BILLIONS in the Basin Plan for on-farm water works is pitting today against the future, writes DARYL HOEY
The devil, as always, is in the details.
Irrigators have fought for more funding for on-farm works in the Murray Darling Basin Plan, as a socially and economically responsible alternative to buybacks.
And on the face of it, we got what we wanted with the $1.77 billion commitment to recover up to 450 gigalitres primarily through on-farm works.
Except that the 450GL will not count towards closing the 890GL gap to the Basin Plan's 2750GL benchmark target; rather, it will count above, towards a 3200GL target.
This has serious implications for water availability and affordability, particularly when the Federal Government is yet to guarantee at least 650GL will come from environmental offsets and a 2100GL cap on entitlements.
We must be clear about what's on offer here. Without doubt, the commitment to more on-farm works is a welcome investment in regional development and increased farm productivity.
It will pay substantial social and economic dividends because, unlike buybacks, it will keep farmers, regional processing and farm service industries in business, thereby supporting the wellbeing of the community and national economy.
However, even on-farm works have a downside, because farmers transfer a portion of their entitlements to the Government equal to the savings they achieved. In this way, like buybacks, on-farm works contribute to a smaller collective pool of irrigation entitlements overall.
This has cost implications in dry seasons, when less water is available on the temporary market to alleviate low allocations. It also has cost implications for shared irrigation districts because less water delivered to farms means less revenue, forcing water companies to raise charges.
There is a real danger that farms will be upgraded to produce more with less water under the on-farm works program, only for farmers to be unable to afford the charges to deliver their water. Grabbing the money now without certain guarantees will only rob future generations of an affordable system.
The Goulburn Murray Irrigation District is a case in point. Goulburn Murray Water in its April 2012 Basin Plan submission, estimated that the loss of another 355GL from its already diminished collective pool would drive a 21 per cent increase in prices for a typical medium irrigation customer by 2019.
The Basin Plan as it stands, plus the proposed additional 450GL, translates pro-rata to around another 470GL being drained from G-M Water's collective pool through buybacks and farmers' entitlements transferred to the environment under the on-farm works program.
The Government can minimise these risks by guaranteeing 650GL in environmental offsets and a 2100GL cap on entitlements. It must rule out buybacks to cover any shortfalls in offsets and infrastructure savings, and use any water recovered by the $1.77 billion to fill the gap to 2750GL first.
Anything less is pitting today's farmers against their children's future.
- Daryl Hoey is chair of the Australian Dairy Industry Council Basin Taskforce