Publication (Extension publication): The High Road or the Low Road: Choosing a Future for the Murray-Darling Basin. After Dinner Address to Corowa Centenary Celebration, 11th April

Publication Type:	Extension Presentation / Publication
Publication Name:	The High Road or the Low Road: Choosing a Future for the Murray-Darling Basin. After Dinner Address to Corowa Centenary Celebration, 11th April

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Cullen, Peter (2002) The High Road or the Low Road: Choosing a Future for the Murray-Darling Basin. After Dinner Address to Corowa Centenary Celebration, 11th April.

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After Dinner Address to Corowa Centenary Celebration, 11th April, 2002

The High Road or the Low Road: Choosing a Future for the Murray-Darling Basin

Peter Cullen
CRC for Freshwater Ecology, University of Canberra

Ministers, Commissioners, Representatives of the Yorta Yorta people and other indigenous groups, Community Advisory Committee, other Residents of the Basin and distinguished guests. Thank you for your welcome, and the opportunity to address you on this wonderful occasion.

We gather here to commemorate the historic meeting in Corowa in 1902 that laid the foundation for how we have managed the MDB over the last century. We celebrate the economic and social successes of those arrangements. We celebrate the empowerment of the communities of the Basin to take responsibility for the Basin we live in. We are however distressed by the environmental degradation we have caused. We meet here not to blame each other, or be defensive about the mistakes of our forebears, but with the challenge in front of us to chart a better future for the next hundred years.

Community groups in 1902 called the Corowa Conference, sick and tired of the inability of their Governments to resolve the pressing water problems of the day. It was made up mainly of practical people and all they wanted was that some Government – any Government – should provide them with an assured water supply. They invited the political leaders from the three lower States and the newly formed Commonwealth. The resulting Interstate Royal Commission laid down the framework for the existing MDB arrangements.

As we meet in Corowa, we again have a situation where no one seems satisfied about the present state of the basin, or the organizational arrangements that caused it. As in 1902, we would all like an assured supply of water for our favored uses, be they agriculture, the environment or urban use. The trouble is there is not enough water to satisfy these varying demands.

The row over our waters came to a head in 1902 at the end of the Federation drought. The drought ran between 1895 and 1902, and led the State Governments of NSW, Queensland and Victoria in 1902 to each declare days of “humiliation and prayer” in an effort to bring rain. Despite the pleas for divine intervention, things only got worse until the end of the year. The Darling had dried up at Bourke, the river towns were in crisis as their main transport link was unusable and the agricultural failures were catastrophic. Such is the variability of rainfall in our country, and we would do well to remember it. In 1902 we saw the same tensions between upstream and downstream users and communities as we see now. South Australia wanted the Murray system developed for navigation. Victoria was aggressively developing it for irrigation under the leadership of Alfred Deakin. NSW was not really sure, but as the NSW Premier of the time G.H. Reid put it “NSW was not prepared to reduce itself to the status of a catchment for South Australia”

The joint Interstate Royal Commission was announced at the Corowa Conference to decide the futures of the Murray, and the later report of the Commission showed the divisions between the States. It did however, establish two key principles. Firstly it argued that the waters of the Murray must be divided proportionally between the three riparian States, and secondly it appreciated that the whole river must be treated as a unit under joint management of the three States.

The Present

We have now included Queensland and the ACT in the Agreement. We have not yet been able to treat the whole river as a single system. The tributaries are seen as the States domain; the groundwater is largely managed in isolation from the surface water, the downstream estuary has been ignored and terminal wetlands are not well considered in the management framework. For much of the last 100 years our energies have gone into squabbling over dividing up bits of the pie rather than managing the resource in a holistic and sustainable way. By capping surface extractions we transferred pressures to groundwater, unregulated streams and encouraged farmers to capture water in farm dams before it got into regulate waterways.

We now know much more about our river and the Basin. We can now measure river health, and the snapshot of the condition of the Basins rivers shows the results of our past management. We now know that river health is determined by the flow regime, the contaminants in the water and the habitat of the aquatic system. We affect these elements by structures that restrict access to habitat, altering stream flow patterns and by land uses that release sediment, nutrients, salt and other contaminants. We have learned that rivers and their floodplains are complex ecosystems, delivering a variety of critical ecosystem services. They are not simply channels that can be managed by hydraulic formulae alone.

Tomorrow the Ministers here will meet to decide how much water needs to be returned to the environment. Your decision to cap extraction some years ago was widely criticised then, but is now seen as an essential first step. But the cap is still not fully in place, and we have now activated sleeper and dozer licences, increasing the demands on the system. This year so little water was allowed to flow over Mildura weir that the Murray flowed backwards as the Darling waters flowed back up the Murray to Mildura. This is no way to treat a once mighty river that provides the lifeblood of the Basin. We need to find ways of increasing the flows in the river.

Tomorrow you confront the challenge of reducing the cap. You know the pain and outrage that this will cause those extracting water, and they will certainly let you know of their discontent. They will be shrill in their demands for taxpayers to compensate them for real or imagined rights to our water. But many of our farmers know that the wealth of the basin is reliant on a healthy river, and these people do not want to see the river destroyed. And there are many other voting Australians who want to see a healthy river for themselves and their children to enjoy.

The Future

Deciding in principle to reduce the cap is an essential first step, but one that opens up many difficult decisions as to how we should do this in a cost-effective and equitable way. We must resolve the issue of property rights. You just can’t create a water market, and then hamstring some of the players by not letting them know what they can buy and sell. So far we have partly adopted a market solution. It is not good enough.

