National Interest

Federal Water Minister Penny Wong announced the government would spend $3.1 billion buying back irrigation licences as part of a 10-year strategy to secure the nation's water. But the plan relies on farmers volunteering to sell their water rights - and for the Murray that could be too little too late.

Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Peter Mares: Federal Water Minister, Penny Wong announced the government would spend $3.1-billion to buy back irrigation licences as part of a 10-year strategy to secure the nation's water.

But the plan relies on farmers volunteering to sell their irrigation rights, and for the Murray that could be too little, too late.

Mike Young is Professor of Water Economics and Management at Adelaide University, and a founding member of the Wentworth Group of Concerned Scientists. He joins me in our Adelaide studios. Mike Young, welcome to The National Interest.

Mike Young: Hi, how are you?

Peter Mares: Good, thanks. And on the line from her property near the mouth of the Murray is dairy farmer Melanie Treloar. Melanie Treloar thanks for your time.

Melanie Treloar: Hi there, thank you.

Peter Mares: Now Melanie, I'll start with you: your farm's down at the point where the Murray's two lower lakes meet, that is Lake Albert and Lake Alexandrina, that's back inland a bit from the river mouth itself and from the Coorong, is that right?

Melanie Treloar: That's right. Our farm actually is right smack-bang in the middle of the Narrung Peninsula, being that the back of the farm backs onto the Coorong National Park, and the Coorang??? in the front, we pull our water for the farm out of Lake Albert.

Peter Mares: And are you still pulling water out of Lake Albert?

Melanie Treloar: Well just little bits when the wind blows the right direction.

Peter Mares: So what sort of farm is it, it's a dairy farm I think.

Melanie Treloar: It's a dairy farm yes. We milk about 200 dairy cows and back in the farm's heyday we milked up to 800 cows and had a good 400 hectares of irrigation. Irrigation for us is a thing of the past, we are just looking to try and secure some stock and domestic water.

Peter Mares: So how many cattle are you running now?

Melanie Treloar: On the farm about 300, but those numbers are going down every week because we're just having to sell off the cows as the water runs out and as things are getting harder and we're sort of being squeezed off.

Peter Mares: And what's the state of the lakes at the moment, of Lake Albert and Lake Alexandrina?

Melanie Treloar: Well Lake Albert I think it's diabolical. It's terrible. The lake is disappearing so quickly we've had to run our pipeline about 6 kilometres chasing the water, but I believe now as of tonight they've put an embankment across between Lake Albert and Lake Alexandrina and they're actually pumping water from one lake to the other.

Peter Mares: I used to holiday on Lake Albert as a kid, and in fact I remember fishing there and going out in boats and catching yabbies. Does any of that happen these days?

Melanie Treloar: Well it's still a beautiful place to visit, it just means there's a bit more beach now from the Meningee??? side. And it's still lovely, that's for sure. I would want to deter any visitors to the area, it's quite interesting, really. But as far as fish go, that industry's really dried up and disappeared on the lake. Yabbies, we used to have a lot of people come out to our farm yabbying, but where they used to put their pots in, that's been dry for two years. So there's absolutely nothing, and the long-necked tortoises are high and dry as well.

Peter Mares: Anyone who watched Catalyst on ABC TV on Thursday night will have seen how far the water's receded, but in the process it's exposing acid sulphate soils as well, and that can turn the water that's left into a toxic cocktail.

Melanie Treloar: That's right, and that's the big issue and that's precisely why they've put this embankment up and pumping water from one to the other ... they have to keep that lake bed wet, and try to stabilise the pH.

Peter Mares: OK Melanie, I'll come back to you in a moment for your views on what needs to be done further up the Murray to fix this problem, but let's bring Mike Young in here. Mike Young, is Water Minister, Penny Wong's buy-back scheme going to deliver the amounts of water that the Murray River needs?

Mike Young: It all depends if it rains. There's a very, very important issue here, and that's whether or not we're going to stay in a dry regime or go back into a wet one. If we go back into a wet one, and we have lots of water coming back in in Lake Albert and Lake Alexandrina and the river and the dams refill, then we can take our time and then her proposal will work very, very well. The other thing which is really important to realise is that we are very close to an historic agreement that can be finalised in July, when we get a really good agreement in place. And if it does remain dry, we're going to have to move very, very quickly. We don't have a decade, and that puts us in a really challenging position.

Peter Mares: A decade is what Minister Penny Wong is proposing, buying over a period of a decade, but so what are the chances? Can you tell us what are the chances it's going to be wet or dry in the next few years?

Mike Young: Nobody can tell us with certainty. The warnings coming out from the scientists are that we should expect to remain dry. There were warnings coming out this morning again from scientists saying that it looks like the experience we're now having is as a result of climate change. We can never be certain. The really important thing is we plan for what happens if it does remain dry. And if it does remain dry, then we're going to have to move very, very quickly and do what all of the research suggests is the best way to solve these problems, is to rapidly fix the problem to bite the bullet, and put in a new regime. The real problem we have is that the Murray-Darling Basin agreement was not designed to cope with this situation we now find ourselves in, and we're struggling, and that's why we're now seeing the bottom of the rivers collapse, and why all the irrigators are suffering so much. It's about cutting a cake, and we didn't put in a regime that actually worked out how we were going to share the cake in dry times. We have a regime and a set of rules at the moment which says the environment actually gives up most of its water in dry times. But if we have a long dry, then the whole system starts to collapse, so we new way to cut the cake, and that's the challenge.

