While the cooperative Labor federalism promised by Kevin Rudd had a relaxed start in late 2007, we’re now seeing the reality of different levels of government with different policy agendas and political needs trying to work together.

Health was always going to be a minefield for the new spirit of Commonwealth-State bonhomie, and the ongoing disasters in NSW were hardly going to encourage Nicola Roxon to be seen to be good mates with Reba Meagher. The states’ inevitable demand for more money and their unwillingness to provide the basic accountability of hospital performance data (on the basis that it would, outrageously, create “hospital league tables”) means that negotiations over the renewal of Australian Health Care Agreements are likely to be problematic without a State surrender.

And despite the arrival of a Federal Labor Government, Victoria hasn’t dropped its objections to the Commonwealth’s Murray-Darling water scheme. The political script may have changed, but the policy objectives of both sides remain the same, and continue to conflict. Penny Wong has some patient negotiation ahead of her to bring Brumby and co along.

Greg Hunt has bagged Wong for taking too long to strike an agreement with the Vics, which is a bit rich given the Coalition’s track record both on water and Federal-State cooperation. Hunt perhaps should be more concerned about Nick Minchin, who has cast doubt on the entire rationale for his shadow portfolio by suggesting climate change was “very exaggerated”. It’s heartening to discover that at least some Liberals’ apparent conversion on climate change was faked. Evidently the road to Damascus is a two-way street.

Wong has also announced $50m for water buybacks in the Murray-Darling basin. The announcement predictably sent farming groups into a tizz, on the basis that it would send water prices up. While the Commonwealth’s aim is to return water to the river, surely pushing the price of water up is actually one of the points of the exercise? If higher water prices drives unviable farmers off the land, and encourage those remaining to use water more efficiently, then they directly benefit a profoundly stressed system. After decades of paying too little or nothing at all for water, irrigators can’t complain about having to pay a proper market price for the stuff.

The only problem is that the option of compulsory acquisition is not being seriously considered. Given the over-allocation of entitlements throughout the basin and the systematic water theft revealed earlier this week, forcing irrigators to surrender – for fair compensation – some of their over-allocations would hardly be unjustified. But the breaking of the drought will probably drive the issue off the agenda. Maybe it will be considered when the next Big Dry hits.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey