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What’s next with water?

Last Friday’s consultation with ACCC Deputy Chair and Commissioner Mick Keough and Commissioner Stephen Ridgeway was well conducted and informative. Not unexpectedly the ACCC team’s opening position was well aligned with conventional competition policy. The widely reported ‘warm-up session’ in Mildura the day before had broken the ice and the commissioners had a predictable, logical response to almost every proposition or allegation of inappropriate competitive behaviour by brokers, traders, speculators and ordinary everyday irrigators.

The ACCC team was in the Riverland to listen and get a sense of the prevailing concerns around water markets and water trading arrangements. They’ve had time to acquaint themselves with the essence of most of the anxiety around the water topic. There were no early hints that the inquiry will discover significant breaches of Australian Competition Law that will lead to legislative changes and short-term relief for irrigators across the Basin. They don’t perceive any market failure at this early stage of the inquiry.

Most of what was presented by the gathering of (predominantly) irrigators was a reiteration of what has been reported so many times in the past 12 months.  Keen and genuine expressions of frustrations and hardships were expressed; mostly well-reasoned but no break-through thoughts or game-changers.  Understandably the focus is on this year and next for most irrigators and beneficiaries; those who hold surplus water. 

Major policy reform is needed to rebalance water, communities, environment and commercial interests but it’s unlikely Competition Law will facilitate much of that long-haul policy reform program! Prime Minister Scott Morrison and Water Minister David Littleproud realise the present situation is untenable and they want an interim report early in the new year. They realise a policy overhaul is needed and they need to know ‘where to start’. The Riverland community, not just irrigators, have an opportunity over coming months to be part of setting the new policy framework and direction.

The water horse has bolted to be sure but maybe there are ways to put the genie back in this water-bottle with some thoughtful and well informed crafting of policy to acknowledge that water needs to be returned, in large part, to the ‘common wealth’. To bring about the necessary reform will require a transition plan that all stakeholders can comprehend and see where each one’s ‘realistic’ long-term position is.  The unsustainable developments that have been promoted, incentivised and delivered can’t be undone.  Likewise, the defective policies that have facilitated today’s realities have done their damage.  Neither the developments nor the defective policies are defensible or sustainable but reforming them will take great courage and leadership. Communities must be involved and must be heard. A true form of localism will be a good start!

The Murray-Darling Basin Plan was necessary; many horticultural developments of the past 10 years were not.  The Plan must be rolled out in full.  But the great swathe of plantings can’t be wound back.  Hard-liners will continue to say ‘the markets will sort it out’ and of course, markets will, but at what cost to the communities; those long term custodians of the MDB; the communities who have innovated, invented, slogged and taken measured steps to create jobs, livelihoods, markets, exports and opportunities in what was always a drought-prone part of the country? 

To achieve a horticultural re-balance, bold structural adjustment strategies are needed for all MDB communities. These s will need to be formulated while the MDB Plan continues to be rolled out within the agreed timeframe.  If it rains, as in 2016 and there is modest relief, the challenge will be to keep all stakeholders focussed on future plans that can be modelled in such a way that ordinary communities and irrigators can have confidence that the horticultural industry can transition to a more balanced platform.

Water markets will continue to transition to the crops of highest value but it must be ‘crops’ (plural) to ensure diversity and balance; otherwise it’s nuts. All irrigators business plans will have to meet long-term sustainability credentials. Jamming the genie back in the bottle will require plenty more smart technology in the very short term and that will mean real courage among industry leaders to influence policy makers to invest in systems that provide transparency and equity.

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