Sunday, January 25, 2004

The New Protectionism

One of the largest threats confronting the world today is the rise of protectionism.

Trade liberation has been the single most important factor in the unprecedented rate of economic growth experienced over much of the world over the last sixty years.

Australia is no exception.  While we pursued protectionist policies for much of our history, we began reducing trader barriers in the 1980s.  This change in policy has contributed greatly to our recent "miracle economy".

Nonetheless, protectionist tendencies run deep;  deeper than logic and the national interest.  This was illustrated last week by the reaction to a report that Telstra IT jobs were going to India.

IBM Australia has for six years had a contract with Telstra to provide a range of IT services.  It recently informed Telstra of a plan to contract-out about 500 software development jobs to India -- where its parent company has close ties and major investments.  Telstra readily agreed as it was a win--win arrangement.

IBM Australia benefits from the decision by the renewal of its contract.  Telstra shareholders, including taxpayers, benefit from lower costs and better services.  Likewise, telecommunication consumers benefit from lower costs and higher quality services.  Even Australian IT contractors at least do not lose, as the savings are such that IBM Australia plans use a portion to redeploy all 500 contractors to other tasks.

Telstra also faced a competitive imperative.  Its main competitor, Optus, contracted-out similar IT services years ago (in its case to China) and is reaping the benefits.

One would have expected a positive response from politicians.  After all, Australia is a large net beneficiary of offshore contracting of services.  McKinsey & Co estimates these gains at around US$400 million per year.  Offshore contracts play a critical role not only to the local IT industry but the pharmaceutical, education, engineering, hospitality, accounting and legal industries.  Our comparative advantage in trade in services has long been recognised by successive Australian governments and this has led them to push for further liberalisation.  More perversely, successive Australian Governments have identified India -- the country to which the jobs in question are going -- as a key potential market for Australian service exports.

There are other less tangible benefits flowing from the decision.  It will generate wealth and jobs for Indians in a far more effective manner than the $20 million in foreign aid Australia provides per year.  It will help develop a powerful constituency within India to free up its markets for services as well agricultural products.  It will also help develop links between Australian and Indian firms.  And one thing is clear:  the Indian IT industry will become a world force with or without Australian involvement.

Instead of support and leadership, our politicians criticised the decisions.  The Treasurer, Mr Costello, warned Telstra to ensure that jobs went to Australian first;  the Opposition Leader condemned the decision and blamed it on the lack of training and the Democrats demanded that government use their purchasing power to punish companies which out source jobs off-shore.

The fact is that trade in service will increase as a share of world trade and will become increasingly important to the success of Australian firms and the economy.

As such, it is the new frontier of trade debate and needs to be better addressed.


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Friday, January 23, 2004

Casual alternative wrongly demonised

The proposal by the federal ALP to give casuals access to full time holiday and other entitlements reflects a long held view that any work that is not full time and not permanent is somehow illegitimate.

This is a view that ignores simple mathematics, appears out of step with community expectations and seeks to impose one model of business operations onto business.

Workers are attracted to casual jobs.  They normally receive 6 to 11 percent higher pay than full timers and are paid on the spot.  Under most awards, full time entitlements equate to about 19 percent of workers' weekly pay.  Award casual loading is mostly between 25 and 30 percent putting, casuals' income way in front of full timers.  Casuals are paid their entitlements in cash each week.

If the ALP proposal were to add additional holiday and other leave to casuals -- when they already have their leave paid out -- it would on the surface seem to enable casuals to double dip.

This could initially excite casuals giving them up to 30 percent higher pay than full timers.  But business wouldn't carry the additional cost and would have to make casuals permanent, saving business up to 11 percent on weekly wages which will come from the pockets of casual employees.

Being paid leave entitlements in cash each week saves casuals from the risk of company collapse.  Full-timer "entitlements" are in effect loans made to companies.  When companies collapse, full timers become creditors whereas casuals credit risk is limited to one week.  The ALP proposal potentially limits casualisation and exposes more workers to financial loss in company collapses.

Why then the ALP proposal?  There is a strong view amongst industrial relations and human resource academics, some managers, unions and some industry associations that the only socially legitimate form of work is full time, permanent employment.

These groups argue that national skills development is reduced by the use of casuals, that loyalty to the firm is not possible, that work safety is reduced and that employers avoid their responsibilities when employees are casuals.

The public relations "war" against casualisation has been occurring for about five years in Australia and perhaps peaked as a force at a packed Australian Industrial Relations Society conference in Adelaide early last year.

The three day talkfest featured all the key anti-casualisation campaigners, but what was surprising was the confusion that prevailed in the conference summations.  Whereas the underlying theme was that casualisation was an employer plot, several key case studies painted a starkly different picture.

For example a South Australian hospitals case study showed how the hospitals had to offer a wide variety of engagement types to attract and retain staff.  Their "standard" forms of employment included full time, part time, casual, contractor, agency and many more.

The diversity of engagement types was driven by hospital workers demanding alternate mixes of work -- or they weren't interested in working.  The message of worker demand was repeated at the conference in other case studies.

However the anti-casualisation campaigners brush with worker reality did not diminish the demonisation campaigns.

The ALP policy seems to be responding to the campaigns but it has potential political risk.

If the "employer plot" view is accurate, the ALP anti-casualisation proposal may be seen by employees as saving them from exploitation.  But if the South Australian case studies of worker demand is closer to the truth, the ALP risks angering large numbers of people.

This includes students who need casual work, older people who want to stay in the work force but on a highly casual basis, many working parents and people scared of business collapse.

These people have done their mathematics and know the dollar value of casualisation.

The Howard government quietly embarked late last year on a policy of neutralising industrial relations as a political issue in the next election.

If the ALP proposal is counter to community aspirations, an anti-casualsation stance -- even if masked by "worker rights" language -- risks backfiring on the ALP among many people who want casual work.


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Saturday, January 17, 2004

The New Protectionism

One of the largest threats confronting the world today is the rise of protectionism.

This threat is real and its new face highlighted last week by reaction to Telstra's (or rather its contractor, IBM Australia), decisions to contract-out IT jobs to India.

While reports of rising protectionism in Australia have focused on such things as steel import quotas and agricultural subsidies, the focus in the US has actually been more on the loss of IT and other service jobs to off-shore operations -- known as "offshoring".

Indeed fear of off-shoring has led to five US states proposing legislation to prohibit or severely restrict the state governments from contracting with firms that contract-out services to low-wage developing countries.  The US union movement has also been actively lobbying Congress against off-shoring.

There is no doubt that off-shoring is a significant and growing phenomenon in the US.  Forrester, a leading IT consultancy firm, predicts that nearly 500,000 IT jobs will be moved offshore from the US over the next twelve years.  While this represents a small number of total US jobs, it represents 8 per cent of current IT jobs.

That similar concerns exist in Australia is much harder to understand.  While the US is a net exporter of off-shoring jobs, Australia is a large net beneficiary of off-shoring.  McKinsey & Co estimates that Australia benefits from off-shoring to the tune of US$400 million per year.  Moreover, our comparative advantage in trade in services has long been recognised by successive Australian Governments and this has led them to push for the liberation to trade in services.  More perversely, successive Australian Governments have identified India -- the country to which the Telstra IT jobs are going -- as a prime potential market for Australian service exports.

While the debate about trade in services is in many ways identical to that of trade in goods, it has some different aspects which make it both more difficult and important to advance.

Protectionism is based fundamentally on the notion that trade is a zero-sum game.  Of course, in reality, trade is win--win, at least when viewed from an economy-wide perspective.  This is illustrated nicely by Telstra's off-shoring decisions.  The facts are that Telstra's contractor of many years, IBM Australia, has decided to shift 500 software development jobs to India.  It did so to save costs, to access higher skills and to provide a greater range of services to it client.  IBM Australia benefits from the transaction by the renewal of its contract.  Telstra shareholders, including taxpayers, benefit from the ability of the Telstra to match it major competitor, Optus, which has off-shored similar services, and to generate profit.  Telecommunication consumers benefit from lower costs and higher quality services.  Australian IT contractors benefit from use of some of the saving to create new domestic jobs.

There are benefits from this decision.  First, it generates wealth and jobs for Indians, in a far more effective manner than the $20 million in foreign aid that Australia provides to that country annually.  Second it will help develop a powerful constituency within India to free up its markets for services as wells as goods.  Finally, it helps develop links between Australian firms and Indian firms.  And one thing is clear:  the Indian IT industry will become a world force, with or without Australian involvement.

Trade in services, however, has characteristics which make trade liberation more difficult (though there are major exceptions).  First, many service sectors have until now not been subject to foreign competition -- at least not directly.  Thus the idea is new and the new is often threatening.  Second, the service sector accounts for most existing and virtually all new jobs in Australian.  Thus the number of people affected by trade in services will potentially be much larger than for trade in goods.  Third, service providers are generally more affluent and articulate than farmers and manufacturers.  Fourth, the union movement has identified trade in services, particularly IT services, as fertile ground for its own renewal.  Little wonder that the union movement was the chief propagator of the recent Telstra off-shoring scare.

Finally, politicians are, with few exceptions, latently protectionist, seeking to use the power of the state to provide special favours and protection from the "outside".  This is particularly the case when it affects them and their own constituency, which in turn largely comprises service providers.  Hence we were subject to the absurd spectacle of all major parties chastising Telstra for doing what all governments have long advocated -- competing on a world stage and creating value for shareholders and the economy.

All is not gloomy, many parts of the service sector, most importantly the IT industry, have a global, competitive culture.  More importantly still, technology is likely to thwart any efforts to stop trade in IT services.  The culture of the contractor in the service sector will also limit the influence of unions.

Nonetheless, services are likely to be the next battle ground for free trade.


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Friday, January 16, 2004

The New Missionaries:  NGOs in Third World Development

NGOs are the new missionaries to the Third World.  The original missionaries carried messages of Christianity and capitalism.  Many of the new missionaries whether Christian or not, are decidedly anti-capitalist.  Many are given unwarranted legitimacy in international forums.

Oxfam/ Community Aid Abroad has been active for many years, seeking a reduction in the debt owed by the most heavily indebted poor countries to multilateral institutions such as the World Bank and IMF.  A nice thought, except that the successive forgiveness of debt provides an incentive to continue Third World practices that created the debt in the first place.

Guilt, wrongly attributed, and altruism, can raise money for transfers of wealth between the First World and the Third, it has succeeded in capturing the minds of international bureaucrats in the UN, and at times unfortunately in the World Bank, though less so at the IMF.  Guilt, however, is no substitute for the message of economic development based on sound political and economic institutions.

Take one very prominent example, the Jubilee 2000 campaign to forgive the debt of poor countries.  Oxfam and the churches, with the Pope and the Dalai Lama and stars like Bono of rock group U2 pressed Western governments to forgive the debt of the poorest countries.  The argument was to let them start afresh without the burden placed on them by the West.

