What do you do when you’re the Minister for Northern Australia, your government’s landmark “Northern Australia Infrastructure Facility” is known only for its failure to fund any infrastructure, and one of the nation’s pre-eminent research organisations releases reports showing how uneconomic building new infrastructure in remote locations is?
If you’re Matt Canavan, attack inner-city avocado eaters.
Last week, the CSIRO released its Northern Australia Water Resource Assessment, three reports looking at the Mitchell catchment in far north Queensland, the Fitzroy catchment in Western Australia and the Darwin catchment in the Northern Territory. The reports were spun by Canavan and his party leader, paving the way for major new dam investment.
“Investing in dams is one of the key ways we can make our country more resilient from drought,” Canavan said. “If we had had the Pinnacles dam there right now, they would be growing sorghum cotton seed and molasses that could be trucked to these drought-affected areas in Queensland to provide relief.” He added “these reports have been conducted by the pre-eminent scientific body in our country, the CSIRO”. His party leader, who is also infrastructure minister, joined in on “the potential for 387,000ha of crops such as cotton and sugarcane”.
Canavan decided to go further, anticipating critics of dam-building. “They will pontificate from the salons of West End about the evils of irrigated agriculture in between mouthfuls of smashed avocado … they know nothing about farming, even though they still want to eat the best produce all year round.” The Courier-Mail — which referred to a dam producing “$720,000 million in farm produce”, more than 10 times the actual entire Australian agricultural output — described this as “challenging hippies”, yet again demonstrating News Corp editors are old white men whose frame of cultural reference was frozen in 1978.
But you’ll never pick it: the CSIRO reports actually detail how frighteningly uneconomic building dams in northern Australia are. Take its conclusions in the Mitchell catchment report: “Viable new irrigation development in the Mitchell catchment would require challenging combinations of low-cost infrastructure, high-productivity farms, management of a wide range of risks, and/or off-farm value adding.” The CSIRO warns of “the systematic tendency of proponents of large infrastructure projects to substantially under estimate development costs” and concludes “even when technically feasible options are found, many of these are unlikely to be profitable at the returns and over time periods expected by many investors. The results presented below suggest that development costs above $15,000/ha (plus $7424/ha farm setup costs) would be difficult to cover from farm gate revenues alone.” You could add other uses, such as food and fibre processing, to the mix but that would also increase risk along with potentially increasing revenue.
The CSIRO goes on to note “scheme development costs for the most promising potential dam sites in this Assessment were estimated at about $20,000/ha to $30,000/ha”.
It’s a similar story for the Fitzroy catchment. So similar, the CSIRO cut and pasted pretty much the entire economic analysis. “Viable new irrigation development in the Fitzroy catchment would require challenging combinations of low-cost infrastructure, high-productivity farms, management of a wide range of risks, and/or off-farm value adding.” Ditto the Darwin catchment. “Viable new irrigation development in the Darwin catchments would require challenging combinations of low-cost infrastructure, high-productivity farms, management of a wide range of risks, and/or off-farm value adding” although the numbers there were a little different: “scheme development costs for the most promising potential dam sites in this Assessment were estimated at about $18,000/ha to $25,000/ha.”
But it was the same conclusion for all three catchments: “On this basis, farm gate revenues alone would fall short of reaching a 7% return on capital invested.” And all that’s assuming construction and operational costs don’t blow out.
You don’t have to be an avo-munching hipster to find these dams objectionable. You merely have to be able to count.