The latest Murray-Darling Basin scandal explained

Four Corners, with the help of Australia Institute research, revealed yet another Murray-Darling Basin scandal being paid for at taxpayer expense. Maryanne Slattery and Rod Campbell from the Australia Institute explain.

First there were dead fish and towns running out of water, then #Watergate and now Four Corners have done an investigation into the Murray Darling Basin — again. Big picture…what’s going on?

At a high level, it’s pretty simple — too much water has been taken out of the Murray Darling for irrigation. No one really contests that. Since 2012 the Basin Plan has been the main policy trying to address this and get more water back in the rivers. The million dead fish over summer and towns without drinkable water show that it isn’t going very well.

The Basin Plan gets water in two main ways. Firstly, the Commonwealth can buy water licences back from farmers who want to sell. This is straight forward and should be the most economical, but has been opposed by some communities and industry groups who fear it could just buy them out of existence. Some buybacks have been controversial — the #Watergate scandal was about Barnaby Joyce signing off on an $80m payment to a company founded by Energy Minister Angus Taylor, for water that the government might not be able to use.

The other way the Basin Plan aims to recover water is through efficiency or infrastructure programs. Here the government is supposed to pay for existing irrigation infrastructure to become more efficient. About $4 billion of these deals have been done and that’s mainly what 4 Corners was about.

So how do these deals work?

Imagine an irrigator owns the rights to 100 megalitres (ML) of water each year, but one of her channels leaks, losing 10 ML, leaving effectively 90 ML to use. The government pays to seal the channel, saving 10 ML per year. The rights to the saved 10 ML are split between the government and the irrigator. The irrigator gets an extra 5 ML to farm with, so now has 95 ML. The government gets 5 ML to put back into the river, acquiring the irrigator’s rights to this 5 ML.

Sounds fine. What could possibly go wrong?

A few things. Firstly, is the efficiency program a good idea in the first place? There’s the question of whether any water is actually saved. If the 10 ML that was leaking from the channel was trickling into the groundwater and maybe back into the river anyway, then the river lost 10 ML when the channel was sealed, and gained 5 ML with the government’s new water right, leaving a loss of 5 ML. The taxpayer has just spent money to end up with less water in the river.

Then there’s the cost. In general, the government pays at least two and a half times more to acquire water through fixing the channel than just buy water on the market and direct buy backs come with a lot more certainty around the water and whether it is a genuine addition to water going back into the river.

But let’s just say that we accept the efficiency program saves water by making irrigation more efficient, and it saves communities because irrigators can keep on irrigating, so the extra cost is justified (a lot of scientists are screaming right now….)

What really beggars belief is that irrigators buy the water from other irrigators and sell that water to the government in exchange for infrastructure upgrades at 2.5 the market price. That’s just a buy-back with a middle-man and a mark-up.

But, that deal gets even worse because the efficiency money is being used to build brand new dams on land that have never before been used for irrigation.

Then there’s transparency. For two years, we have been trying to get a list of the individual projects funded under the efficiency program in NSW through parliament and freedom of information requests. The Commonwealth says “it’s not us, NSW runs the program” and NSW says “it’s not us, it is a federal program”. We are suspicious that there is no list.

There has been little to no effort to measure these water savings to see if they actually exist. While there might be an audit of how much money was paid, until very recently there has been usually no assessment of where the water is going, or not going or if the structures that we have paid for have been built as advertised. In fairness, it’s pretty hard to check a list of projects if there isn’t a list to start with.

Lastly, in the real world it isn’t the Commonwealth Government actually going and running these projects on the ground. The Commonwealth pays the money, but it goes via the states. In NSW at least, there is another layer between the government and the irrigators — ‘delivery partners’, which include councils and lobby groups. Lots of consultants are required to estimate the water savings and lots of construction contractors, all operating far from public scrutiny.

Well, at least the money is going to help Aussie farmers, right?

With billions of dollars being splashed around, it didn’t take long for big players to get involved. 4 Corners showed the example of how major agribusiness Webster Ltd has been (legally) using the efficiency program to get the Commonwealth to pay for new dams on their properties in the Murrumbidgee. Webster is part owned by a Canadian pension fund and Chris Corrigan of 1990s waterfront fame.

Websters? Haven’t we heard of them before?

They’re big players in the Basin. They received nearly $80 million in a buyback deal in the Lower Darling, which the Guardian wrote about. Australia Institute research has shown $40 million of that was compensation for lost business that hasn’t been made available to any other business in the Basin. The Australia Institute does not suggest any illegality by Webster ltd.

How does building a new dam saving water?

It doesn’t. Webster bought cheap water licences in the Murray that they were prepared to give up if the Commonwealth chipped in for new dams in the Murrumbidgee Hay plains. This land is hot and flat (really, really flat) with very high levels of evaporation and not a good place to have a dam.

Okay, so where to from here?

The best thing would be a federal Royal Commission. The whole management of the Basin needs a thorough review. South Australia started one last year that the Commonwealth, NSW and Victoria refused to participate in what it did report was scathing, even with the limits on what it could do.

Outside of a Royal Commission, one large group of small irrigators has already begun legal action against the government over mismanagement of the Murray river. That could be the start of serious litigation in the Basin that could begin the process of real reform of its institutions and a return of some trust in the management of the Basin.

We need a Royal Commission now > Add your name.

Maryanne Slattery is senior water researcher and Rod Campbell is research director at independent think-tank the Australia Institute. @MaryanneSlatte1 @R_o_d_C

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