A former World Bank economist, William Easterly, has tested the incentives in debt forgiveness.  He found that the big problem is that debt forgiveness is not new.  The World Bank/ IMF Highly Indebted Poor Countries Initiative, now running at $27 billion, stands on the shoulders of decades of previous rounds of debt forgiveness.

The promise of Jubilee 2000 was no different to all of those that have gone before.  "The debt campaigners treated debt as a natural disaster that just happened to strike poor countries".  The truth is not so charitable.  Countries that borrowed heavily did so because they were willing to mortgage their future.  They were irresponsible, they sold productive assets into unproductive hands, they built unproductive infrastructure, they favoured one ethnic group above another, or one region above another, they ran inflated economies, they were corrupt, they waged war, they allowed black markets to develop because they controlled exchange rates and interest rates.

How many "progressive" NGOs would sign up for Easterly's remedies?  "Does the government of each nation face incentives to create private sector growth, or does it face incentives to steal from private business?  In a polarised and undemocratic society, where class-based or ethnically based interest groups are in a vicious competition for loot, the answer is probably the latter ... In a democratic society with institutions that protect the right of minority interest groups, institutions that protect the right of private property and individual economic freedoms, governments face the right incentives to create private sector growth".

Environmental NGOs have bought into the trade, aid and development game as well.  The Australian Conservation Foundation is active in Papua New Guinea, supporting local NGOs pressing its line on "ecologically sustainable development" and "management of natural resources".  Green NGOs will cite the Ok Tedi mine as an example of poor exploitation practices.  Ok Tedi experienced wash from a tailings dam escaping into the local river and affecting the amenity of the residents downstream on the Fly river.  The action brought by Slater & Gordon in Australia was the straw that broke the camel's back in terms of BHP's involvement with OTML in the mine.  They walked away from the mine, agreeing to pay compensation to certain groups.  They were already paying compensation to others, already paying for infrastructure and development costs in the immediate region, they were already subject to an Act of the PNG legislature requiring specific performance in all matters associated with the mine, including environmental management.

The mine continues, in the hands of the PNG government, but with a significant and skilled partner, BHP absent.  The chance for PNG citizens to break out of the primitive existence is diminished.  The Greens wants to keep the PNG villagers in the Stone Age.

A contrast in the Pacific, where the progressive NGOs are conspicuously absent, or at least ineffectual, is New Caledonia.  Rather than opt for the liberation path of the post-colonial so disastrous for their neighbours, such as the Solomons, New Caledonia is "still lucky to have France".  New Caledonia has a First World standard of living, high literacy rates and long life expectancy.  The careful and long-term devolution of power from the colonial power to the locals, contrasts with the Anglo experience in the Pacific, where the liberationists have reaped the dividend of poverty and mayhem.

Thursday, January 08, 2004

Latham's Choice:  Put the Child or School First?

Labor now has a communicator;  the next trick is to work out what he needs to communicate.  The new leader of the Opposition, Mark Latham, will have to wear statements made as Treasury spokesman, but to some extent, a line can be ruled under nearly all previous statements.  The electorate are for the first time listening to him as Opposition leader, so he has an opportunity to make, not remake himself.

In the next nine months, Latham has to negotiate National Conference, sell the policies developed by his team, and begin to think in terms of specific seats.  He has to do this with one very important worry in the back of his mind.  Labor may never again win a parliamentary majority.  It is the same problem the Liberals face, as the Nationals begin to fade from the scene.  The vote share by the three major parties averaged 97 per cent for the 1949 and 1951 elections, 80 per cent for the 1998 and 2001 elections, and 77 per cent for 2001.  Labor's share of that diminishing vote was only 37.8 percent -- lower than in any of the big defeats of 1975, 1977, and 1996 and the lowest primary vote for the party since 1906.  No matter what the polls say, it is a long way back.

The stability of the party system may well unwind as the majors find it just too much to spread their tiny membership, and their policies across a very broad spectrum of policy demands.  Simple electoral arithmetic may soon be outdated.  Minority government has been the experience of nearly every state government in the last decade, and there are more Independents in the House of Representatives than has ever been the case.  There have only been nine Independents out 727 members elected to the House of Representatives since 1941, most of those successes occurred since 1990.

That is the future, but back to the present.  The easy part is the faces.  Latham starts with a minor reshuffle.  The main winners are Simon Crean as Shadow Treasurer, Julia Gillard's additional duties as Manager of Opposition Business in the House of Representatives, Nicola Roxon as Shadow Attorney-General, Robert McClelland in Home Security, Daryl Melham as Shadow Minister for Housing, and Stephen Smith as shadow Immigration spokesman.  The rest remain in place, including the "silly" ministries, "Sustainability", "Population", and "Reconciliation".

The hard part is policy.  In his first speech to Parliament as leader, Latham mentioned early childhood development.  He implored parents to read books to their children.  "It is the foundation stone of lifelong learning because the truth is that learning does not start the first day school;  it starts the first day of life".  Now here is a policy area to watch.  Like school funding and child-care before it, Labor will open up a new front for Commonwealth spending.  They will seek to develop "quality" early childhood development, meaning professionalising those who care for very young children.

Nearly forty years ago, Bridget Plowden reported to Tony Crosland, Harold Wilson's Secretary of State for Education, on the future of English children and their primary schools.  Plowden attributed most importance in accounting for variations in children's achievement to the home, then the neighbourhood, and least of all to school.  That never stopped a labor government in Britain or Australia spending a lot more on public education.  Public expenditure is supposed to substitute for what some parents lack:  the desire to achieve.  The issue for Labor is what stimulates that desire.  Ask most immigrant families, it is almost certainly not public resources.  Plowden's insight into the factors that lead to children succeeding was simple.  The mother's aspirations for the child, and the number of books in the home.  Has anything changed?

Mark Latham's story of the importance of reading to children is sobering.  But what does a government do about it?  Does a government follow the advice of the early childhood development specialist, and Australian of the Year Fiona Stanley, and pour resources into children at the youngest age, or does it implore the parents to take an interest in the child?  Does it fund the parents?

This same question is being played out in school funding, university funding, even medical insurance, with obvious implications for income tax cuts.  Does a government substitute for personal exertion, or does a government reward personal exertion?  Labor was always in the first camp.  In Whitlam's time, Labor wanted the state to massively substitute for individual effort.  But in the last three decades, there has been a remarkable change of heart on the part of the electorate.  Many parents make a considerable financial sacrifice in order to fund their children, and their health.  Labor appeared to step into this camp when it introduced HECS for university students.

Until last week, my reading of Mark Latham was that he was in the Plowden camp.  My bet is that by the time he comes out of the other end of the National Conference he will be in the Stanley camp.  The more interesting thing is how the government will react.  In its heart, it must be in the Plowden camp, but it too will have to lay off bets with the easy solution of paying professionals to do what only a parent can.


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Wednesday, January 07, 2004

Local coastline well and truly in tidal wave sights

As I write this column the number of people estimated to have died from the Boxing Day Tsunami that devastated Indian Ocean communities is 150,000.

The earth quake that generated the tsunami occurred on the anniversary of that which killed approximately 41,000 Iranians when the city of Bam was flattened in 2003.

Earthquakes have the potential to cause great destruction.

When the island volcano of Krakatoa erupted in August, 1883, giant waves hurled ashore coral blocks weighing as much as 600 tonnes.

A year ago nobody was discussing the possibility of another Krakatoa.

During 2004 the world's media were preoccupied with "human-induced climate change" the "war on terror" and "the war on Iraq" as potential sources of devastation.

The Global Coral Reef Monitoring Network identified the 1997-98 coral bleaching event as severely impacting on reefs in South Asia including Sri Lanka and the Maldives with concern that climate change and/ or another El Nino event could slow recovery.

The human death toll from the Boxing Day tsunami tragedy would have been much greater had the giant waves not first struck the coral reefs that protect beaches on these Indian Ocean Island, in this way dissipating a lot of energy.

Yet earthquakes and tsunamis are not listed by the large global environmental organisations as environmental threats.

These organisations focus exclusively on human impacts on the environment.

There are four potential sources of tsunami:  earthquakes, undersea volcanoes, submarine landslides and asteroids.

NASA estimates that asteroids with a diameter of 90 metres or more can be expected to hit one of Earth's oceans once every 2,000 years.

Eastern Australia is more likely to be hit from a tsunami resulting from an earthquake along the Alpine fault which runs through New Zealand.  There would be a maximum of three hours before such a tsunami hit Australia's east coast.

Unlike coral reefs that have the effect of reducing the land impact of tsunamis, bays and inlets -- for example, Sydney Harbour -- create opportunity for wave reflection and refraction potentially magnifying and focusing impacts.

Professor Ted Bryant, of the University of Wollongong and author or Tsunami:  The Underrated Hazard, suggests the Australian Government should plan for tsunamis including through a public awareness campaign.

In contrast, Dr Anne Felton, an Australian and a tsunami expert based at the University of Hawaii, suggests that because of the difficulty of calculating the likelihood of a tsunami hitting the east coast of Australia it is not worth establishing an early warning system.

While the experts don't agree on whether we should plan for a tsunami, they do agree that the Australian coastline is always at risk.


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Friday, January 02, 2004

From Bureaucracy to Business Enterprise

Agenda

Publishers will tell you that a book of conference papers is hard to sell, and editors will tell you that a book of conference papers is hard to review.  The latter, even more so when three of the papers are comments on other papers.  Publishers and editors are generally right, they have to be because they are paid to know their market.  This is a useful starter for the review of an edited book about the regulation of Government Business Enterprises and Government Operated Corporations.  The contributors jump between the two terms, so for the purposes of the review the generic GOC will suffice.  The issue for all of the contributors is to decide how public or private are GOCs, and having decided, to be satisfied that each is sufficiently accountable to the appropriate power, the government and/ or the market.

The contributors appreciate the dangers of bureaucratic inefficiency and party-political manipulation in the governance of GOCs on the one hand, and the emulation of private sector management on the other.  It is not difficult to be left with the impression however, that the complexities of designing accountability systems for GOC performance are such that, in the absence of overwhelming economic argument, like the presence of a natural monopoly, it is better to privatise than to corporatise.  If a GOC cannot serve two masters, the private interest and the public interest, then best to sell and let government concentrate on regulating the market, not the GOC.  I suspect that most of the authors in the volume would not be in the privatisation camp.  In fact, at the outset while the editor claims to have no preference for state control over government control of economic enterprises, those in favour of market processes are described as "ideologues of the Right" whereas the statists are assumed to be normal.

