‘Like pink batts for farmers’: Minister defends questionable ‘irrigation efficiency’ grants

By Stephen Easton

Tuesday July 9, 2019

The gulf between the alternate realities of the Murray-Darling Basin Plan — one occupied by its chorus of critics and the other by ministers, commissioners, industry lobbyists and public servants — grows wider, as Four Corners shows Commonwealth funding for more efficient water use on farms has paid for an infrastructure boom, allowing them to extract more from rivers.

“I would characterise it as pink batts for farmers,” said John Kerrigan, one of several beneficiaries of the federal government’s funding. He told the ABC program how he, like many clients of his earth-moving services, had used the money to develop land that would have been uneconomical to farm otherwise.

A succession of farmers told reporter Sean Rubinsztein-Dunlop they had taken up the funding because it was available but generally agreed it didn’t make a lot of sense from the taxpayers’ point of view. The public grants were offered in exchange for water rights, but the program also raised serious questions about the generosity of the process and the prices paid for them. They have funded expensive infrastructure on private land like dams, channels, pipelines and watering systems that several farmers said they would have paid for themselves otherwise, but over a longer period of time.

The contention was this has improved water-use efficiency but also underpinned an overall increase in agricultural production by vastly expanding the total area of irrigated land. The public funded program that was supposedly aimed at saving water has accelerated projects that allow farms to capture and store more water from river systems.

Farmers spoke of profitable speculation on the water rights market and the agricultural industry consolidation of recent years, with several suggesting the largest companies, like walnut and cotton farming giant Webster Limited, had gained the most.

The episode featured compelling arguments from several persistent critics of the basin plan like barrister Richard Beasley, who was counsel assisting the South Australian royal commission into the scheme, and former senior water researcher Maryanne Slattery, who quit a job at the Murray-Darling Basin Authority in 2017 and sees it as a colossal deception of taxpayers. They appeared along with various academic researchers who are at odds with the minister and the independent government body.

“In my opinion, money spent on irrigation infrastructure programmes is wasted,” said professor of water economics Sarah Wheeler. “Four billion dollars of taxpayer money has been wasted to date. There is a huge opportunity cost of that money. It could have been spent on buying water directly back and reinvested within real communities on services and activities that would actually help them become more healthy and resilient.”

Ecology professor Richard Kingsford commented: “We’re degrading the rivers at the same time as we’re handing out money to a few individuals to realise huge economic gains at public cost.”

Richard Beasley questioned the lack of transparency around “who’s been given the money, why and what is … the scientific basis in relation to what amount of water is claimed to have been recovered from individual schemes or from the scheme overall”.

“I’d just call it a rort,” the barrister said. “And I think I’m justified in calling it a rort or a scam, because it still hasn’t been disclosed to the public: what is the good, best available science behind this in terms of how much water we’re getting out of these schemes?”

Economics professor Quentin Grafton, the UNESCO chair of water economics at the Australian National University, also questioned the lack of transparency. He questioned whether the government was appropriately considering how on-farm water efficiency improvements could in turn reduce the water that flows back into the environment through run-off and soil seepage, an issue recognised by the Productivity Commission in 2006.

“They just don’t want to know. It’s an inconvenient truth. We knock on the door, we tell them what we’ve done, we give then the evidence and we get pushback and the pushback is, ‘No, you’re wrong.’

“And we say, ‘Fine. Tell us where we’re wrong?’ Blank. There’s no response [as to] where we’re wrong. It’s been incredible to say … we can spend [$4 billion] to date and billions more to spend, yet we haven’t done those measurements, those basic measurements to allow us to know what in fact we’ve got, net, in terms of the impact for the environment.”

Slattery said when she worked at the MDBA lots of public servants working in Commonwealth agencies questioned the water-use efficiency program.

“It was always talked about with a raised eyebrow and a bit of a snigger that there was a lot of water that was bought well, well above the going rate … and that the water savings were quite dubious.”

Responses from the other reality

As they have done in response to previous trenchant criticism of the scheme, including from the SA royal commissioner, the MDBA and the government mostly dismissed the views expressed on the program, which did not suggest any specific corruption or misconduct — just a misleading and misguided policy.

Hearing of growth in the agriculture industry supported by generous federal subsidies and seeing farmers developing and expanding their operations delights Nationals MPs like David Littleproud, now the Minister for Water Resources, Drought, Rural Finance, Natural Disaster and Emergency Management, who responded not long after the report aired.

“The Coalition is proud to invest in water-efficiency projects because they return water to the river system whilst protecting rural jobs and communities rather than decimating them as water buybacks do,” Littleproud said.

About 95% of about 1500 efficiency projects were “worth less than $1 million” and the average value was $152,000. “These are almost all small projects involving small farmers, not big companies,” he argued.

He also said he would have more to say about speculators in the water market soon, noting the Australian Competition and Consumer Commission was looking into the issue.

The minister said funding big irrigation projects in the name of efficiency was better than buying back water for the environment because buy-backs led to “less farm production, less harvesting and packing jobs in small towns, and less money spent in the local pubs and restaurants”.

He did not address Prof Sarah Wheeler’s suggestion of buybacks paired with direct government investment in the resilience of rural communities.

“Water efficiency projects began under the previous Labor Government, after it had bought back nearly 1200 GL of water and literally thousands of rural jobs were lost,” the Water Resources Minister said.

Littleproud claims 2100GL of water have gone back into the Murray-Darling system in total through buybacks, water-use efficiency projects, state government programs and gifts of water and there’s about 500GL more to come.

The minister did not offer clear evidence to refute the main argument that the Commonwealth funding flowing into the sector may well have increased total agricultural water usage, by driving an expansion of production on irrigated land that would otherwise have occurred more slowly.

“Taxpayer funded water efficiency projects help farmers grow more with less water, and return water to the river system. … If that farmer or company uses other money to plant other crops or buy other water; that’s up to them so long as all approvals are met. Australia is a free country.

“Building a dam does not give a farmer more water entitlement. Planting almonds, nuts or any other water intensive crop does not give a farmer more water entitlement.”

Littleproud said the Department of Agriculture ran “risk-targeted spot audits” of efficiency projects and had engaged Deloitte to run a separate audit. It began an audit of Webster a week ago, he added, and its delivery partners checked infrastructure works.

The minister complained that Four Corners did not contact him, as did the MDBA, but the ABC said its reporters were told nobody from the government would comment from the story when they approached Environment Minister Sussan Ley.

Groups representing farmers and irrigators are up in arms about the story and arguing it was inaccurate and one-sided. The ABC said:

“The aim of the story was to speak with people who have first-hand evidence of how the grants scheme is operating. It drew on a wide cross-section of the community affected by the scheme, including farmers and irrigators who have received the funding or been involved in its expenditure, scientists and economists who have gathered and analysed data on its effects, community leaders, former government officials and current and former Murrumbidgee Irrigation staff.”

The broadcaster also had “lengthy discussions with the Department of Agriculture and Water Resources” about the story. “The Department provided two background briefings, but told the program no-one would be available for an on-camera interview.”

The MDBA said the efficiency program was the department’s business and asserted the plan was “delivering real water to the environment while doing the least harm to farming communities” in a brief response:

“More than 2000GL of water is now held for the environment and is being used to make a real difference, for example in the north to protect native fish from further fish kill events.

“Every year the MDBA checks that Murray–Darling Basin water take limits are being met. The latest report finds that farmers are not taking more water than is allowed under the Basin Plan.

“While direct water purchase is cheaper than investing in irrigation infrastructure, research shows it causes more social and economic harm to regional communities.”

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