Penny Wong’s revamped water package announced yesterday confirms the profoundly cautious nature of the Rudd Government, which continues to govern as if it holds power by the slenderest of margins.

Problem is, caution is not going to save the Murray-Darling.

The Opposition, and The Australian, is right to bag the package as a remix of the Howard Government version, topped up with Labor’s election commitments on water. But that’s not the main problem.

Wong’s package is composed of the following:

  • $5.8b to upgrade irrigation infrastructure – with only half the water saved going back into the river, including what already goes back as groundwater from leaking irrigation now. The other half goes to irrigators.

Wong nebulously says projects will need to have “clearly defined cost-sharing arrangements” but there is no specific requirement for the prime beneficiaries of the upgrades, irrigators themselves, to contribute significantly to projects.

Wong has laid down criteria for upgrade projects, including long-term sustainability, value for money and CBA testing. But $1b of this is already committed to Victoria’s Food Bowl Modernisation Project, subject only to what Wong describes as “due diligence”. Given funding for the Food Bowl projects, most of which are uncosted, is part of the Prime Minister’s COAG bribe to Victoria, one imagines the due diligence won’t be especially diligent.

  • $3b for water buybacks, the first round of which is underway.

Wong has again ruled out compulsory acquisition, worried that this will upset rural communities. This removes a key tool in targeting areas along the Murray-Darling where acquisitions are needed most. Moreover, there’s nothing to stop irrigators from refusing to sell until political pressure on the Federal Government starts to mount over the lack of water sales, driving up the price the Government is willing to pay.

Greens Senator Rachel Siewert has also found that managed investment schemes have been entering the water rights market to acquire rights as an investment. With $3b entering the market over the next 10 years, urban investors stand to make a significant profit from selling overallocated water rights back to the Government.

  • $450m for the Bureau of Meteorology to improve water information. There’s the slight problem that the information base on which infrastructure upgrades and water buybacks will be carried out at the same time as the buybacks and upgrades are happening. Better late than never? Maybe.
  • $1.5b for urban water initiatives. This is the genuinely new money in the package, albeit promised by the ALP during the election, and a significant step by the Federal Government into urban water issues.

$250m is for a household rainwater tank subsidy of $500, and another $250m is for infrastructure projects and trials to save water. But the big initiative here is $1b for a National Urban Water and Desalination Plan, which will provide 10% of the capital costs of major water projects, up to $100m.

As the name suggests, this is very much targeted at desalination, rather than large-scale water recycling plants, which require access to existing State Government-owned infrastructure. The desal fetish even extends to the establishment of a Centre of Excellence in Desalination Technology in Perth, along with a Water Recycling Centre of Excellence in Brisbane. The Plan will not require energy-hungry desal plants to use renewable energy, despite the carbon emissions scheme being planned in the other part of Wong’s portfolio.

The remainder of the $12.9b is made up of existing programs moved under the Water For The Future initiative.

Is this the best the Government can do, when it is streets ahead in the polls, and primarily dealing with Coalition electorates? Irrigation projects that won’t even return 50% of saved water to rivers and buybacks that will flow into superannuation funds? Worse, the Federal Government is obtaining no leverage over the States from its $12.9b, particularly, as Siewert notes, in relation to the state water plans, which will retain existing over-allocations for years to come. The Federal Government is not even getting value for money from its bribes.

The Government’s extreme caution is also evident in its foray – welcome as it is – into urban water. Subsidies for rainwater tanks – most of which end up watering people’s gardens – won’t go especially far. How about getting State agreement for new planning laws requiring every new house to have a rainwater tank, greywater recycling system and solar panels? Not to mention proper pricing of water rather than restrictions.

We’re repeatedly told how we face a water crisis. It’s time governments actually lived up to that rhetoric. Wong’s package, new and old initiatives alike, reflects political sensitivity and an unwillingness to take on the States, rather than any sense of urgency.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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