There are three classes of contribution;  we will name them, reactionary, sceptical, and accepting.  Only the latter seem to be aware that Australian GOCs have turned from being a net drain on government budgets to a net contributor in the space of two decades, that many of those privatised are making a significant contribution to the economy, and subsidies for public purposes once associated with GOC pricing are more explicit.  The reactionary contributions begin with the presumption for continued public ownership and argue that privatisation is not a continuous evolution of economic policy, but that in the economies surveyed -- Australia, UK, US -- despite the fact that there have been "slash and burn turn(s) of the cycle" of ownership, there should be no presumption that government will vacate the field.  The governments in the countries surveyed may have vacated the field of economic ownership, but there is no suggestion that they have vacated the regulation of the marketplace, nor (often at the behest of the electorate) most other aspects of life.  A second contributor wants to start a "counter reformation" and have the market well and truly subsumed by politics.  He confuses the ability to charge a commercial price with a lack of public accountability.  "Increases in profitability arise precisely because managers are not subject to constraints imposed through public accountability, and are therefore free to manage enterprises so as increase revenue and reduce costs".  It could be argued that price is a form of public accountability, and that to this author accountability really means hidden subsidy.

The sceptics have a problem specifying the "public interest".  One asks, "how can managers of GOCs be motivated to act in the broader interests of society?  For example, "Governments may like the [GOC] to operate efficiently, in the sense of producing its relevant outputs at the lowest possible cost.  However, governments may also be concerned about unemployment.  If efficient operation of the [GOC] involves a significant reduction of the workforce and a rise in unemployment, these two objectives will conflict".  This is surely a confusion of the enterprise with the economy.  If in the short run a government uses it own enterprises to bolster employment in an inefficient operation (or indeed in protecting a private one) it will in the long run the risk of leading to higher unemployment.

One of the important innovations of the corporatisation period has been not only the discipline of the market on enterprises, but also the discipline on politicians of specifying non-economic objectives, or economic objectives broader than the enterprise.  One contribution produces a survey of members of various boards of Queensland GOCs, which indicates difficulties in Ministerial intervention in the affairs of the GOC.  For example that the Minister-as-shareholder may promote electoral maximising rather than wealth-maximising behaviour.  Quite so, but if the "public interest" is to be achieved, it is difficult to state who else other than the Minister may be in a position to know the public's interest.  A useful suggestion may be to insulate a GOC from certain excesses of ministerial intervention, for example, when a Minister holds down insurance premiums for workers' compensation until after an election, by ensuring the premium setting process is transparent.  A high degree of specification of governance parameters, that is setting out a thorough menu of performance on non-financial criteria, or community-service-obligations is a desirable thing, but is unlikely to prevent a Minister from asserting that his interventions are not in the public interest.  However, one of the interlocutors advises, "A risk of inappropriate Ministerial intervention may be the price we pay for the opportunity for appropriate intervention".

Another contributor criticises the perennial Productivity Commission critique that GOCs are not efficient, and supports Senator Stott Despoja's suggestion of a Public Interest Commission!  Why not just get rid of government altogether, which I suspect is the entire purpose of the governance discourse that has crept into political-economy in the last decade.  It is as if the underlying objectives of GOCs are only social.  It may be more helpful to commence with the assumption that their objectives are economic, and then specify the non-economic objectives and preferably implement these available outside of the operation of the GOC.

Another discusses a case study the Energy and Water Ombudsman Victoria, and questions whether the privately funded (by licence holders) structure can be part of the doctrine of responsible government.  The assertion is that energy and water are public goods, which the state has chosen to deliver privately, but that the "provision of essential services is properly situated in the public realm".  Surely, the issue is not what the state wants, but what the customers want, presumably a good service at best price.  What were once deemed essential services are clearly no longer public goods.

There is a presumption that "market governance", governments letting go of economic entities (but not of regulation) is tantamount to the "fraying of Ministerial accountability".  The presumption is that the consumer, for the purposes of goods and services provided by a GOC, is also a citizen.  Hence, the call for direct accountability of the scheme by "consumer/ citizens".  This would involve the election of consumer representatives by their relevant constituencies, which in practise usually means the funding of consumer advocacy groups and their pet projects.

In terms of the dispute resolution processes available for contracted parties and consumer/ citizens, the contribution kindly presents an alternative view, in the form of a judge's remark.  "The courts have not taken the view that a privately founded, privately managed organisation ... is necessarily to be subject to control by the courts.  That is certainly not to say that such an organisation may treat itself as above the law;  it is merely to acknowledge that the courts will not discourage private organisations from ordering their own affairs within acceptable limits".  Quite so.

There are contributions that accept corporatisation and who wish to enhance its usefulness with suggested reforms that may help achieve some of the benefits of market-based governance without giving up governmental control.  "Sometimes these benefits are best achieved by replicating the governance of private firms".  One contributor addresses the problems of managerial agency costs and inappropriate Ministerial intervention with a number of innovative strategies.

The first is a contractual solution, to let parties resolve issues contractually without legislative intervention.  In fact, the contract may be part of legislation, but a particular device such as an appropriately crafted Statement of Corporate Intent, may go long way to solving the issue of the divergent interests of a Minister in the responsibility for a GOC.  Another, quite intriguing gambit, is to create a class of private investors with a stake in the GOC by the issue of subordinated debt.  The idea is to create an investor class that has an incentive to monitor and whose purchase and sale decisions provide a market signal about the GOC performance.  Other contributors suggest ways to define those who should have standing to sue a GOC in private actions, to mimic the environment of the private firm.

Such suggestions seem to be greatly advanced in the exercise of accepting the presence of government-owned corporations in the market place and creating the best opportunity for them to perform as economic entities, rather than the reluctant starters who would rather "social" objectives be achieved by economic entities.  The difficulty for the reluctant corporatisers is that, the more corporate responsibilities are loaded onto GOCs, the greater the reason to privatise.  The desire to account for each potential adverse aspect of the market, by incorporating into the governance of every GOC, every conceivable fail-safe arrangement, rather defeats the purpose of the corporatisation.  Those who want to broaden the scope of corporate governance by incorporating the political agendas subsumed under corporate social responsibility only serve to produce a strong argument to allow the GOC to escape the clutches of government, and at least then face merely the competition of its peers and the ordinary weight of regulation.

In essence, the dominant contributions in the book reflect the prevailing orthodoxy of the Griffith University Key Centre for Ethics, Law, Justice and Governance:  that we live in a post-parliamentary, post-democratic, post-market age;  that the combination of representative government and the regulated market are insufficient to deliver a just outcome for everyone.  Rather than the liberty to make ones own way in the world, the dominant value is that every citizen has recourse to every forum to resolve his or her every problem, and that every problem is public and shared by every other citizen.  I guess they know their market.


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Sunday, December 28, 2003

Housing Affordability

While many of us have relished the recent housing boom, others have seen price rises beyond their ability to pay.

To help it walk the tightrope between home-owners and want-to-be-homeowners, the Commonwealth Government asked the Productivity Commission to review the issue of home affordability.  This has proved to be a deft move.

The Commission's draft report, issued this week, provides a much needed sedative to the often overcharged debate and refocused it on where tax changes are most urgently needed -- that is, stamp duties.

The Commission pointed out that much of the recent increase in housing prices has been rational, desirable and not unique to Australia.  Three factors -- resulting directly from policy changes -- contributed to the shift in capital to housing.  First, the taming of inflation greatly reduced the cost of borrowing.  Second, the deregulation of the banking sector removed artificial limits on capital flows and resulted in more competition in the provision of financial services to householders.  Third, the housing sector provided a valuable offset to the recent poor returns in stock markets.

Similar policy changes were made around the world, resulting in growth in housing prices similar to that experienced in Australia.

In short, there has been a policy and market-induced shift of capital into largely existing housing stocks, which have, in turn, increased housing prices.

The Commission also cautioned against hasty action, because the indications are that the market is already starting to self-correct.  Yields on rental of residential properties have fallen below long-term averages and far below yields on industrial property.  Vacancy rates, especially for apartments, have risen, suggesting a catch-up in supply.  And turnover of properties has slowed.  Indeed, policy actions designed to address the boom may well have contributed to a bust.

While the Commission agreed that a favourable tax climate contributed to the recent housing boom, it pointed out that non-property investment received the same tax treatment as property investment, including the ability to negatively gear.  Given that a major principle of tax policy is neutrality between different forms of investment, the Commission argued that it would be wrong to reduce the scope for negative gearing in housing whilst maintaining current arrangements for other forms of investment.

Instead of negative gearing, the Commission identified stamp duties as the priority area for tax reform.  The stamp duties levies have increased sharply in recent years as a result of increased turnover, higher house prices and the application of progressive rate structures.  Indeed, in Victoria, which applies the highest stamp duties rates on median-priced housing, stamp duty collections have risen by 195 per cent over the last five years.

While stamp duties may not have contributed greatly to rising house prices, they do act as a major impediment to mobility of people and tend to lock in investments.  As such they undermine the long-run functioning of the housing sector.

In short, the Commission's message for governments is to hold tight and allow the market to self-correct and focus instead on policy that assists the long-term functioning of the market.  Let's hope they listen.


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Friday, December 19, 2003

An Act of Corporate Loathing

Late last month the Australian Capital Territory passed the first corporate manslaughter legislation in Australia setting a precedent that will be a potential model across the country.  Now any organisation operating in the ACT needs to be aware of its increased criminal liability if a death occurs when work is done for it.

The legislation applies to businesses, churches, governments, unions, not for profit organisations, volunteer associations, clubs and any organisation that requires work to be done.  If an employee, a contractor, an outworker or a volunteer dies while doing work for an organisation, defined under a broad definition of "employer" the organisation itself can be found to have committed a criminal act.  Penalties against the employer include fines and/ or jail.

The legislation creates two expanded streams of criminal liability.  The first is against "employers".  The second is against "senior officers" which includes executives, government ministers and department heads, and anyone in a position where they take part in decisions affecting the functioning of an organisation.  A senior officer is guilty of industrial manslaughter if their conduct was reckless or negligent or if they failed to do something that would have prevented the death.

The Crimes (Industrial Manslaughter) Amendment Act takes effect on 1 March 2004 and comes after the failed Victorian attempt in 2001 to create corporate criminality.  The ACT government says they have fixed flaws in the Victorian approach which included a process where on finding a corporation guilty of criminality, a senior officer would go to jail on the corporations behalf.  This pathway to jail does not apply in the ACT legislation where a senior officer only goes to jail if they had directly committed an offence.

This direct link between criminality and an individual's actions is consistent with core ideas of criminal justice.  On this basis the ACT legislation may not cause concern.  Surely if someone's criminal behaviour has lead to a death they should go to jail.

But although the ACT legislation is a significant improvement on the Victorian approach its real problem rests in why the legislation is needed.  What was so seriously wrong with existing ACT criminal law that it became necessary to expand criminality so that groups, however defined, are said to be capable of criminal acts?

