the remaining duration of the drought and until the Federal Government Royal Commission reports. Emergency measures are established by COAG that focuses the Murray Darling Basin Commission and regional water management bodies to achieve the following:
- Critical domestic needs are put first to focus on sustaining the health and conservation of the Murray Darling system.
- Irrigators are able to meet the needs of Australians for food at an affordable price both now and in the future that enhances Australian's competitive position against imports i.e. like all costs the cost of water needs to be kept as low as possible.
- Reallocating water based upon domestic needs first (highreliability water) and export use second (lowreliability water) taking into account the inherent variability of Australia's climate.
- Agricultural and industry purposes must be appropriate to the availability of water that takes into account not only economic but environmental impact and climate change.
- All other options for sourcing and effectively using water are thoroughly researched and developed to improve the range of available options in times of severe drought and to ensure appropriate use of water at all times.
- A Drought/Disaster Management Master Plan needs to be established for the MDB that addresses the above principles.
State governments of both political persuasions have been part of the reform movement since the midnineties and given the current crisis caused by the current drought have jumped to building expensive desalination plants, pipe line projects as a policy solution without addressing the issue of mismanagement and over allocation of our rivers, setting fair policies for water use and thoroughly investigate alternative options for water resources, their efficient and effective use.
In Victoria the Bass Shire Council passed a motion on the 18th June 2008 "That this Council, informed by its research and investigation, believes the Government’s decision to commit to a desalination plant at Williamson’s Beach should be reversed. Council calls on the Premier, Hon. John Brumby MP, and the Victorian State Government, to abandon the decision to construct a desalination plant and to instead hold a comprehensive, open and transparent inquiry into options for Victoria’s water supply. Council believes that the outcome of such an inquiry should inform future Government decisions." The best form of a comprehensive, open and transparent inquiry is to hold a Royal Commission.
South Australia also needs to hold a Royal Commission to examine the water resources available to it and whether a desalination plant is justified as an economic and environmentally viable solution for Adelaide given the outcome of a Royal Commission into the MDB.
John Caldecott is Director of Consultants in Quality Pty Ltd, Henley Beach SA.
References & Further Information
ABC Landline "The future ofManaged Investment Schemes" 25th February 2007
http://www.abc.net.au/landline/content/2006/s1853485.htm
ABC News "Aust breaching Ramsar wetlands deal: water expert" 11th August 2008 (Associate Professor David Paton, of Adelaide University) http://www.abc.net.au/news/stories/2008/08/11/2330550.htm
ABC News "Cubbie expansion sparksMurrayDarling fears" 28th June 2008
http://www.abc.net.au/news/stories/2008/06/28/2288704.htm
ABC News "Lawyer raises doubts over water unbundling legislation" 2nd October 2007
http://www.abc.net.au/news/stories/2007/10/02/2048378.htm
Bass Shire Council "Bass Coast walks from DesalinationPlant" 20th March 2008
http://www.basscoast.vic.gov.au/content/content.php?cnid=3724&ctid
Commonwealth of Australia The Australian Constitution "Section 100 Nor abridge right to use water"
http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/DA4C5EE438A954 BCCA25728A00001A67
Council of Australian Governments "COAG website"
http://www.coag.gov.au/
Fair Water Use (Australia) "FairWater Use proposes declaration of State of Emergency" and "Fair Water Use proposes Royal Commission of Inquiry"
http://www.fairwateruse.com.au/
Fair Water Use (Australia) "Here is your water Kevin"
http://www.fairwateruse.com.au/content/view/65/5/
Farmhand "Talking Water" 12 Part Report 2004
http://www.farmhand.org.au/
Government of South Australia "Water Trading" in South Australia
http://www.irrigate.net.au/water_trading/states_territories/sa.shtml
Independent Murray Darling Basin Commission: Ian Kowalick 30th July 2008
http://www.news.com.au/adelaidenow/story/0,22606,241075115017720,00.html