Peter Mares: There seems to be a real difference of opinion about this amongst irrigators themselves. Some irrigators, perhaps those higher up the river, are saying the money doesn't need to be spent on buying back licences, the money can be spent on upgrading infrastructure to ensure that irrigation is more efficient, that is, you get more bang for your buck with every litre of water you use, you target it better and so on. What's your response to that argument?

Mike Young: We need to be very, very careful. What we're trying to do is with a smaller cake to find a share for the environment and also just simply to maintain the river. We haven't been putting aside enough to keep the river actually just as a basic river. So we have a problem, and if we invest in savings that are about leakage and seepage, it's very important to understand where that leakage and seepage water is taken from, and it used to leak and seep back into the river. So that's not a real saving. So those savings are going to have to - what they've called savings are actually is going to have to be retired and given back to the river. If we do that, then there is an opportunity to invest, but we're looking for a way to find more water for the river and more water for the environment, and that's the challenge. And investing is not going to produce large amounts of that, unless we put all of the savings - and they have to be real savings - back into the river.

Peter Mares: Melanie Treloar, if I can come back to you: I've heard calls from irrigators on the Lower Murray, people like yourselves, people in South Australia particularly, saying that a buy-back over ten years will be far too slow, and calling for the government to buy back a lot more water a lot more quickly.

Melanie Treloar: I think so. We haven't got six months really here, so two years, even ten years is going to be too long a wait for us, and I think the government is probably willing to sacrifice us and our region, but we're concerned about who's next, where they're going to draw the line in the sand and who's going to go next, which is a very scary reality.

Peter Mares: And I guess that's the issue, isn't it, Mike Young, that unless we fix this problem that issue that Melanie Treloar is experiencing will start creeping further and further back up the Murray.

Mike Young: It's already starting to do that, and the first best option is to bite the bullet, put a new sharing regime in place, and then re-set the system in say two to three years time and send every community the money so they can start adjusting, and they can run it as a bottom-up process.

Peter Mares: Now hang on, let's stop here and just unpack a bit what you're proposing. What you're saying is more or less to start again, for the government to buy everyone out and then issue them with new licences at a lower level, something like that?

Mike Young: No, we don't have to do that. The licences at the lower level work, and so do the local plans in place. The big problem is right at the very top where we have a cap which was put in place as a limit on the amount that can be diverted. The state-of-the-art in the world is in fact not to guarantee volumes and talk about volumes, but to talk about shares and say Look, we're all in as equal shareholders and allocations of water are made in proportion to everybody's share, everybody's slice of the cake, and if the cake's a tiny little cake, then everybody gets a little bit. But if we're going to do that, then the first thing we have to do is actually put aside enough water to maintain the river so that people at the bottom (like actually Melanie) or people at the top, can extract water out of it. And on top of that, there has to be some water that flows right out through the bottom, because the other problem that comes is we have rising salinity. Unless you flush the salt out the bottom, you end up in strife. So that's the first part.

Peter Mares: We've got to make sure the river stays a river, that's No.1.

Mike Young: Yes, that's No.1, we actually maintain the river first, just as a very basic river; No.2 is we have a sharing regime, and particularly as part of that, all people are allowed to save water. It's really important to understand that people in South Australia are not even allowed to carry forward water through to next year. They have to use what they're given within the year. Now there's a special exception this year: farmers have been allowed to do that, to save water and leave it in the dam by carrying it forward. And that surely must be part of a system that's future-proof. You must always be able to do that. We've learnt in this year that that makes sense, and if it makes sense this year, then surely it must make sense to allow people to do that in the future. We can't be making a mistake now.

Peter Mares: So what would your proposal mean for irrigators now. What would happen in practice for irrigators along the length of the Murray? What would you see them do or see happen to them?

Mike Young: First well it's really at the high level that States would have shares, and then the amount that's allocated to them then is allocated down to the irrigators. If it remains dry, then they're going to have to get less, and they understand that. The other part is how do we go through the re-sharing process and the first best option there is to send everybody a cheque and say We're going as a step-change into the new regime, moving quickly, and then farmers themselves have to decide whether to use that money to buy water from others who are prepared to give it up, to invest in savings themselves, or perhaps to retire. Now that's very difficult, and every community is struggling with this issue. The real problem with a slow buy-back process, which I think people are starting to realise they'll experience if it remains dry ...

Peter Mares: That is the process that the Minister's currently proposing?

