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Plibersek free to strip irrigators of 269GL

Federal water bureaucrats can now walk into irrigator water markets to snap up their entitlements for the environment.

Federal Water Minister Tanya Plibersek. Picture: Martin Ollman
Federal Water Minister Tanya Plibersek. Picture: Martin Ollman

The federal government is set to wade into Murray Darling Basin water markets this financial year to begin stripping up to 269 gigalitres out of southern irrigation communities without breaching any interstate agreements or legislative barriers.

While the former Coalition government set a legislated cap of 1500GL on buyouts, just 1231GL has been purchased to date, leaving room for Labor to begin buying the remaining 269GL.

Nationals water spokeswoman Perin Davey said Labor was taking the “easy option, rather than the right one” and was likely to enter the market within months.

Irrigators have already lost almost a third of their water to the environment says NSW Senator Perin Davey. Picture: Richard Dobson
Irrigators have already lost almost a third of their water to the environment says NSW Senator Perin Davey. Picture: Richard Dobson

“It’s not about the farmer who sells their water, it’s about the community that farmer helped support,” Senator Davey said. “My calculations are that nearly every valley has already lost 30 per cent of their consumptive water.

Last week’s federal budget set aside an undisclosed amount from savings for irrigator buyouts in 2022-23.

Those savings include $1.35 billion that Treasurer Jim Chalmers cut from the former Coalition government’s National Water Grid fund over the next four years, most of which was earmarked for new large dams in crucial Queensland Coalition electorates.

After initially dodging the issue, federal Water Minister Tanya Plibersek finally admitted late last week the undisclosed amount included money for buyouts, which had been kept secret to ensure the Commonwealth did not flag what it was willing to spend and got “good value for money”.

Federal Water Minister Tanya Plibersek has accumulated a war chest to buy irrigators’ water, which could push up entitlement prices by 50 per cent.
Federal Water Minister Tanya Plibersek has accumulated a war chest to buy irrigators’ water, which could push up entitlement prices by 50 per cent.

While the Federal Water Act prohibits it from buying 450GL towards what is commonly called the “upwater” commitment to South Australia, it is silent on buying water towards the basin plan’s baseline recovery target of 2680GL (originally 2750GL).

The nation’s top water bureaucrats warned their respective ministers in July they would fall short of the target by up to 340GL, as complex contracts on seven supply and constraints projects had not even been signed and could not be delivered by the legislated deadline of June 30, 2024.

That shortfall clears the way for the federal governemnt to enter the water market.

BOC briefing papers supplied to all water ministers state:“water recovery to bridge this new gap is, unlike the 450 GL, not required to meet specific socio-economic criteria.

“The Commonwealth is anticipated to be able to use any water recovery method including water licence purchase (buybacks), efficiency measures or some other mechanism to meet the new gap.”

National Irrigators Council chairman Jeremy Morton said more federal buyouts would cripple irrigation communities, which had already lost so much.

“We’re carrying the can for something governments have failed to deliver,” Mr Morton said. “All the risk here sits with irrigation communities.”

Irrigators are hoping Victorian and NSW governments will now step in to block federal buyouts, which they could simply do by refusing to register trades to the Commonwealth.

NSW Water Minister Kevin Anderson said its government “has a policy of no water buybacks”.

NSW Water Minister Kevin Anderson warns he will not tolerate more federal buyouts of irrigators’ water.
NSW Water Minister Kevin Anderson warns he will not tolerate more federal buyouts of irrigators’ water.

“NSW Basin communities have already done the heavy lifting when it comes to the Murray Darling Basin Plan. Meeting the environmental water targets in the Basin plan should not be done at the expense of NSW farmers.”

Victorian Water Minister Harreit Shing said the state did “not support actions that reduce the total water available to the water market”.

“Victoria delivered all its Basin Plan obligations to date, including Bridging the Gap water recovery – the federal budget commitment is targeted at other jurisdictions who have not yet met these targets and will not include water recovery in Victoria.”

Federal Labor’s last foray into water markets, by then Water Minister Penny Wong in 2008, led to high reliability water entitlement prices jumping from $1750 to $2500 a megalitre on the Murrumbidgee, $1100 to $1600 on the Goulburn and $1100 to $1800 on the Murray.

Since then prices have quadrupled on the back of massive growth in corporate horticultural plantings, plus global pension funds and speculators investing direct in basin water entitlements.

High reliability entitlements on the Murrumbidgee have hit $9500 a megalitre, while below-choke water on the Murray now sells for $9000 a megalitre.

To buy 269GL at $9000 a meglitre would cost the Commonwealth $2.4 billion, but water brokers estimate prices could rise to $15,000 a megalitre once the government called for tenders.

Irrigators have already handed over 1990GL to the Commonwealth Environmental Water Holder, leading to a smaller consumptive pool that has led to major price hikes, at just the merest suggestion of a dry season.

Duxton Water chairman Ed Peter, who oversees 84.5GL of entitlements, has previously warned the next time drought hits “there’s going to be one heck of a fight for the marginal supply of water”, simply based on demand from permanent plantings of almonds, citrus, tablegrapes and other crops.

The recent Frontier Economics report, commissioned by the Victorian Government warned further buyouts would destroy northern Victoria’s dairy industry.

Further federal buyouts are set to drive irrigated dairying out of northern Victoria, as prices rise to unsustainable levels. Picture: Zoe Phillips
Further federal buyouts are set to drive irrigated dairying out of northern Victoria, as prices rise to unsustainable levels. Picture: Zoe Phillips

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Original URL: https://www.weeklytimesnow.com.au/news/water/plibersek-free-to-strip-irrigators-of-269gl/news-story/a1f969f5037e2a1437ddb54473e9d887