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Murray-Darling Basin plan gets off to a very slow and shaky start

Seven years after then prime minister John Howard called on states to look beyond their borders and manage the Murray-Darling Basin’s water as a national asset, progress remains painfully slow. AAP/Gavin Lower

A year after the Murray-Darling Basin Plan came into force, New South Wales and Queensland finally signed the intergovernmental implementation agreement at the end of February. The Australian, South Australian, Victorian and ACT governments had all signed up eight months ago. Having all states on board is an encouraging if belated step forward.

Implementation remains the key to securing the plan’s long-term benefits for the environment and communities within the basin. Let us look at six significant watch points.

Slipping years behind schedule

First, time lines are not being met. The federal government has reiterated its commitment to implementation in full and on time (which is already some five years longer than envisaged back in 2007). It is clear not all the states share that commitment.

As a precondition for signing up, NSW and Queensland extracted an agreement to amend the National Partnership Agreement. They became eligible to receive all 2013-14 funding ($11.7 million and $1.3 million respectively) even though they did not achieve the original milestones. That’s not a good start!

Second, a federal commitment to capping water purchases in favour of very expensive water infrastructure was apparently important in bringing the states on board. Moving to secure water for the environment through very high-cost approaches locks in inefficiency at a time of budget constraint. In the past 12 months, direct purchases have slowed to a trickle.

Third, the record of infrastructure investments under the Water for the Future framework, notably those involving state governments, has not been encouraging.

Most projects that the states put forward were very weak in their original form. They have taken much longer to execute than first indicated. By and large, they have yet to deliver.

An example is NSW’s $222 million water meter project:

  • NSW proposed this to COAG in 2008.

  • It took until 2010 to get a $22 million pilot agreed.

  • In November 2013 NSW State Water indicated it hoped to issue the main contract in the southern Murray-Darling Basin in mid-2014, for completion in 2017.

To date, public information on progress of infrastructure spending with NSW is scant, reflecting the need to get the state signed up to implementation. Six years after the water meter project was proposed, it has produced few tangible outcomes on the ground.

Similarly, the $328 million federal contribution to enlarge the already large Adelaide desalination plant was a highly dubious investment from the outset. The plant is now fully operational but SA’s agreement to take on average 12 gigalitres (GL) less from the River Murray makes it a spectacularly expensive infrastructure investment in terms of the cost of water saved for the environment.

The Commonwealth would have done much better for SA and the entire basin by using $26.4 million to buy water directly for the environment and putting the remaining $300 million into either more direct purchases or alternative projects of superior value.

These two examples illustrate significant issues with some infrastructure decisions of then prime minister Kevin Rudd in 2008 to get the states and territories to sign up to a new “co-operative” intergovernmental agreement. The problems underscore the importance of rigorous project assessment (as applies to the Commonwealth’s own programs) to ensure substantial public investments provide real value for money.

Water targets at risk

Commonwealth water purchases are the key mechanism to achieve the new sustainable diversion limits. Water entitlements acquired through direct on-market purchases and, in prospect, through recovery from infrastructure projects are currently 1900 GL average yield. That is around 69% of the 2750 GL target for reduction in water available for consumption.

The environment is already benefiting substantially. Since Commonwealth environmental water entitlement purchases began, some 3175 GL has been restored to the basin’s rivers.

While the adjustment task has well and truly begun, the fourth concern is that there are at least two important risks to achieving the target for reduced water use.

The first is the federal government’s decision to limit direct purchases in the market to 1500 GL. That will make reaching the Basin Plan’s 2750 GL target by 2019 very difficult. Over the past five years less than 200 GL has been recovered through infrastructure investments, although contracts have been entered into promising around 540 GL.

Achieving the target of 2750 GL appears to rest heavily on new “supply” measures and removing “constraints” within the basin’s rivers.

The second risk is the need to limit new interception activities (water extraction or use outside the entitlement framework, such as unauthorised farm dams and water theft) and ensure groundwater use is within the diversion limits detailed in the Basin Plan. Managing these risks will be a key part of successful implementation.

After NSW premier Barry O'Farrell (left) and Queensland premier Campbell Newman finally signed on, the announcement by prime minister Tony Abbott (right) betrayed an anxiety about state back-sliding on the Murray Darling Basin Plan. AAP/Alan Porritt

Cost-shifting game continues

Fifth, all is not well with the joint programs. Over much of the history of water management in the basin, governments have worked together to handle joint problems, such as managing River Murray infrastructure assets, managing environmental water held by the Murray Darling Basin Authority, implementing a native fish strategy and monitoring water quality. In mid-2012, NSW and then SA announced they would massively cut back these activities, even though they are part-owners of the underlying assets.

This looks like a blatant attempt at cost-shifting. It is certainly sensible to examine all activities to ensure they are necessary and cost-effective, but the two states’ move goes far beyond that. We can only hope it does not further set back the Basin Plan implementation.

Finally, a fascinating clause in Prime Minster Tony Abbott’s press release on the final states signing up is that “the states have assured the Commonwealth these investments will not be counteracted or undone through state actions”. It is indeed a sad day that such an assurance is necessary.

Even after years of working to establish a framework for advancing the collective interests of communities across the Murray-Darling Basin, one still gets the uncomfortable feeling that from each state’s perspective, its interest, rather than the interest of the whole, remains paramount.

The author would like to thank a number of colleagues who made very useful comments on an earlier version of this article.

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