The many forms of "employers" caught by the Act are groups of people who have formed a legal structure for a common purpose.  The ACT government says that these groups, which can be religious, ethnic, business or any other, can engage in collective criminal behaviour and their culture may be to blame.  What drives this view of collective criminality?

The answer is found in a quirk in the ACT legislation which allows for groups which are guilty of criminality to be subject to a process of court ordered public humiliation.  This may include orders to publicise an offence and undertake community projects.  Surprisingly, this applies only to corporations but not to government or community groups.

The ACT legislation aims to attack only corporations by humiliating them and damaging their brand name.  The idea is that corporations' fear of brand name damage is so high that the risk of public humiliation will cause a shift in corporate cultures.  But why only corporations?

The answer lies within the current deep seated obsession with demonising corporations who some see as big, bad, ugly and anti-community.  This view maintains that corporations need humiliation and disciplining.

But will this approach lead to fewer workplace deaths?  If corporations are uniquely bad perhaps yes.  But what is forgotten is that the human dynamics inside organisations that lead to accidents and workplace deaths, are common within any formalised group structure.  People working in churches and governments behave on the safety front no differently to people working in corporations.

In this respect the ACT legislation is naïve but also dangerous.  In turning an anti-corporate sentiment into criminal legislation they have collapsed the idea of criminal justice.  Individuals act criminally, not collectives.  What is dangerous, is that this invention of collective criminality is not driven by principles of justice but rather prevailing political perceptions of which collective is in favour and which is out.


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Wednesday, December 17, 2003

Sweet Jobs Turning Sour

Anyone who has happy childhood memories of that great biscuit snack, Weston Wagon Wheel, will also remember how the Wheel seemed to become smaller over the years.  Now the Australian icon food manufacturer of forty years is going for good.

George Weston, the maker of the Wagon Wheel and other well known biscuit and cake products is closing its Abbottsford plant and shifting production interstate and overseas.  The closure is no isolated case but part of a continuing long list of disappearing food manufacturers that is costing jobs and increasing our food imports.

More closures will occur.  The reasons are straight forward, could be fixed but are being ignored.  The manufacturing plants are under performing with the big reason being poor labour practices.

Take one example.  Recently at one large food manufacturing plant, a delivery of chilled raw materials arrived unexpectedly on a Sunday afternoon.  Normal warehouse employees were not present so a middle manager who had a forklift license unloaded the container and put the goods in a cool room.  She did this so the product would not rot.

One Monday morning the warehouse employees were furious that someone else had done their job.  They went to the union, who complained to senior management and the middle manager was disciplined.  This sort of nonsense never makes the headlines.

However repeat this type of behaviour in thousands of small, different ways over many years and the capacity of managers to run their plants is so heavily reduced that the plants become unprofitable and have to be closed.

I have discovered the extent of the problem by researching the capacity of managers to run their firms based on clauses in firms' industrial agreements.  The Capacity to Manage Index looks at each clause in agreements to see if the clauses reduce or increase capacity to manage.

Westons at Abbotsford rated minus 16.  Arnotts closed Burwood plant rated minus 9.  Ballantyne Chocolates who are closing their Melbourne plant scored minus 9.  Simplot who have closed their Kensington Four and Twenty pie plant had minus 10.

This trend of closures reaffirms a two year old report of mine that gave evidence that international food manufacturers will not invest here because of labour problems.  The experience of the Japanese food giant Saizeriya in having their new Melton factory built eighteen months late due to labour problems, is well known overseas and has scared off new investment.

For existing plants the scenario is clear.  As plants reach the end of their technological life companies worry that upgrades cannot be completed on time or on budget and existing operational labour issues will cause new investments to under perform.  It's easier to go overseas.

The outcome is that workers lose jobs, unions lose members, farmers lose value adding and export opportunities and consumers eat more imported foods.  The reaction of all governments so far has been to publicly ignore the problem and spend millions on slick marketing campaigns to hide the problem.  Some industry associations respond by criticising anyone who talks about the problem.

The outcome is a culture of dangerous silence amongst those best positioned to do something.

But concerns are not just with food manufacturing.  The clothing manufacturing industry is struggling with near death, significantly because of bad labour problems made worse by industry specific destructive laws.

And according to my report car manufacturing has a worse reduction in capacity to manage than food manufacturing.  The big four car manufacturers don't appear at risk because of the hundreds of millions of dollars of tax payer grants they receive.  But many car parts and components manufacturers could shift overseas.

Evidence of possible local manufacturing closures in the housing and construction materials supply sector is emerging.

What's being done to fix the problems?  Nothing so far that will alter the closure trend!


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Sunday, December 14, 2003

Going Against the Flow

Pauline Hanson's One Nation Party may be in mothballs, but the rural discontent that helped fuel it is alive and growing.

Nothing illustrates this more than the so-called "Living Murray Initiative".  The Murray Darling Basin Commission (MBDC), which runs this campaign, goes through the motions of consulting with the river communities and does so in a carefully orchestrated manner.

In the past, the MBDC was close to the rural communities which draw their livelihoods from the river.  But in recent years it has begun pandering to the green lobby.  This lobby is essentially urban and has little real understanding of the state of the river.

When the green lobby began claiming that the river was becoming "brinier and brinier" the MBDC did not set the record straight.  When CSIRO's Lands and Water Division jumped on the green bandwagon claiming that "salt levels are rising in almost all of the basin's rivers and now exceed WHO guidelines for drinking water in many areas", MBDC again did not publicly disagree.

The MBDC and the river communities, however, knew these claims to be false.  The evidence is clear:  salt levels have been falling at key sites for the past 20 years.  This should not be surprising given that hundreds of millions of dollars have been spent on programmes designed expressly to reduce salt flows into the rivers.  Moreover, salinity is the one aspect of water quality for which there are good data and the data clearly show declining salinity levels at key monitoring stations.  Indeed, at Morgan, which is just upstream from where Adelaide takes its drinking water, salinity levels have declined by 50 per cent over the last 20 years.

It took protests from river communities and reports from independent scientists, before MBDC publicly came clean about salinity.  In the meantime, rising salinity had become an urban myth and provided the foundation for a campaign to take even more water from irrigators.

In the report released this week, Dr Jennifer Marohasy examined the evidence behind the other claims of the declining health of the Murray River, including poor water quality, dying red gums and threats to continued survival of the Murray cod and other native fish populations.  She found in each case that the evidence was at odds with the claims of the green lobby.  Indeed, with the possible exception of native fish populations, she found a healthy river and plenty of examples of communities working hard and successfully to further improve the River's health.

While Dr Marohasy's research was greeted with relief in the communities along the river, it was treated as heresy by the MBDC and the green lobby.

The Ministerial Council of the MBDC acting on these myths has adopted a programme to remove an additional 500 million litres of water per year from irrigators for environmental flows.  While this target falls short of the demands of the green lobby, the Council made it clear that this was just the "first step".  While the Council promised to respect property rights and buy the water in the market place, it did not rule out compulsory acquisition.

Is it any wonder the people on the land feel ignored and powerless?


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Friday, December 05, 2003

Myth and the Murray:  Measuring The Real State of the Environment

Backgrounder

We have all heard about the declining health of the Murray River, including poor water quality, dying red gums and threats to the continued survival of the Murray cod -- this is the popular view in urban Australia.  Along the river, communities believe that the end of commercial fishing, a substantial restocking effort, improvements in on-farm practices and the construction of salt-interception schemes have resulted in a healthier river.  The available evidence supports the local view and suggests that, with the possible exception of native fish stocks, the river environment is healthy.

Many of the scientific reports that have led to the perception that the Murray River is in poor health make their comparisons with a natural river, which is one without dams and locks, one that gushes and then runs dry.  Such comparisons are misplaced.  If the ultimate objective of the conservation movement is a natural river, then we must reject the cultural heritage and economic wealth created by the engineering works, including the Snowy Mountains Scheme.  In its natural state, the Murray River could not provide for Adelaide's water needs and it could not support the irrigation industries that have made the region the food bowl of Australia.


2. INTRODUCTION

"Myths embody popular ideas on natural and social phenomena."

Oxford English Dictionary

In Australian cities, a popular idea about the Murray River has emerged.  The image is of a once great river that is now dying:  "Over the past 100 years, the flow of water through the River Murray system has changed.  Most of this is due to dams, locks, and levies which were constructed to provide water for irrigation, drinking and industry.  The alteration to the system's water flow has caused changes to the environment.  Water quality has dropped, some wetlands have become dry, native fish are struggling to survive and some areas of land have become salt-affected.  If things are left as they are, the River Murray system could die." (1)

The Australian Conservation Foundation (ACF) has specialized in saving rivers.  According to their Website, "saving rivers is in our blood" and "we've worked to save the Franklin, Fitzroy and Snowy Rivers.  Right now the Murray River's need is urgent." (2)  The ACF, and others, have initiated a campaign to return 1,500 gigalitres per annum (about 3 Sydney Harbours full of water, 1 gigalitre equals 1 billion litres) of irrigation water to the river as environmental flow to help fix the problem of the "dying Murray". (3)  A group of Australian scientists sponsored by the World Wide Fund for Nature (WWF) suggested this target be achieved by irrigators voluntarily giving back 10 per cent of their current water allocation, with the remainder to be bought by government. (4)  At current market prices of approximately $1,200 per megalitre (1 megalitre equals 1 million litres) it would cost approximately $1.8 billion to buy the total amount of water proposed (1,500 gigalitres).

While spending money on the environment may seem like a worthy cause in itself, what would actually be achieved if this quantity of water were released?  The Murray River environment is highly modified as a consequence of the many dams and locks constructed over the last 100 years to "drought proof" the region.

Many local communities believe a vocal environmental lobby has formed a partnership with scientists pursuing funding.  They regard this partnership as having hijacked the debate and, through exploiting an ill-informed media, (5) given city-dwellers the wrong impression that the Murray is facing a crisis.  Local communities generally reject the idea that the river is dying and many reject the various proposals to take additional water from irrigators. (6)  Nevertheless, they recognize that there are environmental issues to deal with, are embracing more environmentally friendly farming technologies and have already made significant contributions by way of environmental flow, including to flood red gum forests. (7)

Irrigated agriculture has been a feature of the Murray River since the early 1900s when the first dams and irrigation channels were constructed.  Wheat, cotton and wine-grapes are amongst the many crops now grown on land that was once covered in salt bush.

In 1974, the Snowy Mountains Hydroelectric Scheme was completed and 1,100 gigalitres per annum was diverted west from the Snowy River to the Murray and Murrumbidgee Rivers.  The additional water was diverted with the aim of generating hydroelectricity, drought-proofing the region and providing additional water for irrigation.

The Murrumbidgee and Darling River systems flow into the Murray River most years, while the Lachlan River flows into the Murray approximately once in every 20 years, Map 1.  This entire catchment area is often referred to as the Murray-Darling Basin and covers an area of 1,061,469 square kilometres, equivalent to 14 per cent of Australia's total area.