Mike Young: Yes, and if this happens, I think communities will find very quickly that people won't know when is the right time to sell, when is the right time to adjust, and they'll be taking the price higher and higher, with massive uncertainty. And people are not going to be able to plan for their futures until it's over, So you can actually freeze a community for actually a very long time and for shopkeepers, and local people in towns, this is going to be awful, because there's uncertainty. It's also going to be very difficult for the irrigation companies themselves who won't know whether or not to maintain infrastructure, to modernise it, or to close it down. What we need is clarity, and that's the really difficult experience that we're going to go through. People are saying they want to go down the voluntary process, and if it rains then it could work. But if it doesn't, then it's going to be very, very difficult and I think we'll be back in a very short period of time wrestling with this and saying, Look, it's not working, as people try and agonise and communities suffer and start calling for clarity. They want to know what the final sharing regime's going to be like, when this is going to end. And there's one other bit that's very, very important in this. We must understand that there are a number of processes that eat into our water, and particularly increases in plantations, increases in farm dams, and these things are outside the system at the moment. If we don't bring those in, we're going to lose all the water we buy back.

Peter Mares: Yes, we need to account for all those things, otherwise it's not going to be in the river at all. Melanie Treloar, if I can come back to you and just ask you how you respond to Mike Young's proposals, his idea that irrigators should be getting money now enabling them to decide what to do with their futures, whether to keep going or sell up, or move into some other kind of agriculture, or whatever.

Melanie Treloar: Yes I think what Mike Young is proposing makes abundant sense, because we as farmers have lived with so much uncertainty for so long now, that everyone is struggling, and the feeling in the community is terrible. We're finding it very difficult to make these decisions, so I think that this proposal makes very good sense, and would be a positive step forward, and I believe too we do have to account all of the water that's going into those large dams up north and try and bring a system in that's fair to everybody. Because if they're looking to buy back water, the local people here will volunteer to sell their water because their businesses have gone bad anyway, and that's only going to restrict the water down here even more.

Peter Mares: So if you were offered money now to sell back your licence, you'd sell?

Melanie Treloar: Well we probably wouldn't, but there are others in this area that would. We're fighting tooth and nail to hang on and stay in business down here, but of the some 40 farms there are about six left, as dairy farms in this area. So we're really trying to keep on going.

Peter Mares: So Mike Young, what would your proposal mean for food production, because that's often the case, the issue that's brought up, you know, if we reduce irrigation, if we buy back these licences, then Australia's food bowl will shrivel and we will no longer be able to feed ourselves or export to the world and so on.

Mike Young: Well this is one of the reasons why we actually need to get this fixed very, very fast. There's wine to produce, there's rice to be produced, cotton to be produced the world is desperate for food. So it's very important that the water markets and the water trading regimes that are part of the adjustment, are about the future. At the moment, the proposal is to have the government in there buying water, at a rate that's actually bigger than it's ever traded, so they're going to take over the entire market. In fact if you look at what's happened, they want to buy water at a rate that's four times the amount that's ever been actually traded, and to do this at a very, very fast rate. The program at the moment, the first step, the $50-million, is the first 60th to be bought, and they need to buy 60 more of those slices and do it six times as fast. If that's going on, then people won't be able to be focusing on all of the things necessary to produce food. So we have a choice: we can be into the business of producing food, which means we have to put the past behind us, reset the system, and confidently trade into the future, or we can sit there and struggle through. And communities, as we go into this, I think will be coming back very quickly and say: Soon this won't work. Penny Wong is right to listen to the communities and say Let's try this. But I think if you look at the analysis and information available, if it remains dry, we're going to have to find a faster way to move and as people at the end of the system are already telling us, they need a solution now, not in a decade's time.

Peter Mares: One of the problems with a voluntary buy-back is you might have a seller here and a seller there, and every time someone leaves an irrigation system, that puts more pressure on the other people in that system to keep it going, to do maintenance and so on and pay for it all. Whereas a more rational approach surely is to say Look, this area is semi-viable, we need to close this area down and improve that one.

Mike Young: That's right. but this can only be worked out at the community level. There's another option which is that the government does deals with entire communities. And they come forward and say Look, we would like to go to a new regime where our share of the system is X, whatever X is, and in return for that we would like this much money. And then they sit down and reconfigure, knowing with certainty where they're going to do, and that's very similar to the regime I've put in place. But it is important if we do that, that every community right across the basin does that.

Peter Mares: Mike Young, thank you very much for your time.

Mike Young: Pleasure.

Peter Mares: And Melanie Treloar, thank you to you as well, and we wish you lots of rain.

Melanie Treloar: Thank you, that's what we need.

Peter Mares: Mike Young is Professor of Water Economics and Management at Adelaide University, and a founding member of the Wentworth Group of Concerned Scientists. And Melanie Treloar is a dairy farmer on the Narrung Peninsula on the lower lakes of the Murray River.

Guests

Mike Young
Professor of Water Economics & Management Adelaide University (and a founding member of the Wentworth group of concerned scientists)

Melanie Treloar
Dairy Farmer Narrung Peninsula on the lower lakes of the Murray River

Presenter

Peter Mares

Producer

John Standish

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