The release of the revised proposed basin plan for the Murray-Darling brings us one step closer to the end of one of the most disastrously misconceived and mismanaged policy processes in Australian history. The process began in 2007 with John Howard’s decision to assert Commonwealth control over the waters of the Murray-Darling Basin, through the Water Act and the National Water Action Plan.

To be sure, the previous system of co-operative federalism, enshrined in the constitution as a result of South Australian concerns about maintaining navigation for paddle steamers, did not have a glorious track record. But a careful examination of that record suggests that this was not entirely the fault of recalcitrant state governments. The Commonwealth government had long been divided between advocates of a market-based policy, such as then water resources minister Malcolm Turnbull and opponents like parliamentary secretary to the PM, Gary Nairn.

To overcome the resistance of state governments, Howard relied on two expedients: the first a traditional tool of Commonwealth governments of both parties, and the second one that had previously been viewed with distaste by conservatives. The traditional expedient was a big bucket of money — $10 billion to spent on the basin with the majority being allocated for infrastructure upgrades. Much less traditional was reliance on the Commonwealth’s treaty power to legislate without the consent of the states. In this case, Howard relied on the RAMSAR convention, under which Australia promised to protect high-value wetlands.

This produced an absurd outcome where, as far as the law was concerned, environmental preservation trumped all other objectives. But this was a mere legal device: it did not reflect the political reality, or the actual position of the Commonwealth government. Certainly, Howard was far from being a committed environmentalist. The succeeding Labor government, while placing more weight on the environment, was keen to keep rural and regional voters onside, and was unlikely to treat their concerns as a matter of secondary importance.

Howard’s plan did little to convince voters, and when Labor came to power at the end of 2007 there was a shift in focus. Under the Water for the Future policy, the government began buying water rights from irrigators. This approach had obvious benefits for both parties. Water was restored to the environment at a much lower cost than would be achieved with infrastructure projects: around $2000 a megalitre for high security entitlements, delivered in all but the worst droughts, and around $1000/ML for less reliable general security entitlements. Irrigators got more for their water entitlements than they could have made if the government were not in the market, and the money they received could be invested as they chose, rather than being restricted to irrigation infrastructure.

The success of the buyback scheme and the routine cost blowouts associated with infrastructure boondoggles like Victoria’s Food Bowl Modernisation Project made it clear that there was no real need for a Basin plan or for any further irrigation infrastructure. The funds available under the plan were more than sufficient to restore 30% of the natural flows. Experience elsewhere, notably in the case of the Snowy, suggested that, regardless of the scientific evidence, the balance of political forces would eventually produce a settlement somewhere near 30%.

Meanwhile, however, the process of producing a plan under Howard’s Act rolled on. In substance, the reduction of 3000-4000 GL in the Sustainable Diversion Limit recommended by the Murray-Darling Basin Authority was not much different from the policy outcome that was already on the cards.

In preparing the plan, however, the MDBA took the view that its job, under the Water Act, was to say how much water had to go back to the environment , not how it should be obtained. As a result, even though the Gillard government had already committed itself to a policy of “no compulsory acquisitions”, the MDBA allowed the debate to be framed in terms of “cuts” to individual allocations, necessitated by the requirement to give top priority to the environment.

The resulting firestorm of protest forced the government into damage control mode, and led to the resignation of MDBA chairman Mike Taylor (chief executive Rob Freeman departed soon afterwards). From this point on, the basin planning process was almost entirely political, with the primary objective of assuaging basin communities.

The “revised draft” is the result. The target reduction in Sustainable Diversion Limit has been reduced to 2750 GL, and there is finally a clear statement that there will be no compulsory acquisitions, although the reliability of allocations may be reduced in the future. The lower volume of water restored to the environment is a disappointing outcome, but at this point, the real issues are not about volumes but about how water can best be managed.

The real disaster in the revised plan is the recommendation to focus on irrigation infrastructure rather than buybacks as a way of securing additional water. Politically, this makes perfect sense, at least if you regard the $6 billion of public money allocated by Howard as a sunk cost. Unfortunately, infrastructure works aren’t just a costly and inefficient way of saving water. In many cases, the environmental benefits are illusory. The water “saved” through measures to reduce leakage from irrigation channels would, in many cases, have flowed back to the rivers. The groundwater and river water systems, treated separately in this report, are, in reality, interconnected.

Finally, a note of hope. Twenty years ago, when extractions of water from the basin were finally capped, a return of 2750 GL to natural flows would have seemed a utopian hope. The process of getting there has been messy and a lot of money is likely to be wasted. But with careful management, the Murray-Darling Basin can be saved from the disaster that seemed inevitable in the late 20th century.