Inland Rivers Network (NSW) Latest news "Help buy water for Warrego"
http://www.irnnsw.org.au/
Murray Darling Basin Commission (latest issue of the Murray Darling Basin Agreement is June 2006 165 pages)
http://www.mdbc.gov.au/home
Murray Darling Basin Commission Natural Resource Management "Water Trading" 16th March 2007
http://www2.mdbc.gov.au/naturalresources/watertrade/watertrade.htm
National Conservation Council of NSW "Win for the Warrego River" circa September 2007
http://nccnsw.org.au/index.php?option=com_content&task=view&id=2146&Itemid=1
Nature Conservation of NSW "Crack down on floodplain harvesting a good first step"
http://nccnsw.org.au/index.php?option=com_content&task=view&id=2460&Itemid=619
NSW Government Department of Environment and Climate Change "Water accesslicence purchase (RiverBank)" 24th April 2008
http://www.naturalresources.nsw.gov.au/water/dealings1.shtml
NSW Government Media Release Department ofWater and Energy "Floodplain Harvesting Policy to Provide Security for NSW Rivers and Communities" 3rd July 2008
http://www.naturalresources.nsw.gov.au/mediarelnr/mr20080703_3902.html
NSW Government Natural Resources "Licensing under theWater Management Act 2000: Dealingsin Water"
http://www.naturalresources.nsw.gov.au/water/dealings1.shtml
Parliament of NSW "Snowy Hydro Corporatisation Bill" 13 th November 1997
http://www.parliament.nsw.gov.au/prod/parlment/HansArt.nsf/V3Key/LA19971113049
Parliament of NSW Minister For Land AndWater Conservation "Motion of Censure" 8th April 1997
http://www.parliament.nsw.gov.au/prod/PARLMENT/hansArt.nsf/V3Key/LA19970408048
Plug the Pipe Campaign (Victoria) – campaigning against plan to pipe 75GL per year from Goulburn River to Melbourne.
http://www.plugthepipe.com/
River Lakes and Coorong Action Group Inc. (RLCAG)
http://www.riverlakescoorong.com.au/
Stop The Weir Campaign (South Australia) – campaigning against the South Australian Government's plans to build a weir at Wellington and block water off from flowing into the Lower Lakes of the Murray.
http://www.stoptheweir.com/index.php?option=com_weblinks&catid=29&Itemid=55
The Advertiser Editorial "Out of sight, lakes' plight ignored" 8th August 2008 (Calls for a State of Emergency and Royal Commission)
http://www.news.com.au/adelaidenow/story/0,22606,241456395006336,00.html
The Advertiser Professor Wayne Meyer, Earth and Environmental Sciences 31st July 2008 outlines State of Emergency priorities.
http://www.news.com.au/adelaidenow/story/0,22606,241075125017720,00.html
The Australian "Brendan Nelson criticisedfor denying climate change" 3 September 2008
http://www.theaustralian.news.com.au/story/0,25197,242853735013871,00.html
The Australian "'Disgraceful' water licencemay earn $100m" 22nd August 2008
http://www.theaustralian.news.com.au/story/0,25197,242215405013169,00.html
The Australian "Freshmove to privatise SnowyMountains Hydro scheme" 2nd August 2008
http://www.theaustralian.news.com.au/story/0,25197,241153822702,00.html
The Australian "Minister attacks farmbasedmanaged investment schemes as a 'disgrace' 25th July 2008
http://www.theaustralian.news.com.au/story/0,25197,240745025006787,00.html
The Sun Herald "Good harvest forManaged Investment Schemes" 2 July 2008
http://www.news.com.au/heraldsun/story/0,21985,23954205664,00.html
The Sun Herald "Managed investment schemesin return" 1st December 2007
http://www.news.com.au/heraldsun/story/0,21985,22849976664,00.html
The University of Adelaide Professor Mike Young "A futureproofed Basin" 2008
http://www.myoung.net.au/water/droplets/A_futureproofed_Basin.pdf
The University of Adelaide Water Research Cluster Water Events in 2008: The second "Water Wednesday" seminar was held on 2 July 2008.
http://water.adelaide.edu.au/events/
TheWentworth Group’s "Australia’s Climateis ChangingAustralia" November 2006 paper on water reform and the state of Australia’sWater:
http://www.wentworthgroup.org/category/articles/
Victoria Government The Department of Sustainability and the Environment VictoriaWater Register "Unbundling"
http://www.waterregister.vic.gov.au/Public/Unbundling.aspx
Your Water Your Say "Bass Coast Shire Council’sMotion 18 th June 2008" (Against desalination in Victoria)
http://www.yourwateryoursay.org/2008/06/19/basscoastshirecouncilsmotion18june2008/
Your Water Your Say Campaign (Victoria) – campaigning against the Victorian's Governments plans to build a 150 GL desalination plant in Bass.
http://www.yourwateryoursay.org/
Source: Australian Options, Issue 54, Spring 2008, pp. 9-13.