Tuesday, November 07, 2006

Government Split on Water Trading

The Australian government will enter this morning’s crisis summit on water in the Murray Darling Basin divided over the question of buying out struggling irrigators.

The government last week opened a tender for a limited purchase of water entitlements along the Murray Darling Basin, conditional on the water becoming available from extra efficiencies.

At the insistence of the Agriculture Minister Peter McGauran the tender was not opened to farmers wanting to sell entitlements in order to close or wind back their operations.

On the weekend the Prime Minister’s Secretary for Water Malcolm Turnbull signaled his support for more complete trading. He said it was “important that we allow water to trade and that farmers make their own choices and their own judgments.”

The Finance Minister Nick Minchin yesterday also lent support for complete water trading. He told the Senate: “The basic principle is that water users themselves are best placed to determine the most efficient use of water. If water rights can flow to the most efficient uses and if the price signals exist to encourage water efficiency then users themselves can make the tough decisions about how to allocate the available water fairly"...

But ahead of the water summit Peter McGauran said yesterday he would not be a party to any government offer to buy rural water licenses. He said he was concerned that if the Government was a buyer, it would squeeze out other buyers who might want to keep farms running.

"Governments have such deep pockets, they will inevitably win every auction and neighbors and other potential purchasers can’t compete. It is not a problem of willing sellers. It is a problem of willing buyers being swamped by the financial might of governments," he said.

The Prime Minister yesterday declined to take a stand on the issue. “I do not think it is time to announce a water policy at a doorstop. I think we have a good water policy, it is the National Water Initiative, and if that is fully implemented it will make an enormous contribution to solving the problem,” he said.

The National Water Initiative commits Australian governments to introduce water trading but is silent on the question of government buybacks.

The Wentworth Group of Concerned Scientists yesterday lent support to the idea of a national buyback. In a position paper released ahead of the summit it said that a government offer to buy back water entitlements would be simple to administer. “It worked for the Coles Myer share buyback and it can work just as well for an environmental water buyback. The entire prospectus need only be a few pages long and in plain English,” it said.

The Queensland Government will attend this morning’s summit offering to work with the Commonwealth to buy out Australia’s largest privately-owned irrigation operation, the giant Cubbie Station cotton property near the start of the Darling river. The network of dams on the estate holding water diverted from entering the Darling are said to be able to hold 500 megalitres of water, more than Sydney Harbour.

Queensland Deputy Premier Anna Bligh who will be attending the meeting on behalf of the Premier Peter Beattie said her state would come to the table if the federal government wanted to buy the property.

Cubbie’s Station’s joint managing director John Grabbe said last night that the property would not be for sale at any price. "The property is not for sale, so there won't be any purchase of Cubbie Station. As far as we are concerned that is the end of the issue," he told ABC Radio. He said Cubbie used only 0.28 of one per cent of the Murray's flow.

Prime Minister Howard will today present the Premiers of NSW, Victoria, South Australia and the Deputy Premier of Queensland with a stark update on the health of the Murray Darling Rivers. Whereas normally the flow into the rivers climbs thoughout the year to peak in September, so far this year the flow has flatlined with no increase at all.

“We have had a failed winter and a failed spring. Until now there was always a possibility that seasons could return to normal. That is no longer the case,” the Agriculture Minister Peter McGauran said yesterday.

“Normal average rainfall next year will not solve our problems overnight. The water storages are so depleted you would require the worst flood in 100 years to return irrigators to the sense of security they had been enjoying until now, he said.”

This morning’s crisis summit will be brief. The Prime Minister said yesterday it will be over in time for the Melbourne Cup.

“It will be over by lunchtime. It will be over, I have taken care, to ensure in sufficient time for [the Victorian Premier] Mr Bracks to return to Melbourne . It will be over in adequate time for people to view in an uninterrupted fashion, this great Australian festival,” he said.