Map 1:  The Murray-Darling Basin

The Murray-Darling Basin is now home to approximately two million people and supports one quarter of the cattle herd, half of the sheep flock, half of the crop land and almost three-quarters of the irrigated agriculture in Australia.  The value of the Basin's agricultural production exceeds $8.5 billion per annum, which represents 41 per cent of the national output from rural industries.  Manufacturing industries in the Basin rely on this agricultural output for 70 per cent of their $10 billion per annum production. (8)  Adelaide is not in the Murray-Darling Basin, but water piped from the Murray River typically supplies about half of Adelaide's water needs.  In dry years, the reliance upon Murray water can increase to as much as 90 per cent of needs.  Adelaide is thereby able to present itself as an English-style city of roses and churches;  despite being the capital of the driest state in the world's second-driest continent.

A dying river with deteriorating water quality cannot sustain the environment, agriculture or Adelaide -- at least not in the longer term.  How is it that the river appears to be healthy to the local communities, whereas the overwhelming advice from eminent Australian scientists and research organizations suggests that the River is an ecological disaster?  It is this issue that I shall explore through a consideration of the available evidence.


3. MEASURING THE STATE OF THE RIVER ENVIRONMENT

If we are to understand the real state of the world, we need to focus on the fundamentals and we need to look at realities, not myths.

Bjørn Lomborg, 2001


3.1 RECEIVED MESSAGES ABOUT THE MURRAY'S HEALTH

The simple message that the Murray River is dying has been repeated over and over in the Australian media.  But what do the actual data look like?  How many red gums are dying relative to the total population of red gums?  At what rate are Murray cod numbers declining?  How do salinity levels compare now with what they were before the salt-interception schemes were built?

Basic environmental statistics can give us an indication of the magnitude of the problems we face and the extent to which current programmes are successfully addressing environmental issues.

The focus of this Backgrounder is on those indicators that have influenced current public perceptions of the River's health because key organizations have promoted them as the most important.  These indicators are:  salinity, fish (in particular the Murray cod), sediment and nutrient loads and river red gums.  Also considered is the issue of "water diversions", because this measure was identified by the Australian Bureau of Statistics as an important indicator in their 2002 report Measuring Australia's Progress.

Macroinvertebrates (bugs) are also included.  While they have received little if any media attention in the context of the Murray River, they are relatively easily sampled and normally considered an important measure of the overall health of a waterway.


3.2 THE RIVER'S MOUTH

While a dry Murray mouth is generally perceived to be a symptom of a dying river, a dry river bed and dry river mouth are natural parts of the Australian landscape during drought.  The historic photographic record shows that the River ran dry well upstream of South Australia before the construction of the Hume Dam (completed in 1936), including at Swan Hill in 1914-15 and 1923.


A dry river bed is a natural part of the Australian landscape during drought -- the Murray River at Riversdale, New Year's Day, 1914, 50 kms upstream of Swan Hill


Of more ecological significance from the perspective of river health is the issue of the barrages that restrict tidal flow and movement of fish at the river mouth.

At Wellington, the Murray River flows into a 85,000 hectare lake complex which, under natural conditions, would be estuarine, Map 2.  Under natural conditions the level of the lakes and mouth of the river would change constantly because of the variations in water flow, tide and wind action.  By 1940, barrages had been constructed across each of the five channels connecting the lakes with the Coorong and the ocean, Map 2.  These engineering works restrict tidal flow into Lakes Alexandrina and Albert and stop freshwater flowing out to the River's mouth.  An intended consequence of the barrages was the creation of artificial fresh water lakes with more constant water-levels.  Hence, while we now complain about salt in the lakes from river water, under a natural situation they would be estuarine -- very salty from the sea.

Map 2:  The Mouth of the Murray


3.3 THE OFFICIAL INSTITUTIONS

Four institutions have shaped our current perception of the health of the Murray River:

  1. The Australian Bureau of Statistics (ABS) is Australia's official statistical organization, with a mission to assist and encourage informed decision-making, research and discussion within governments and the community, by providing a high quality, objective and responsive national statistical service. (9)
  2. The Commonwealth Scientific and Industrial Research Organization (CSIRO) is one of the largest and most diverse scientific institutions in the world with over 6,600 staff located at 60 sites throughout Australia.  The CSIRO Division of Land and Water has more than 500 staff and a budget of approximately $50 million.  This Division has several Research Directorates focusing on Murray-Darling Basin issues, including the Rivers and Estuaries, Salinity and Sustainable Irrigation Systems Directorates.
  3. The Murray-Darling Basin Commission (MDBC) is an autonomous organization responsible to the governments of New South Wales, Victoria, South Australia, Queensland and the Commonwealth with annual revenue from these governments exceeding $60 million.  The Commission's key responsibilities include managing the Murray River and advising government on matters related to the use of water, land and other environmental resources of the Murray-Darling Basin.
  4. The Cooperative Research Centre for Freshwater Ecology (CRCFE) is a joint venture between 19 partner organizations including all the major State and Federal government departments and research organizations involved in Murray River research.  This organization has been responsible for the production of key reports to government on the state of the Murray River and, in particular, an influential survey of fish.

As research funding becomes increasingly targeted towards government-nominated problems, particular areas of research risk becoming veritable industries, within which scientists chase funding by investigating subsidiary fields and special cases within the overall area. (10)  As more researchers become attached to the particular issue, and dependent upon the funding it provides, the field of research involved thereby achieves a degree of independence and even defines its own reality -- as long as no serious external or internal challenge is mounted to the status quo.

The federal government policy of funding "collaborative research" through Cooperative Research Centres works strongly to increase the potential advantage of researchers who corroborate the status quo, rather than those who constructively and competitively challenge it.


3.4 WATER DIVERSIONS (IRRIGATION)

3.4.1 The Murray-Darling Basin

In 2002, the ABS published a report titled Measuring Australia's Progress which identified six "headline indicators" for the environment including "Inland Waters".  The Inland Waters section concluded, "increasing extraction of both surface and groundwater, particularly for agriculture, are leading to a continuing deterioration of the health of water bodies."

A supporting graph, titled Water diversions, Murray-Darling Basin -- 1930 to 2000, shows that water diversions have increased steadily from the 1930s to 1994 when a cap on extractions was imposed by the MDBC.  Over 95 per cent of diversions are for irrigation. (11)  The report concluded, "In the 1990s, in response to the environmental problems caused by water diversions and to ensure continued supply for those who use water, a cap was placed on the volume of water that could be taken from the river systems in the basin.  While increases in diversions have slowed, the MDBC notes that it is too early to decide whether and to what level the cap needs to be changed to avoid further degradation."

The quantity of water extracted from the system (diversion) is the only trend data provided for the Murray-Darling Basin in this important ABS report.  It is important to note that, in the report, a causal link between water diversions and degradation is assumed.  However, no data are provided to establish an actual link between diversions and river health, and no other measured statistics are provided to give an indication of actual river health.

The ABS report does not provide a total water balance.  It is thus unclear how much water is being extracted relative to the system's total storage capacity and average annual inflow.

The average annual inflow for the Murray-Darling Basin has been calculated as the sum of all the most upstream flow gauges throughout the basin at 24,000 gigalitres. (12)  In the 1920s, the amount of water being diverted for irrigation and other uses from the system exceeded the system's storage capacity (i.e., dam capacity), Figure 1.  In the late 1930s, diversions and storage capacity were about equal, at approximately 3,500 gigalitres.  However, storage capacity increased rapidly from the mid-1950s through to the early 1980s, while diversions increased at a much lower rate, Figure 1.  The Snowy Mountains scheme was built including the major storages of Lakes Eucumbene and Jindabyne which are in the Snowy Catchment but supply water to the Murray-Darling Basin Catchments.  The capacity of major storages is now 33,438 gigalitres;  with on-farm storages the total capacity is 36,645 gigalitres.  The amount of water now diverted annually (mostly for irrigation) is approximately 11,041 gigalitres, Figure 1.

Figure 1:  Water Balance for Murray-Darling Basin SystemSource:  MDBC, November 2003. (13)  "Diversions" are all the extractions from the rivers in the basin and smoothed to remove the effects of seasonal climate variations;  "Average Natural Flow to the Sea" is the output from the MDBC's hydrological simulation model created by removing all man-made features from the system and running the model for the past 109 years.  "Average Annual Flow all Rivers" is the sum of all the most upstream flow gauges throughout the basin.  "On-farm Storages" is the storages associated with surface water diversion licences and does not include farm-dams.


The Murray-Darling Basin's large storage capacity relative to average inflows and diversions provides a capacity to store water in very wet years for use during drought.  The system's storage capacity is approximately 53 per cent more than annual average inflow. (14)

The average amount of water potentially available will equal the average annual inflow plus the storage capacity.  Although diversions have increased, because storage capacity has increased much more, the actual percentage of the potential total capacity used by irrigators now (approximately 18 per cent) is only marginally greater than the percentage used in 1950 (approximately 13 per cent).  The storages, however, are rarely full.  When the last Water Audit Monitoring Report 2000/01 (15) was undertaken, storages greater than 10 gigalitres in capacity were at 61 per cent (no values were given for smaller storages or the total system).  At 60 per cent storage, irrigation use as a percentage of total capacity was 8 per cent in 1920, 22 per cent in 1950 and 24 per cent in 2002.

While the ABS report gives the impression that the "degradation" to the Murray River by way of "salinity, loss of fish species and algal blooms" is caused by water diversions leaving too little water in the river, a total water balance is not provided to enable a comparison of the amount of water extraction with the amount of water stored by the dams.  In reality, as a consequence of the increase in government storage capacity (i.e., dams) over the last 50 years, the water level in the main stem of the river is unnaturally high for much of the length of the river, most of the time. (16)

The information presented in Figure 1 is not easily accessible.  It is remarkable that general information on storage capacity and total inflows relative to diversions for irrigation is absent from key MDBC documents published over the last 10 years, including the Audit of Water Use in the Murray-Darling Basin (17) and Review of the Operation of the Cap (18) which, like the ABS report, emphasize the amount of water currently used by irrigators, emphasize differences in monthly flow now relative to natural conditions, but do not place this information in any context relative to total storage capacity.


3.4.2 The Murray River

The Murray River is a component of the larger Murray-Darling Basin system, Map 1.  Not all water flowing into the Murray-Darling Basin reaches theMurray River.  For example, the Lachlan River is approximately 1,480 kilometers long with an average annual flow of 1,270 gigalitres, (19) but in most years contributes no water to the Murray River.  The Lachlan is a terminal river system with most of the inflow feeding the Great Cumbung Swamp. (20)

Inflow into the Murray River varies from 2,500 gigalitres to 40,000 gigalitres each year;  a reflection of the highly variable nature of the basin's climate. (21)  A computer model has been developed by the Murray-Darling Basin Commission (MDBC) that estimates the total water balance for the Murray River based on a hypothetical average year under natural conditions (i.e., without any dams), and also under current conditions (i.e., with dams, locks and levy banks), Table 1.  In an average year, under current conditions, total inflow is 12,607 gigalitres.  About 24 per cent of this water is lost from the system through evaporation and transmission, 34 per cent is diverted, mostly for irrigation, and 41 per cent flows out to sea, Table 1.

Table 1:  Water balance for an average year in the Murray River

Current*Natural*
TotalGL/year%GL/year%
Inflow1260710017052100
Losses304424345820
Diversions43283400
Flow to Sea5235411359480

* "Natural" assumes the river is in a state unmodified by human intervention while "Current" is post-development with dams, locks and levy banks.  Under natural conditions, the inflow is shown as greater than under current conditions as on-farm dams and levies will prevent water that under natural conditions may have flowed into the Murray River from reaching the River.

Data Source:  Murray-Darling Basin Commission, 1998.  GL = gigalitres (109 litres).  Murray River includes Lower Darling.  Mean inflows, losses and diversions are for the period 1891-1992.


The information is rarely presented in this form.  Instead, the impression generally given is that diversions for irrigation account for up to 80 per cent of the river's natural flow, leaving only a small percentage of the water to flow through to the Murray River mouth. (22)  The 80 per cent figure appears to be calculated by variously combining losses and diversions and calculating medians rather than averages, giving the impression that the basin has been "drained to death". (23)  The reality is that diversions for irrigation average approximately 34 per cent of total inflow and approximately 41 per cent of inflows flow to the sea in an average year.


3.5 SALINITY

Until September 2003, the CSIRO Land and Water Website included the statement:

...[a] look at Australia's largest and most developed river system, the Murray-Darling Basin, shows the nature of the problem we face.  Salt levels are rising in almost all of the Basin's rivers and now exceed WHO guidelines for drinking water in many areas.  Business as usual is not an option.  If we do nothing, the salinity of the Lower River Murray -- where Adelaide pumps out its drinking water -- will eventually rise to exceed WHO guidelines.

However, no data were provided to accompany this very powerful statement on the Website and requests to the CSIRO for data to support this assertion brought referrals to the Murray-Darling Basin Commission (MDBC).

Daily readings for salinity from 1938 are available on request from the MDBC for Morgan, South Australia.  Morgan is the key indicator locality for water quality in the Murray-Darling Basin.  Morgan is just upstream of the pipeline off-takes for Adelaide's water supply.  Its use as an indicator site emphasizes the relative importance of river salinity impacts on all water users in the system. (24)  The yearly averages for salinity measured through electrical conductivity (EC µsec/cm) show current salinity levels at Morgan are equivalent to pre-World War II levels, Figure 2.  The peak in 1982 is attributed to the drought at this time, with low flow conditions normally associated with higher salt levels.

Figure 2:  Salinity at Morgan, 1938-2003
Data Source:  Murray-Darling Basin Commission, July 2003


A plot of yearly average salinity levels for the last 20 years indicates that salinity levels have dropped since the drought of 1982, Figure 3.  Concentrations did not return to the 1982 levels despite the recent drought.  Water quality has, in effect, improved.  Upstream at Swan Hill and Yarrawonga salinity levels are stable, Figure 3.  Contrary to information that was posted on the CSIRO Website, salinity levels are not increasing at key sites in NSW, Victoria and South Australia.

Figure 3:  Salinity at Morgan, Swan Hill and Yarrawonga, 1982-2002
Data Source:  Murray-Darling Basin Commission, July 2003


The MDBC has concurred with these findings and has stated that "average salinity in the River Murray has in effect improved during the last decade." (25)  The MDBC attributes the improvement to the salt-interception schemes and improved land management practices.  Given yearly climatic variability and its potential impact on salt levels, the MDBC has indicated that plotting five-year rolling averages is more appropriate than, for example, yearly averages, in determining longer term trends, Figure 4.  On the basis of a five-year rolling average, and by modelling the situation without salt interceptions, the MDBC has calculated that salinity has dropped by approximately 200 EC units as a consequence of the salt-interceptions schemes, Figure 4.

Figure 4:  The effect of salinity management in the Murray-Darling Basin on average salinity levels at Morgan, South Australia
Data Source:  Murray-Darling Basin Commission, September 2003


This information is not readily accessible on the MDBC Website and the Commission's most recent publication implies an ongoing deterioration in salinity levels. (26)

This information, showing that salinity levels are improving, was presented in a paper in August 2003, titled Received Evidence for Deteriorating Water Quality in the River Murray. (27)  The CSIRO subsequently revised the text on their Website and replaced the reference to rising salinity with, "Land and water resource managers in Australia are under increasing pressure to meet stringent environmental guidelines".  At the same time, CSIRO Land and Water published a paper titled, Is the River Murray Water Quality Deteriorating?  A Salinity Perspective. (28)  The paper claimed that while salinity mitigation schemes have "halted the rising salinity trend at Morgan" there are increasing trends in upland catchments.  It further argued that over the next 50-100 years, long-term groundwater rises as "already seen in the Mallee" will override the benefits gained through the existing measures.

The assertion that there are increasing trends in stream salinity from upland catchments purports to be based on CSIRO's Assessment of Historical Data for the Murray-Darling Basin Ministerial Council's End-of-Valley Target Stations. (29)  This assessment concludes that there were sufficient data to establish stream salinity trends at 16 of 32 "End-of-Valley" target stations.  Yet, of those 16, the river salinity trend was not statistically significant at 7 stations, indicated statistically significant rising salinity at 5 stations and statistically significant falling salinity concentrations at 4 stations.  Interestingly the study concluded that, "good quality data at Morgan showed that climatic variability affected EC exceedance curves more than land use or management change".

The reference to long-term groundwater rises in the Mallee cites the CSIRO technical paper, Groundwater recharge in the Mallee Region, and salinity implications for the Murray River -- A Review. (30)  Findings in this technical paper include, "The time for the increase in deep drainage to reach the water table is related to the deep drainage rate, the initial watertable depth, and the soil water content within the unsaturated zone.  Throughout most of the (Mallee) area, watertables are more than 20m below the land surface, and this time delay is of the order of tens of years.  Because much of the Mallee region was cleared between 50 and 100 years ago, watertables should [emphasis added] now be rising over much of the region," however, "in NSW and Victoria watertable trends have not been determined for most of the Mallee region, in part due to scarcity of data.  In South Australia, there is a scarcity of data in crucial areas within 20km of the river."  No data are presented to support a trend of rising groundwater in the Mallee.

According to the MDBC Basin Salinity Management Strategy 2001-2015, the Mallee region represents the greatest potential risk in terms of salt contribution to Morgan. (31)

Along the Murray River there has been a real fear of rising groundwater bringing with it water-logging and salinity.  While the issue is marginal to the focus of this Backgrounder, which is concerned with river health rather than flood plain health, it is worth referencing some of the available data for completeness and to put the issue in some perspective.

In the mid-1980s, modelling carried out by the New South Wales Department of Land and Water Conservation, that was used to underpin the MDBC Salinity and Drainage Strategy, (32) indicated that 127,000 hectares of irrigated land in New South Wales that had water tables within 2 metres of the surface, was at particularly high risk from irrigation salinity.  Furthermore, this area was thought likely to increase to 331,000 hectares within the next 50 years if no action was taken, Figure 5.

Figure 5:  Area actually affected by shallow water tables compared to area expected to be affected (with and without farm plans) in the Murray Irrigation Area

Data Source:  Murray Irrigation Limited Environment Report 2003


In 1996, Murray Irrigation Limited, assisted by funding from the State and Federal governments, commenced the Murray Land and Water Management Plans -- a suite of on-farm and district scale works aimed at keeping the area affected by shallow water tables to within 200,000 hectares, Figure 5.  The programme has been spectacularly successful, with monitored results from more than 1,500 sites showing a dramatic drop in the area affected by shallow water tables since 1995, Figure 5.  The drop preceded the current drought and is expected to be maintained when wet years return.  The last survey undertaken in August 2003 indicated that approximately 14,000 hectares now had water tables within 2 metres of the surface.  This means water tables have dropped significantly over at least 113,000 hectares of agricultural land along the Murray River which was once considered a high salinity risk.  No one is congratulating the farmers for this significant achievement.


3.6 AQUATIC MACROINVERTEBRATES (BUGS)

In 2001, the MDBC published an assessment of river health titled The Snapshot of the Murray-Darling Basin River Condition. (33)  The Overview stated that "Every facet of the ecology of regulated rivers and their floodplains has been impacted by changes to the pattern of flow, so the current level of abstraction in the Basin makes it inevitable that more water must be returned to the rivers to restore and maintain balance commensurate with sustainable resource use."  The document also stated that the scientific evidence indicating "decline" in river health was inescapable.

The term "decline" implies that facts have been assembled in a systematic way and show a worsening trend.  In the report the term "biota" is used as a surrogate for animal and plant life.  However, results for biota are based exclusively on sampling of aquatic macroinvertebrates with these sampling results then compared to expected levels given a near-pristine environment through the use of a mathematical model (AusRivAs).  Aquatic macroinvertebrates are insects, snails and worms that are visible to the naked eye and that live in rivers and streams.  Relatively easy to sample, the diversity of macroinvertebrates and changes over time can give an indication of river health including possible impacts from surrounding land use and the effects of pollution.

Before considering the findings in the recent publication, let us consider the results from an earlier (1980-85) comprehensive 5-year study of the aquatic macroinvertebrate fauna of the Murray River, also undertaken by the MDBC. (34)  This study did not use mathematical models or compare sample results with a hypothetical pristine situation.

The 1980-85 study concluded that

the overall diversity is high at all sites with the exception of those downstream of impoundments and the sites along the River in South Australia.  The number of taxa collected in the Murray (439) compares favourably with other Australian River Systems. ... The River Murray differs from the Meuse and many other large river systems in Europe and North America in that it has little industrial or domestic pollution.  Consequently, water quality is high and this is reflected in a high diversity of aquatic animals.  However, the influence of river regulation in the River Murray has modified the fauna with the more tolerant, slow water forms dominating the highly regulated reaches downstream of Lock 9 (near Wentworth), and the true riverine fauna restricted to the stretch of River above Lake Hume.

Macroinvertebrates are considered very sensitive to pollutants, particularly pesticides.  Since the late 1980s, many of the more persistent agricultural pesticides, including organochlorines, have been banned.  As a consequence of this change, coupled with the adoption of minimum tillage techniques, an improvement in the macroinvertebrate fauna might be expected.  The 2001 MDBC Assessment, however, concluded (based on results from a computer model's determinations relative to a pristine ideal) that macroinvertebrates populations were either in poor or extremely poor condition in all zones along the River Murray from Dartmouth Dam to Wellington.