The establishment of a market has seen a dramatic increase in the price of water, and the water may now be worth much more that the land to which it was once attached. In 1970 a water licence in Moree in Northern NSW sold for under $30 but now trades for $1.4 million. Financial institutions are concerned about the value of their assets in such a situation, and bankers and irrigators would like to see a formal register of water rights to support trading. They are right.

In my view the basic water right should be a right to use a proportion of the available water, for a finite time, so that we can adjust to varying climatic situations, and adjust water demand as our understanding grows. We need a National system of property rights for water. At present there are some 20 different water products on the market, all with different security of supply, and hence different values. We need to get these to some common base to facilitate trade and the tracking of the rights. In standardising the basic water product to enable trade, we should possibly also include several bands of water quality, since water carrying lots of salt to poison a farmers land is not worth the same as good quality water.

You are in danger of presiding over a fiasco as significant as the one created by your forebears when they created railways in this country. Because the States would not yield their sovereignty, and each sought to get advantage over the others, we ended up with a railway system that couldn’t cross state borders. It cost billions to recover from that disaster and we still don’t have an effective rail system.

I know this is difficult, and that some of you have been struggling to resolve the issue sensibly within your own State, far less seeking to negotiate a common system. It may in fact be easier to do this in a basin context rather than in a State context. Please don’t give us another fiasco like the railways. We need a National or at least a Basin wide system. The COAG meeting last Friday has focussed attention on this issue. Your bosses have agreed to consider a report on your progress to resolving the issue of property rights and obligations at is next meeting in September. These rights are fundamental to the COAG water reforms and underpin Commonwealth investment through the National Action Plan and the Natural Heritage Trust.

If the Ministerial Council is unable to seriously address the issue of property rights and a National market, perhaps we will have to resolve it through the COAG process. Or perhaps another Royal Commission might be the only way to block the impasse and let us move on. You have until September to make real and obvious progress on this, or there will be calls for it to be taken out of your hands and done through a COAG or some other process.

I believe that where a farmer has a clear and permanent right to water this must be recognised, at whatever level of security it has been provided. Where farmers assert a right because of customary access to water that is not underpinned by a legal right, but is based on some annual licence or even annual sales, then I do not believe the taxpayers should give another gift to these people. We also need to build into this framework, as COAG recognised, the obligations of those given access to public water. Those who do have a water right have no right to return contaminated water back to the environment. We need to develop our pollution regulations ensuring a fair charge on those who return nutrients, sediment salt and other contaminants to the environment. This will build the real costs of production into the market prices farmers receive

Registering Rights

We need to agree on a title basis, and have uniform title registration and uniform market rules, even if you cannot bring yourselves to have one integrated national system. Sorting out the property rights and the trading mechanisms should not be all that difficult, but it does require leadership. We should ensure that those using the market pay sufficient brokerage to cover the costs of the market and title registration. We should also include a 1% levy on water sales to support the development of knowledge and to fund the river health monitoring needed within the Basin.

Recovering Water for the Environment

There are a number of ways we can achieve this. The costs and equity implications of these alternatives need to be assessed.

· Purchase water on the water market
· Invest in infrastructure to reduce losses from the present system
· Demand an efficiency dividend of 1% a year from all water users, with or without compensation.
· Just reduce the existing entitlements
· Stop sales of “excess” water
· Take a percentage of every trade and return it to the environment

Delivering Water for the Environment

I have argued elsewhere for the establishment of a National Rivers Corporation to own and deliver the environmental waters that are obtained from public investment. A Corporation would use these funds to acquire water for the environment. It could buy water back from farmers on the water market. It could invest in infrastructure like replacing leaky channels with pipes that would reduce wastage and allow further water to be returned to the environment. It could accept philanthropic donations of funds or water; such donations should of course be tax deductable.

Such a Corporation would need to develop the skills on when and how to release the water. The Corporation would come under the Corporations Act that would require qualified Directors, and require them to act in the interests of the Corporation. It would be sufficiently independent of Government to be able to resist the sorts of calls we have heard this year where various cotton and rice growers who do not have sufficient water to finish their crops, believe further water should be transferred from the environment to tide them through. This is of course only one of many ways to handle this aspect. We need to build an environmental share into the capacity sharing arrangements for the storage’s of the basin.

A Vision for Our Basin

We can all envisage the sorts of Basin we would like, and we all understand that today’s actions will drive us to a particular sort of Basin. To stimulate discussion I would like to propose a Basin that in 25 years:

· Has doubled the GDP generated in the basin
· Supports double the population we now support
· Provides a river where we can drink the water and catch Murray Cod in the Lower reaches.

Hopefully in 25 years we will no longer be spending taxpayers money correcting the mistakes of the past and will be able to use scarce financial resources to build productive assets. Perhaps we will have two international airports within the basin delivering fresh produce to Asian markets each day.

In Conclusion

At present we have half embraced a market solution to allocating water. Neither the environmental, urban or agricultural interests are satisfied with a limited market when no one really knows what they are buying or selling. We need to get on and resolve the property rights issues. We need to create a genuine market, and we need to invest Government funds in that market to get water back for the environment.

Leaving it to the market alone will not achieve the outcomes we all seek. Leaving it to the States to design systems in splendid isolation ignores the reality of our Nation and the realities of water and catchments.

The challenge is in front of us all.

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