While the level of emotion is understandable, some of the people of Shepparton and Deniliquin haven’t done their communities too many favours with their antics at the Murray-Darling Basin Authority consultations. Showing up with nooses, making comparisons to Hitler and burning copies of the relevant document — the guide to the draft of the plan — won’t help anything. As Griffith’s deputy mayor Dom Testoni suggested this morning to the ABC, once the passion is vented over the next couple of weeks, there can begin a process of providing detailed feedback to the MDBA. Nonetheless, hysteria and predictions of disaster may just feed urban perceptions of whingeing cockies.

The claim is repeatedly being made that the size of the proposed cuts have come as a shock to irrigators. This is hard to sustain. As early as October last year, the National Water Commission said in its biennial assessment of water reform that irrigated agriculture in northern Victoria faced cuts of up to 30%. The magnitude of the over-allocation of the MDB has long been apparent, even if the direct impact of reducing it in each region has not.

Water reform comes slowly, and is often accompanied by dire predictions that turn out not to be justified. Water trading, for example, has long been held as harmful to regional communities, because when water is traded to other users either elsewhere in the region or outside the region entirely it harms a fragile local economy. On that basis, some irrigation districts, and the Victorian Government, have anti-competitive caps on inter-regional water trading that block further trading once it reaches an arbitrary level such as 4%. The NSW Government instituted its own cap last year in response to the Victorian cap, given the Victorian cap made the Commonwealth’s MDB water buyback program disproportionately target NSW.

In June, the National Water Commission released a report on water trading in the lower Murray-Darling that looked closely at the economic and social impacts of trading. It found no evidence for the traditional argument that water trading undermined communities. Modelling undertaken at the request of the Commission found water trading yielded nearly $370 million in production benefits in the southern MDB in 2008-09. The Commission noted — as users of modelling rarely do — that the modelling reflected a set of assumptions, so it drilled down further into the local impacts of water trading through consultation with irrigators, finding that the impact of water trading was much less than that of drought, that reductions in water allocations did not translate into comparable production cuts because water was being traded to higher-value production, and that some regional areas increased production and population due to water trading, while other areas saw reductions — i.e. water trading produced  winners and losers.

“Critically, comparisons of trade patterns and key socioeconomic indicators revealed no discernible link between patterns of water trading in or out of a region and changes in population, employment in agriculture or weekly household income. Instead, it was found that observed trends in those indicators were similar across regions regardless of their water trading history. For example, employment in agriculture fell in all regions, regardless of whether those regions were net purchasers or sellers of water. The South Australian Murray region showed the sharpest decline in employment in agriculture between 2001 and 2006, despite being a net importer of water during that time. This suggests that other factors had a greater impact than water trading in driving social and economic change at the regional level between 1996 and 2006.”

In fact, the Commission found from irrigators themselves growing concerns about water trading caps, which remain one of the greatest impediments to the efficient operation of a genuine national water market. As the Commission explained in its 2009 biennial report, the water market is growing in size but there remain several serious obstacles even beyond the water trading caps, primarily around the reluctance of the states to agree to common standards, even on simple things such as the meaning of terms  “over-allocated” or “environmentally sustainable”, or develop plans for every water system, or agree national standards so that metering is consistent across the basin, or even to bother investigating how much water is being siphoned out of the system illegally.

Another impediment, penalty fees imposed on irrigators or farmers by infrastructure providers, has now been banned and the ACCC is policing the issue, pinging Murray Irrigation earlier this year. But the majority of the impediments are controlled by state governments.

A plan for a sustainable Murray-Darling Basin and a functional, unrestricted water market are inextricably linked. In the absence of the latter, regional communities will be fighting for their futures with one hand tied behind their backs. And it’s state governments — those of Victoria, NSW and Queensland — who have the greatest responsibility for the slow development of the market. Their silence so far on the future of the Basin has been deafening.

Peter Fray

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