The 2001 Assessment evaluated the entire Murray-Darling Basin and classified the largest area of "severely impaired" river as the Lower Balonne, a tributary of the Darling in Queensland.  Local irrigators refused to accept the interpretation of the expert scientists and commissioned their own data collection programme. (35)  The results from this study and data collected by the Queensland Department of Natural Resources and Mines, was evaluated as part of the Cullen review into the science underpinning the assessment of the Lower Balonne Water Management Plan.  The government-funded review headed by Professor Peter Cullen rejected the findings published in the 2001 MDBC Assessment for that section of the river and concluded instead that the aquatic macroinvertebrate fauna is in near-pristine condition.

While the 2001 Assessment states that macroinvertebrate communities are significantly impaired, this same report acknowledges that an Australian Water Technologies study (36) has determined that macroinvertebrate communities have shown improvement over the period 1980 to 1997.  These findings are inconsistent when compared with the 1980-1985 MDBC assessment which concluded that overall diversity was high.  At issue is perhaps whether or not the more recent study is making relevant comparisons when it uses a mathematical model that claims a capacity to predict how many macroinvertebrates would have been present prior to European settlement.


3.7 FISH

Reports of declining native fish stocks have long been considered an indication of the declining health of the Murray River.  In August 2003, the Deputy Prime Minister stated that "though we are achieving environmental improvements in some areas, such as reducing the salinity of the Murray ... one indicator of a much broader problem is the decline in native fish numbers throughout the basin." (37)  According to the Murray-Darling Basin Commission's Website, "Native fish are estimated to be at 10 per cent of their pre-European settlement levels and are still on the decline." (38)  However, neither the MDBC Website nor the Murray-Darling Basin Ministerial Council's draft Native Fish Strategy provide data to support the assertion that fish numbers are declining. (39)  It is also unclear what assumptions and methodology underpin the 10 per cent determination.

There is a lot of information, much of it anecdotal, indicating that native fish numbers have dramatically declined relative to pre-European levels. (40)  Five native species are considered extinct in the South Australian section of the Murray River including trout cod and Macquarie perch.  Studies undertaken in the 1980s considered the effect of the barrages at the Murray mouth on fish species that need to spawn in estuaries.  There is also a rich oral history relating to the introduction of the European carp, including its subsequent population explosion and negative impacts on both river water quality and native fish numbers.

Since the 1980s, carp numbers have been observed to decline and downstream of Yarrawonga, numbers are thought to be about half what they were in 1997 and are now estimated to represent 21 per cent of total fish numbers. (41)  According to the MDBC a likely explanation for the decline in carp numbers is that the initial population boom resulted in an over-utilization of available resources and subsequent reduction to equilibrium carrying capacity for this species. (42)  In contrast, local fishermen attribute the observed reduction in carp numbers to predation from an increasing Murray cod population. (43)

Local fisherman, Steve Cooper, with a 16 kg Murray cod near Wentworth, April 2003.


The Cooperative Research Centre (CRCFE) survey Fish and Rivers in Stress:  The NSW Rivers Survey (44) is generally considered the most comprehensive survey of fish in the Murray-Darling Basin.  The survey does not provide any data from which trends with respect to improvement or deterioration in fish numbers can be determined.  However, the survey undertaken in the mid-1990s does claim to give an indication of the abundance of fish in the Murray River relative to other rivers.

The report's principal conclusions include that "A telling indication of the condition of rivers in the Murray region was the fact that, despite intensive fishing with the most efficient types of sampling gear for a total of 220 person-days over a two-year period in 20 randomly chosen Murray-region sites, not a single Murray cod or freshwater catfish was caught." [emphasis added]

A good scientist is usually wary of an absence of data.  An absence of data (namely, catching no fish) could be an indication that, for example, they got their sampling method (that is, their fishing technique) wrong, rather than that there were no fish.

While the scientists caught no Murray cod in the Murray, Lachlan and Murrumbidgee Rivers, it is evident from fishing magazines and the results of local fishing competitions that Murray cod are present.  The annual Deniliquin Yamaha Fishing Classic registered a record 48 Murray cod in 2003. (45)  A feature in the winter 2003 edition of Freshwater Fishing Australia's titled Riverina Revival included comment that, "The mainstay of the Edward River fishery (an anabranch of the Murray) is the Murray cod and numbers at present are high.... the number of juvenile fish of 45-50 cm just short of legal length of 50 cm, can be frustratingly high for anglers looking for a keeper." (46)  Perhaps most remarkable is that at the same time, in the same years, that the scientists were undertaking their now much-quoted survey that found no Murray cod, commercial fishermen harvested 26 tonnes of Murray cod from the same region. (47)

Although anecdotal information can provide useful background information, public policy should be based on a logical assessment of information that has been systematically and objectively collected.  In the case of native fish populations in the River Murray, I was able to access only two sources of time-series data:

  1. Information on the NSW commercial catch as documented in the Inland Commercial Fishery Data Analysis, (48) and
  2. Numbers of fish ascending the Torrumbarry weir fishway as provided by the Reservoir controller.

The only historical information available on the MDBC Website was a misrepresentation of the Inland Commercial Fishery Data Analysis (see Section 3.7.2).

While the recreational fishing effort is considered significant, I could not find any data with respect to this activity that might have provided, for example, an indirect measure of changes in fish population numbers or insight into the potential impact of this activity on native fish numbers.

There has been a significant restocking effort with hatchery production in excess of 3.5 million Murray cod, 9.8 million golden perch, and 12 million silver perch from 1992-93 through to 2000-01.  However, without information on survival versus mortality rates after release, it cannot be assumed that high levels of restocking will translate into increased population numbers of the fish species in the River.


3.7.1 The Commercial Catch

The NSW Inland Commercial Fishery Data Analysis provides information on the total annual commercial catch of native fish species (Murray cod, catfish, silver and golden perch) by weight in tonnes from 1947 through to 1995-96 for the NSW section of the Murray-Darling basin.  Most of the fishing effort was in the lower Murray River, the Murray/Wakool/Edward rivers complex and the Menindee Lakes.  Carp became a significant component of the total catch from the early 1970s.  The number of commercial fishers varied over this period with a peak of 280 licences in 1971 dropping to 40 licences in 1996-97, before the eventual closure of the fishery in 2001.

The commercial catch has been used as an estimate of the size of the native fish stock.  Given the decline in the number of fishers over the last 30 years, however, a better measure would be catch per unit effort.  The number of days fished has been reported since 1984-85, providing a measure of catch per fisher day.  Given fishing methods used in the inland commercial fishery have apparently changed very little over this period, converting total catch into catch per fisher day can potentially give an indication of catch per unit effort.  A plot of the total catch of Murray cod, golden perch, silver perch, freshwater catfish, carp, redfin and freshwater yabby caught in the NSW section of the Murray-Darling basin per year divided by the recorded number of fisher days suggests that from the late 1980s to 1995-96 fish numbers were increasing, Figure 6.

Figure 6:  Commercial catch per unit effort, 1984-85 to 1995-96Data Source:  NSW Inland Commercial Fishery Data Analysis, Fish Research and Development Corporation, 1997.  The total represents the total weight in tonnes of Murray cod, golden perch, silver perch, freshwater catfish, carp, redfin and freshwater yabby caught in the NSW section of the Murray-Darling Basin.  Annual average catch per unit effort is the catch weight divided by total recorded fisher days.


3.7.2 Misinterpretation of the Commercial Catch Data

In July 2003, the Federal Minister for the Environment and Heritage announced that the Murray cod was to be added to the national list of threatened species.  In the associated media release, the Minister indicated that the reason for the listing was "The Murray cod has been assessed as having a 30 per cent decline in numbers over the last 50 years.  This decline is inferred from the dramatic decrease in commercial catches from the 1950s until present."

The media release is factually incorrect.  The commercial fishery closed in 2001 and thus there are no data for the last 2 years.  But of more concern is the statement that there has been a 30 per cent decline in numbers over the last 50 years.  The commercial catch data suggest that the Murray cod fishery increased in the late 1940s, before crashing in the early 1960s, Figure 7.  The average annual catch dropped from 103 tonnes during the 1950s to average 20 tonnes per year from 1960-61 through to 1995-96.  This represents a decline of approximately 80 per cent from the high levels in the late 1950s.  Over the period from 1960, the catch of Murray cod remained relatively stable.  An alternative interpretation is that following the crash in the early 1960s there was an increasing trend from 1968 to 1978 followed by a decreasing trend from 1977 to 1996.  There has been no "decline to present" since the early 1960s.

Figure 7:  Total catch of Murray cod, 1947-48 to 1995-96Data Source:  NSW Inland Commercial Fishery Data Analysis, Fish Research and Development Corporation, 1997.


It is important to be careful in assessing the limited available data, because if cod numbers have been gradually reducing, then the problem and solution are likely to be very different to a situation where there was an 80 per cent drop in numbers 40 years ago followed by a stabilization in numbers, Figure 7.  There is a significant ecological literature that gives insight into how and why crashes in population numbers typically follow rapid population increases. (49)  Single factors (for example, predation, food scarcity or pathological effects in response to crowding) are often key regulators of animal populations.

The Murray-Darling Basin Commission's Native Fish Strategy (50) also misrepresents the information in the NSW Inland Commercial Fishery Data Analysis by suggesting that the data show "decline in catches per unit effort of the Murray cod" when the report itself is careful to emphasize that the data represent "total catches of Murray cod" and that "commercial fishing effort has been strongly reduced over this period (last 30 years)."


3.7.3 Recordings from Torrumbarry Weir Fishway

Concerned at the extent of the misinformation in the Draft Native Fish Strategy, the Wakool Landholders Association undertook a survey which determined that 96 per cent of local residents and tourists believed native fish populations are increasing.  In response, the Murray-Darling Basin Commission (MDBC) produced an Information Paper titled Native Fish in the River Murray:  Status and Trend. (51)

The only trend data presented in the MDBC paper shows a graph of total numbers of native fish each year for the period 1991-1992 through to 2002-2003 ascending the Torrumbarry Weir Fishway, Figure 8.  Torrumbarry is situated just downstream from the town of Echuca in northern Victoria about half way between the Snowy Mountains and the Murray River's mouth.  There is an obvious spike in fish numbers in 2000-2001 attributed in the paper to, "an environmental flow release to top up high flows and enhance the watering of the Barmah-Millewa forest".  The peak is followed by a dramatic decline in fish numbers.  There is no explanation given in the paper for the decline.

