Water buybacks axed in Murray-Darling basin overhaul

The Murray Darling Basin Authority will be split-up and water buybacks for environmental reasons will be permanently stopped.

Riverina farmer Garry Farrell, left, and his son David on their property near Berrigan. Picture: Simon Dallinger

Environmental water buybacks will be axed and the Murray-­Darling Basin Authority will be stripped of its enforcement role in the biggest shake-up of the river system’s management in a ­decade.

Under the plan, to be ­announced by Water Minister Keith Pitt on Friday, efforts to save water by upgrading infrastructure for irrigators will be ramped up to compensate for the end of the water buyback scheme.

The changes will be welcomed by river communities and many small irrigators who have argued that the water buybacks have ­undermined their economic sustainability. But they are likely to be heavily opposed by environmentalists who argue extractions from the river remain too high to safeguard its biodiversity.

The MDBA, which has supervised the competing priorities of irrigators, communities and the environment since 2008, will lose its powers to check compliance with the river management plan to a new independent umpire.

The powers will be added to those of the Inspector General of Murray-Darling Basin Water ­Resources, a post currently held by former Australian Federal Police commissioner Mick ­Keelty.

Mr Pitt, in a speech to the Farm Writers Association, will say he expects this change to “end the perceptions that the MDBA is structured in a way that it could mark its own homework”.

Ending the fraught policy of buybacks, under which irrigators sell back their right to take water from the river system to the commonwealth, preserving it for the Murray-Darling Basin’s health, comes as the government faces concerns over the effectiveness of its infrastructure plan to create water savings.

Mr Pitt will warn that an ­attempt to save 450 gigalitres of water through $1.4bn in infrastructure upgrades by 2024 is not working.

The commonwealth has spent more than $6.7bn recovering water for the river system, which has suffered under drought, but scaled back plans by putting a cap on new buybacks five years ago.

The latest overhaul comes after an independent assessment of social and economic conditions in the Murray-Darling Basin was delivered to the government last month, finding there was “diminished trust in federal and state governments to deliver good long-term policy”.

That report, commissioned by former water minister David Littleproud following widespread anger about the impact of the Murray-Darling Basin Plan on ­irrigators and communities, was chaired by Robbie Sefton.

The final report, yet to be ­released publicly, concluded that the plan was delivering “uneven outcomes across the basin, with some communities doing well and others faring very badly”.

Mr Pitt will single out the water buyback program, which has previously been criticised by the Productivity Commission and the Office of the Australian ­National Audit Office, as a key change in overhauling the management of the river system.

 

“While some farmers have done well out of water buybacks, and river health gains have ­accrued to all Australians, for some irrigation communities it has been a net negative,” Mr Pitt will say. “When you take water out of a town that was built on irrigation there are significant consequences for those communities.”

Mike Young, the University of Adelaide’s water, energy and ­environment research chair, said the Murray-Darling Basin Plan was working, but needed better mechanisms to track water use.

“We need a much more sophisticated framework that enables people to talk about sharing water between the environment and irrigator use in both wet and dry times,” Professor Young said.

“The fundamentals are right. We just need to focus on how water of different priorities is shared between looking after the environment and consumptive purposes.”

The Auditor-General has investigated a number of allegations about the buyback program in the past two years, including claims some companies were overpaid for their water rights. One large seller of water, Eastern Australia Agriculture, was associated with Energy Minister Angus Taylor, although his relationship with the company ceased in 2009.

In a report published two months ago, the ANAO said the buyback program “did not develop a framework designed to maximise value for money”. It found “limited evidence of appropriate assessment” to justify the price paid to private owners” and that it “did not negotiate the price for water entitlements it purchased in all but one instance”.

The Productivity Commission, in a report last year, also noted the implementation of the Murray-Darling Basin Plan could not occur under “current institutional and governance arrangements”. It concluded that significant progress had been made in recovering water, but the buybacks had had a disproportionate impact on some parts of the river system. Specifically, large irrigators who sold water rights back to the commonwealth and left farming often had a significant impact on the employment prospects of a region.

Garry Farrell, a canola and wheat farmer in the Riverina town of Berrigan, said he supported the Murray-Darling Basin Plan — but he believed it also required drastic changes.

“The young farmers are leaving the land because of this mismanagement and the way the bureaucrats are treating us with water,” the 65-year-old said.

Despite Mr Farrell spending millions of dollars on infrastructure upgrades to save water, his property had received “virtually no water allocation” in the past year.

“Last year we had good crops but didn’t have any irrigation water so had to cut them all for hay,” he said. “Our income was down 65 per cent.”

National Irrigators Council chief executive Steve Whan said the Murray-Darling Basin Plan “was supposed to be adaptive and it was always meant to produce a triple bottom line outcome”.

“The NIC hopes the Sefton report will see a recognition of the damage buybacks cause for irrigation communities, and from that we get a renewed commitment to avoiding them in future by delivering the 605GL of supply projects – projects which are currently well behind schedule,” Mr Whan said.