In August of last year, the Prime Minister, John Howard, and the State Premiers laid out the framework for a "National Water Initiative". Including a $500 million rescue plan for the Murray-Darling River system, this was designed to provide water to important environmental sites in the Murray Darling Basin. A national plan to enable compensation for those who relinquish water rights is a major goal of the initiative.
On 25 June Mr Howard is again scheduled to meet with his CoAG counterparts, the State Premiers, to advance policy on water.
Doubt is being cast on whether the Murray Darling system is actually under the sort of stress portrayed by green groups and accepted by many in urban Australia. Ecologist Dr Lee Benson has carefully sifted through the evidence and found it seriously lacking. A Parliamentary Committee that has comprehensively examined the matter issued a bipartisan report, expressing severe reservations about the validity of the science on which proposals to take water for environmental initiatives were being made.
Proposals for reduced irrigation water use include diverting some 500 gigalitres (the current government proposal) or 1,500 gigalitres (endorsed by Mr Latham) to environmental uses. The latter plan was warmly welcomed by Michael Young, a senior CSIRO official and member of the Wentworth Group who described it as "very very courageous".
Courageous it is since the proposal would involve a considerable diminution of wealth in regional Australia.
There are some 11,700 gigalitres of extraction permits issued, but not all of this can be used. The additional "environmental allocations" would need to come from irrigators using the Murray and its tributaries in NSW and Victoria. This amounts to around 7,000 gigalitres. The bottom line therefore is that the current proposals would take 7-22 per cent of the water presently allocated to irrigation in Australia's most important agricultural region and the area which must form the backbone of aspirations to be Asia's food bowl.
Although creating short term uncertainty, the green assault on farmers' property rights on the Murray Darling system may have brought a positive outcome. It has been the catalyst for a long overdue specification of and reform to irrigators' water rights in the form of the Intergovernmental Agreement on a National Water Initiative. This is to be considered at the CoAG meeting on 25 June.
The latest draft of the Agreement is concerned to ensure property rights to water are defined and made secure from government seizure. It identifies the need to have water and the land to which it has traditionally been attached placed on individual titles, each of which may be separately traded. It requires that water trading not be confined to specific districts but be allowed along the system wherever this is physically possible. It requires comprehensive plans and definitions of the water entitlements and uses including those for public benefits like fishing.
Some matters remain to be clarified. These include a greater flexibility sought by the NSW Government. But the flip side of government flexibility is reduced security for farmers, and NSW's propositions bring concerns in this respect. They seek a review of water rights at least every ten years -- a matter that puts a sword of Damocles over long term investment planning.
Such matters aside, a serious shortcoming of the current draft is its failure to specify the current entitlements as rights. If farmers are to have confidence about fair play with future decisions they cannot be served up a system that starts with a clean piece of paper. Irrespective of the merits of the water allocation decisions and water rights acquisitions that have taken place over the past century or more, the status quo of de facto rights needs to be the starting point of any reformed system.
Broadly speaking, the Agreement as now drafted offers benefits in requiring that governments offer full and fair compensation if they wish to take more water for environmental, indigenous or other uses. Rights holders will lose water without compensation only in proportion shares that might be lost if the total available is reduced as a result of climatic events or changes.
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