Blog Archives

The Not So Fun Water Fight With Changing Goal Posts

It’s Friday and in politics that can mean one of two things. More often than not it’s that nothing of significance is announced by the incumbent government or the opposition. Sometimes, on the other hand, Friday is used by a government to release a policy that the administration wants eased into the public arena, or relatively ignored on announcement, for fear of the damage or embarrassment it may cause a government, struggling or otherwise.

Today was an example of the latter for the Gillard Government. The Murray-Darling Basin has long been on the political agenda, particularly so since former Prime Minister John Howard set up the Murray-Darling Basin Authority, thus beginning the process of water reform.

Today, with just weeks left before the MDBA plan is finalised, Prime Minister Julia Gillard announced that an extra 450 gigalitres, on top of the putative 2750 gigalitres, would be returned to the Murray-Darling.

While the 2750 gigalitres would be returned to river system, by-and-large through water buybacks and cuts to allocations, the new addition to the target would largely be kept in the basin via water efficiency measures. Water saving measures would also be achieved by removing capacity constraints, meaning that structures and bottlenecks that constrain the flow of water would be removed.

However, the phraseology used when talking about the change opens the door for some of the extra 450 gigalitre target to be achieved by the same method as would be applied to the 2750 gigalitre target. That is, cutting water allocations.  The Environment Minister Tony Burke said today in talking about the extra efforts announced, that the outcome would “largely” be achieved by water-saving methods.

To achieve the new outcome, Prime Minister Gillard today, flanked by South Australian Premier Jay Weatherill, announced $1.7 billion over ten years aimed at these water efficiency projects along Australia’s largest river system.

It would appear on the face of it, that the extra figure and its associated costs announced today, is about one of two things.

The first is that it is a sweetener aimed at getting South Australia on-side and it has obviously worked, South Australia is now firmly behind the push to reform the Murray-Darling in its new form.

The second is that today’s announcement is a distraction from the much bigger task, getting all the states to agree in the coming weeks on the initial 2750 gigalitre target. This outcome is a lot less likely, even though the additional 450 gigalitre target, through the way that it will be achieved, appears likely to be widely supported by the state governments.

Then there’s the farmers and irrigators. They are the ones in the middle of this dispute and the ones both with the most to lose and the most to gain. Take too much from them and the water is not there for food production. Take too little and the long-term viability of the basin system is in jeopardy.

Farmers are feeling the pain already. They are extremely worried about all the targets announced so far, even to the point of protesting by burning copies of the initial MDBA draft plan.

A curious element of the policy announced today is the year of delivery for the recommended water retention in the MDBA report. The full realisation of the target would not be delivered until 2024 under changes from Environment Minister Tony Burke.

To have delayed this time-frame both makes the final outcome the problem of a future government if it goes awry and second, it implies that the government were so concerned about the potential negative impact, likely on farmers, that they simply had to push the pain so far away from the likely end of their governance of the country.

In short, there might be widespread support for the additional target announced today by the Labor Government because the methods under that proposal are widely favoured among the states, however agreement over the whole plan is far from fruition.

Australia: the World’s Value-Added Foodbowl?

Australia, way back over 200 years ago from the time of the First Fleet literally grew as a nation “on the sheep’s back”. As a nation Australia began to grow a broader agriculture sector which included a diverse combination of crops across particularly along the length of the eastern mainland states of Queensland, New South Whales and Victoria. That sector also included other animals in addition to sheep, with cattle and dairy farming playing a crucial role in the early economy.

Indeed agriculture does still play a crucial role in our economy albeit a much diminished one in recent decades with our comparative standing in various exports dropping markedly in some cases.

In the global community Australia is among the biggest exporters in the world of wheat, beef, wool and dairy and our three biggest exports are grain/oilseeds, meat and dairy that has obviously been the case for a prolonged period of time, given the industries on which Australia established itself as a fledgling colony and then nation state in the 1900s.

Agriculture in Australia now sits at only a 3% share of GDP in itself and last night Prime Minister Julia Gillard made a speech to the Global Foundation conference in Melbourne where Ms Gillard said she saw Australia becoming  a foodbowl power, particularly in the Asia-Pacific region, where a rapidly growing population needs increasing access to a variety of different food imports.

The Prime Minister in her speech last night said that Australia should harness our potential in agriculture, like we did in the past and like the mining sector is now harnessing the potential of our vast mineral wealth.

There is certainly a space for Australia to grow its agriculture sector again, particularly when faced with an economy that at present is powering along on resources which are finite, but the way we do it and the markets and niches we seek to develop as a nation are a lot more intricate than just producing and distributing food across our region and the world.

Prime Minister Gillard in her speech to the foundation did acknowledge that Australia would have to focus its efforts, for the most part, on exporting food products which are value-added, rather than simply trying to up exports of foods that have not undergone the value-adding process.

Australia as a nation simply cannot compete with nations in the region on many basic fruits and vegetables which can be produced in similar climates around our region with much lower input and final product costs than we can achieve in Australia.

We would also tend to be seeking more niche and higher-end markets with our value-added production, thereby in a way limiting just how much we can grow the sector, but still an improvement.

We would have to focus on sending more goods from Australia to countries in our region like China, which is booming and will have a bigger middle class market, as well as countries like South Korea and Japan, even though the latter continues to struggle with economic woes both prior to and exacerbated by the horrific earthquake and tsunami event that destroyed so many lives and areas of the economy with it.

Far from just focusing on Asia, there is huge potential for our food exports to go elsewhere, particularly to the United States of America and Europe in a bigger way than at present and that is being worked on at present in a fairly big, if little discussed way.

There is also huge potential to continue to expand the market for our top class wine, with very few countries in the world producing truly exceptional wines, making this market a great hope for Australian producers. This market could be expanded and is beginning to be delivered to Asia and for that to continue would be a massive boon for the economy.

In a way, it seems that the speech the PM gave last night was a subtle way of saying, “hey, here’s a way that we can keep the decline of manufacturing somewhat at bay if we do more food processing in Australia”.

If we add the processing of food products to the agriculture sector of the Australian economy, we suddenly get a sector that is approximately 12% of Gross Domestic Product, a significant sector by any measure when the services sector takes up over 2/3 of the overall national economy on its own.

So Australia can definitely look to becoming a major food exporter to both the region and the globe. There are various challenges, not the least of which is a water shortage along the Murray-Darling Basin food bowl and this will mean that the challenge to grow our food exports will be a medium to long-term effort, rather than a rapid expansion, which would be difficult in itself anyway even if external factors didn’t exist.

The vision is there, but helping to move the idea to a reality will be a long and enduring process that will require the political will of governments of both political stripes to oversee its development.

Follow

Get every new post delivered to your Inbox.

Join 745 other followers

%d bloggers like this: