Introduction to
Economics
Lesson 03/07
MURRAY-DARLING BASIN SCHEME
The Murray-Darling
Basin is one of the country’s largest drainage divisions, covering
over 1 million square kilometres, about 14% of the continental landmass. It contains within it the nation’s 3 longest rivers; the
Darling [2740 kms], the Murray [2530 kms] and the Murrumbidgee [1690 kms].
The Basin extends into 4 of the 5 mainland states and includes
the ACT. It is home for
approximately 2 million people and contains approximately 55,000 farms.
The Basin is thus of major significance, even by international
standards.
Presently it is
widely considered that the Basin is in a state of crisis, largely as a
consequence of human activity. Some
of the problems include significant reduction in the number and area of
wetlands, which has adversely impacted on the bio-diversity and ecology,
distorted and inefficient water allocations, reduced water flows,
increased land and river salinity, excessive land clearance, feral pests
and the growth of weeds and algae.
Some Recent
History
Debate over
ownership and control of the river systems, in particular of the Murray,
played a major part in the talks that led to Federation.
The inability of the colonies of NSW, Victoria and South
Australia to agree on the issue probably delayed Federation for more
than a decade. Each Colony
wanted to protect its own interests; Victoria & NSW were primarily
concerned with water for irrigation, South Australia with maintaining
riverboat navigability.
In the event, the
States retained ownership and control.
Section 100 of the Australian Constitution states:
“ The Commonwealth shall not, by any law or regulation of trade
or commerce, abridge the right of a State or of the residents therein to
the reasonable use of the waters of rivers for conservation or
irrigation”.
An interstate
conference was held in 1902 and in 1914 the riparian States concluded an
agreement, the River Murray Waters Agreement dividing the water, with
South Australia being guaranteed a sufficient monthly volume to ensure
year-round riverboat navigability.
Prior to WW2 a number of dams, weirs and barrages were built,
largely for irrigation but also for navigation.
They included the Hume, Burrinjuck and Eildon Dams.
Following WW2
considerable governmental emphasis was placed on inland development,
particularly on irrigation for agriculture.
Large scale irrigated agriculture had begun in the 1880s with the
Chaffee brothers, but its scope was considerably expanded and new crops
such as cotton and rice were introduced, often with state assistance.
In 1992, the
Murray-Darling Basin Agreement was concluded between the Commonwealth
and the relevant State and Territory governments.
It set up the Murray Darling Basin Ministerial Council, with the
Murray Darling Basin Commission as its executive arm.
Since then the Commission has managed, in a fashion, the
Basin’s land, water and environmental resources.
The Murray
Darling Basin Commission
Management of the
Basin’s resources by the Commission has been widely criticised.
This is not necessarily totally the Commission’s fault since
the Agreement itself severely restricts its power.
The States were unwilling to relinquish much control and
decisions are required to be unanimous; any one government can veto any
proposal.
Nonetheless a
number of recent decisions have attracted specific criticism from
various parties. Thus, for
example, environmentalists and economists both criticised the
Commission’s recent awarding of its National Salinity Prize to the
Pyramid Creek Salt Interception and Harvesting Scheme.
Pyramid Creek, a private company has received $13 million in
subsidies to extract salt for sale from ground water by evaporation.
Arguably the water evaporated is worth more than the salt
collected.
Commonwealth’s
Scheme
Despite what it
says in the Constitution, the Commonwealth government recently announced
its intention to take sole control of the water management of the
Murray-Darling Basin. It
proposes to spend ten and a half billion dollars over 10 years.
Six billion dollars is proposed to be spent improving irrigation
channels to reduce water waste from evaporation and seepage.
Such waste is a major problem.
It has been calculated for instance that in the Victorian
Wimmera-Mallee water delivery system, 85% of the water is so lost.
The Commonwealth
also proposes a 3 billion dollar structural adjustment package,
presumably intended to bring greater economic rationality and equity by
buying out existing inefficient or unjustified water entitlements and
assisting farmers’ relocation. Presently
much irrigation water is being supplied at a charge of less than $50 per
megalitre, whilst urban drinking water piped into homes is being charged
at between $500 to $1000 per megalitre.
More rational pricing of irrigation water however is likely to
render many marginal farms, and crops such as rice, uneconomic.
Although it is a
Murray- Darling rescue package the Commonwealth is likely to sweeten the
pot for the other States and the Northern Territory by allowing them
also significant sums for their own water projects
Reaction
Reaction to the
Federal government’s Scheme has been mixed.
Amongst the States, NSW, which has an election coming up and
appears likely, as proposed, to snare the lion’s share of the $10 and
a half billion, was quick to climb aboard.
South Australia was reluctant to give up State power, whilst
Queensland, showing innovation and flair, sought to grab the pot of gold
for itself by seeking to have accepted as a national development
project, a resurrected 1930s plan [last rejected by the Queensland
government in 2002] to pipe water from North Queensland rivers into the
Murray-Darling Basin, possibly coupled with a secondary plan to pipe
water from the northern NSW rivers.
Victoria, which as proposed, probably has the most to lose, was
opposed.
As of the present,
amongst the States, only Victoria has yet to agree to the Scheme.
The Federal Opposition is supportive but suggests it will need
even more money than the amount proposed.
Whilst conservationists and believers in anthropogenic climate
change are generally in favour some express doubt that the measures
proposed go far enough and see the Scheme as merely a somewhat rushed
election stunt. In support
of this view they can point to the fact of the forthcoming Federal
election and to the paucity of detail accompanying the proposal and to
the fact that it was not apparently even considered by Cabinet before
being released.
Effectively the
States will not formally be giving up their ownership of their
particular share of the Basin. Rather
they will be ceding effective control thereof to the Commonwealth for a
very large sum of money. In
one or two decades from now it might make little difference.
David Sharp