OPINION
Paul Kelly, Editor-at-large
11nov06

THIS week’s Melbourne Cup Day water summit is recognition that climate change and disastrous resources management by governments have created a crisis that demands new policies and a new politics.

The Howard Government has been slow on global warming but prescient on the water crisis. Whether the drought is the worst in 100 years or 1000 years is semantic. The solution to the water crisis is based on productivity, markets and scientific assessment about water availability. This is an overdue agenda for Australia’s waters and rivers.

Political resistance to such water reforms has been fierce. The culprits have been state Labor governments, state water monopolies, flawed development strategies, irrigators and an obsolete Nationals. But sentiment is changing. The worse mistake remains the culture of denial.

The irony of Howard’s environmental policy is that his urgency about water led him to take water responsibility into his own portfolio as Prime Minister, yet he has never been able to convince the public that his Government takes global warming seriously. This perceptional split reflects a truth: Howard believed in a water crisis yet stayed a sceptic about the more alarmist global warming theories, preferring to call himself a “prudent greenhouse gas reducer”.

For Howard, the politics of water are clear-cut though the policy is difficult. The water crisis is less about ideology, and the effect of climate change on our rivers is obvious, a point stressed by Parliamentary Secretary to the Prime Minister and water guru Malcolm Turnbull. It is untenable to talk about the worst drought in 100 years and pretend climate change is not serious.

The only viable political stance for governments on the water crisis is that of problem solver. As the Wentworth Group of Concerned Scientists said last week, climate change means Australia “must urgently accelerate the agreed water reforms”.

Given the basic differences between rural and city water problems, there are two paths forward. In rural areas, management of water scarcity must be conducted to maximise the benefits from use of water and to eliminate wastage. City water problems are largely decoupled from weather and reside totally within the political system. The solution is to expand supply rather than limit demand, the false choice long preferred by state politicians.

The philosophy underpinning Howard’s 2004 National Water Initiative begins by calculating the balance between consumption and environment; that is, working out how much water can be taken from systems such as the Murray-Darling Basin for agriculture.

This week’s meeting asked the CSIRO to report on this issue before the year’s end, presumably to reduce the water volumes being extracted. But progress has lagged on the pivotal issue: ensuring that agricultural water goes to the most efficient users. If water is scarce, then it should be used in the most productive way possible.

“This is what water trading is all about,” Turnbull told The Australian. “Our task is to get more bang out of every drop of water. This means that water has to go to the highest value and most efficient users.” With the Murray servicing half of Australia’s agriculture, trading is another means of restoring water to the river system.

Turnbull says government cannot tell farmers what crops to plant. But it can create a system in which water will be used more productively to maximise the value it adds to agricultural produce. This is an idea new to state Labor governments and one that frightens the Nationals. But it is essential. Irrigation is used in a highly inefficient way. About 12 per cent of irrigation water produces 50 per cent of agricultural value and some sectors, notably cotton and dairy, use huge volumes of water for low-value returns. With 70 per cent of Australia’s water supply going to agriculture and only about 12 per cent to households, this becomes a pivotal issue.

For years state governments have had a resources mentality that handed out water licenses. The upshot is that during the past 20 years Australia has doubled the volume of water it has pulled from the rivers for irrigation, putting the system under great strain. As Turnbull says, as “we have become aware of how scarce our water resources are, we’ve been increasing our reductions”.

“There are interest groups who seek to block any return of water to the river,” says Peter Cullen from the Wentworth Group. “This is mainly on the grounds that taking any water away from irrigation will impact on irrigator and general community wealth. These groups have used a number of tactics to delay addressing the problem.”

This reform agenda spells structural adjustments that will create new winners and losers. It is difficult politics for state governments. It undermines the resources culture of state bureaucracies and it is a reform agenda that Nationals ministers, notably Agricultural Minister Peter McGauran, distrust or oppose.

As Howard knows, national leadership and funds are essential to progress. Although water is a state responsibility, the crisis is national in scope, with the Murray-Darling affecting four states. At this week’s meeting, Howard and the premiers agreed to contingency planning for 2007-08 and to accelerate interstate water trading.

It is idle to think Canberra will not be held politically accountable if drought persists into the 2007 election year.

City water is a more clear-cut issue. As Turnbull says: “There is absolutely no excuse for our cities, especially those on the coast, not being drought-proof. We can desalinate. We can recycle and store this water in nature dams, aquifers beneath our feet. We can, in some cities, purchase water from irrigators. A national recycling agenda is a vital policy issue for us.”

State governments have avoided proper policy for two reasons: cash and politics. Water boards are run as monopolies that deliver dividends to governments. They are under-geared, they don’t reinvest in water supply, they maximise cash flow by cutting demand in preference to new investments in supply.

“Imagine a world in which we were told that instead of increasing the supply of electricity as demand increased, the Government would ration electricity by imposing restrictions,” Turnbull says. “We could not use certain appliances on certain nights. We would, however, receive subsidies to install a windmill. Now a government that presided over such an arrangement would not be in office for long. But that is precisely what we are seeing with water.”

Turnbull says he has installed his own rainwater tanks. The cost was several multiples the present price of water and the process is nonsense as a community-wide solution.

Governments have exploited shamelessly the public’s idealism and naivety. Water restrictions are mainly used to avoid confronting the supply-side solution. The politicians have won every way. They duck the solution, penalise the consumers and are applauded for taking action courtesy of the pervasive green culture that applauds restraint and opposes market solutions.

As Turnbull says: “We can have as much water as we wish.” The problem lies in our minds and in our politics.