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Romancing the north: the food bowl furphy

We’re talking, yet again, about how lovely it is up north. Flickr/skittledog

Romancing the north: the food bowl furphy

The romantic idea of developing northern Australia has once more been thrust into the light, this time by the Coalition’s 2030 Plan for Developing Northern Australia. As I look at coverage of the plan I wonder, does the media have the memory of a pot-smoking goldfish?

The argument that we should develop northern Australia is based on rent seeking, opportunism, romanticism and an ability to ignore countless studies stating the national economic, social and environmental folly of such an exercise.

In such an extensive “nation building” exercise, the major beneficiaries are those who supply the inputs. They get paid by the public, take none of the risk and are no worse off if it fails. The other beneficiaries are those demanding special tax rates or concessions to build their personal wealth. Trickle down benefits do not materialise, yet continue to be a mantra to mislead. In this case, the vested interests may be desperate cattle farmers, caught short by the end of live exports. Or it may be a neat move by the mining industry to continue subsidisation of their infrastructure.

In 1965, Bruce Davidson released the The Northern Myth. This definitive study stated that not only was the land unsuitable for large scale intensive agricultural development but the economics simply didn’t stand up when compared to the benefits of allocating the money in southern Australia.

In 2009, CSIRO’s Northern Australia Land and Water Science Review not only supported these findings but again highlighted the reasons why the expenditure is reckless.

The soils are still poor. They easily erode. At best you could create a patchwork mosaic of cropping (assuming that those crops would at some point be washed away). A mosaic pattern like this in the vastness of the north would be incredibly expensive to subsidise; it would make subsidies for the car industry look sound.

Rainfall still occurs near the coast, where it is flat. This makes building dams a challenge. CSIRO’s 2009 analysis did find that 600 gigalitres of ground water is available and could irrigate 40-60,000 hectares. Let’s put this into perspective: Cubbie Station alone has about 460 gigalitres of water licences and about 96,000 hectares of irrigated and dry land at its disposal.

Irrigation schemes still fail to provide positive economic returns on public capital investment. Politics and water are a dangerous mix. The heady vision of a Utopian agrarian system where irrigation channels transform the desert has proven irresistible throughout the world. Davidson’s other classic work, Australia Wet or Dry, tracks the litany of failures in developing the Murray-Darling Basin. There, the constant over estimation of benefits and underestimation of costs has left a legacy that the public will continue to pay for.

In the north, Stage 2 of the Ord irrigation scheme has cost $300 million and adds over 13,000 hectares to irrigation. The entire stage 2 has been leased by the Chinese company Shanghai Zhongfu for the next 50 years. They initially proposed a $700 m investment to develop a sugar industry. They now propose planting sorghum to produce ethanol: a sugar monoculture was likely to attract pests that would undermine profits. But changing the crop won’t make a difference: planned profits from cotton in the 1960s quickly evaporated in rising costs from pesticides need to control an influx of pests. Sugar was no different and nor will sorghum be.

It would be nice to think that the hard lessons of previous failures in the Ord or lessons from other parts is Australia, for example the Goyder line in South Australia (where despite the biophysical limits for agricultural production being identified, risk takers strayed into zones that were not suitable for agriculture) could be ingrained into long term public consciousness.

As a country we have just allocated over $10 billion to fix the mess created in the Murray-Darling Basin. Why would we want to create a similar mess in the north? The north is not suitable for intensive food production, it never has been, nor will it ever be. I simply go back to Bruce Davidson’s fundamental question: why would we open the public purse and spend billions on low or negative returns when there better returns from the expenditure elsewhere?