Figure 8:  Total number of native fish that ascended Torrumbarry fishwayData Source:  Terry Holt, Reservoir Controller, Torrumbarry Weir.  The total number of native fish equals the total number of fish minus the total number of European carp.  Data for 1995-96 excluded as per MDBC paper as weir was rebuilt during this year.  There is a slight discrepancy in the values for 1992-93, 1994-95 and 2002-03 between the above graph and the graph in the MDBC Information paper -- but the overall trend is consistent.


The MDBC paper concludes that "There is considerable evidence that supports the decline in the range and abundance of many native fish species.  There are also explanations why excellent fishing for some species can occur on occasion even if overall populations are in decline through time."  Yet the only data presented in the paper do not indicate that fish numbers were in decline over the period for which data are available.

The Reservoir Controller at Torrumbarry Weir has overseen the collection of daily recording of numbers of adult and juvenile silver perch, yellow belly, bony bream, Murray cod and European carp passing through the fishway since the original fishway commenced operations in March 1991.  The fishway was not operational for a period during 1995-96 when the weir was rebuilt and a new fishway constructed.  During 2001-2002 an automatic carp sorting machine was installed at the fishway.  The Torrumbarry fishway data appear to be the only recent direct measure of fish numbers, over time, available for the River Murray.

The MDBC Information paper interprets the numbers of fish moving through the fishway as an indication of changes in relative abundance.  On this basis a plot of the total number of Murray cod passing through the fishway might suggest that Murray cod numbers were relatively stable through to 1998-99, increased during 2000-01, and declined during 2002-03, Figure 9.  The dominance of adults relative to juveniles, however, suggests that the perceived increase in numbers is more likely to relate to an increase in cod moving along the river system rather than an actual increase in the population numbers in those years.

Figure 9:  Total number of Murray cod passing through the Torrumbarry Weir FishwayData Source:  Terry Holt, Reservoir Controller, Torrumbarry Weir.


Murray cod are apparently territorial and do not normally migrate to the same extent as the introduced European carp and native silver perch, golden perch and bony bream.  Large numbers of juveniles of these more migratory species were recorded in relatively high numbers passing through the Torrumbarry fishway, Figure 10.

Figure 10:  Dominant class and species of native fish that ascended the Torrumbarry fishway, 1991-92 to 2002-2003Data Source:  Terry Holt, Reservoir Controller, Torrumbarry Weir.


Silver perch are listed as critically endangered under Victorian legislation, endangered in the Australian Capital Territory, and vulnerable in NSW.  Interestingly, silver perch were recorded in similar numbers to European carp ascending the Torrumbarry fishway, Figure 11.

Figure 11:  Total number of native silver perch and introduced European carp passing through the Torrumbarry Weir FishwayData Source:  Terry Holt, Reservoir Controller, Torrumbarry Weir.


The peak in European carp, silver perch and Murray cod numbers at the Torrumbarry Weir in 2000-2001 does not appear to correlate with flood events in this section of the Murray River over the period July 1991 to June 2003, Figure 12.  However, the peak does appear to correspond with a 300 gigalitre allocation to the Barmah forest in the year 2000 to prolong major bird and fish breeding stimulated by natural flooding (see "Discussion" below).

Figure 12:  Flow at Torrumbarry WeirData Source:  Terry Holt, Reservoir Controller, Torrumbarry Weir.


3.8 SEDIMENT & NUTRIENT LOADS

The Australian Bureau of Statistics (ABS) report that discussed water diversions as an indicator of river health (see section 3.4), acknowledged that, ideally, more direct measures of river health than the quantity of water extracted from the system should be used, but commented that "It is difficult to obtain national time series data that encapsulate the changes in Australia's natural capital" and "...such data are unavailable for much of the country, so we focus on water use, and consider the proportion of Australia's water management areas within which water extraction is thought to be sustainable" [emphasis added].  This statement suggests that the ABS is prepared to substitute opinion for measured and relevant environmental statistics.  Furthermore, time-series data (in other words, trends) with respect to water quality indicators are available and have been measured for our major river systems for many decades.

According to the Australian Water Resources Assessment 2000, we spend $142-168 million each year on water-quality monitoring.  We have already considered the salinity data (Section 3.5), but what is the situation with respect to other key water-quality indicators, including turbidity, nitrogen and phosphorus levels?

Turbidity is a measure of the suspended sediment load.  Turbidity levels generally rise with increased discharge (for example, increased rainfall).  Australia's inland river systems are considered to be naturally turbid.  Since European settlement, the most significant change to water quality in many inland river systems is thought to be an increased sediment input from the early years of land clearing and the introduction of sheep, cattle and rabbits.  As a result of improved management practices over recent decades, erosion is likely to have stabilized or reduced to pre-European levels. (52)

Data sourced directly from the MDBC, show that turbidity levels (measured in nephelometric turbidity units, or NTUs) at Morgan fluctuate but with no apparent trend, Figure 13.  Turbidity levels upstream at Swan Hill appear to be relatively stable, Figure 13.  Turbidity has been measured at both sites since 1978.  Average yearly turbidity levels have not increased over this period.

Figure 13:  Turbidity levels at Morgan and Swan Hill, 1978-2002Data Source:  Murray-Darling Basin Commission, July 2003


Mean daily turbidity levels at Morgan exceeded 400 NTU in July 1983, Figure 14.  The relatively high turbidity levels during the second half of 1983 contributed to the high yearly average in 1983, Figure 14.  The high levels probably resulted from drought-breaking rains carrying higher than usual sediment loads because of increased erosion from reduced vegetation during the drought in the early 1980s.  During years of low mean turbidity, mean daily values for both Morgan and Swan Hill are typically in the 20-40 NTU range.

Figure 14:  Turbidity Levels at Morgan, 1983Data Source:  Murray-Darling Basin Commission, July 2003


The most detailed study of turbidity within the Murray-Darling Basin is an analysis of flow in the Murrumbidgee River at Wagga Wagga, NSW, from 1949 to 1990.  This study found that most sediment was discharged during years of high flow, with the flood years of 1950, 1952, 1956 and 1974 contributing approximately 35 per cent of the sediment load for the 41-year period. (53)  High concentrations were short-lived.  There was no trend of increasing concentrations over time.

Interestingly, the study also determined that approximately 14 years of daily data are required to produce a mean annual load for Wagga Wagga with an acceptable level of uncertainty.  Related studies determined that most of the sediment came from upstream tributaries (54) and most of this sediment is deposited immediately downstream of Wagga Wagga with less than 10 per cent reaching the Murray River 870km downstream. (55)

Despite an absence of supporting data, the contention that the sediment load of the Murray River (measured through turbidity) is increasing, continues to be promulgated. (56)

It is generally believed that algal blooms in inland rivers are due to elevated nutrient levels, particularly phosphorus.  While it was thought previously that the major sources of these nutrients were agricultural fertilizers, sewerage treatment plants and feedlots, the most recent and relevant report on the MDBC Website suggests that a large proportion of the phosphorus may come from natural sources, in particular basalt-derived soil. (57)

Whatever the origin of the phosphorus, a plot of yearly average phosphorus levels (Mg/l) for key sites in the middle and lower Basin show levels have fluctuated but with no increasing trend, since data were first collected in 1978, Figure 15.  The peak in 1984-85 may correspond with increased relative inflows from the Darling River system.

Figure 15:  Phosphorus Concentrations, 1978-2002Data Source:  Murray-Darling Basin Commission, July 2003


High nitrate levels can be an indication of excess runoff from agricultural fertilizers.  Nitrate levels also fluctuate, but with no increasing trend, at least since levels were first measured by the MDBC in 1977, Figure 16.

Figure 16:  Nitrate Concentrations, 1977-2001Data Source:  Murray-Darling Basin Commission, July 2003


3.9 RED GUMS

As vast numbers of 300-year old red gums die along the Murray floodplain due to extreme drought following a severely depleted river flow, we must ask how much longer can we survive as a nation without changing the way we use water.

The Wentworth Group, 2003

In 1994, the Council of Australian Governments (CoAG) consisting of the Prime Minister, Premiers, Chief Ministers and the President of the Australian Local Government Association agreed to the implementation of a water reform process with the objective of achieving a more efficient and sustainable water industry.  Underpinning the reform agenda was a commitment to minimize the "unsustainable use of our precious water resources." (58)  Many reforms have been implemented, including catchment-based plans (that include an environmental flow component) now underpinning water allocation across much of Australia.  Other aspects of the water reform framework are still being determined, notably water property rights and trading issues.

In the lead-up to the CoAG meeting in August 2003, the Wentworth Group released a paper titled Blueprint for a National Water Plan.  Funded by the World Wildlife Fund (WWF) and given legitimacy through the involvement of the CSIRO, the Wentworth Group has been accorded great respect and standing by the media, and apparently by government as well, on the basis that its members deal in science -- in facts.  Many of the purported facts in its documents, however, including the assertion (see the quotation above) that vast numbers of red gums are dying as a consequence of depleted river flow, are misleading.

During the recent drought, and citing significant media interest as the catalyst, the MDBC undertook a preliminary investigation into observed river red gum decline. (59)  The report clearly states that findings were based on visual assessment and that this method of assessment can be quite subjective.  Quantitative, physiologically-based tree health data were not collected because of "time limits imposed on this Project".

While the Wentworth Group cites this study exclusively as evidence for vast numbers of 300-year-old trees dying along the Murray River, the survey did not distinguish the number of trees visually assessed as stressed from the number of trees actually dying, and does not comment on the likely age of the trees.  The report stated that the problem is limited to the lower section of the Murray and, in particular, that while many of the trees on the riverbank remain healthy, the problem is the health and regeneration of floodplain trees with, "80 per cent of trees on the River Murray floodplain in South Australia stressed to some degree, with between 20-30 per cent of them severely stressed".

The report suggests that the symptoms exhibited by the trees are, "not surprising as this part of the catchment is in its sixth year of drier than average conditions" but then goes on to conclude that the "tree decline" is due to a combination of the Basin-wide drought, reduced flooding regimes and rising saline groundwater.  No studies or data are cited to support the contention that groundwater levels are rising.  Furthermore, the report is not consistent on the issue of rising groundwater, proposing that there is a need to replenish groundwater sources because levels are currently low as a consequence of the reduced flooding.

River red gums are not unique to the Murray, but occur naturally throughout Australia in all mainland States.  River red gums and black box trees tend to dominate the Murray River landscape because of their capacity to tolerate relatively high levels of water stress, flooding and salinity and also their capacity to be opportunistic and variously access surface and groundwater.

A recent study of black box on the Chowilla floodplain (eastern South Australia) had hypothesized that trees would become more reliant on groundwater following river regulation, but surprisingly the study concluded that river regulation has had little effect on tree water sources over time. (60)  The analysis constructed an historical record of soil water versus ground-water use from 1900 to 2000 based on stable isotopes from black box tree rings.

Relative to South Australian, river red gum populations along the New South Wales and Victorian sections of the Murray are considered healthy and continue to support commercial forestry operations.  A 1996 audit of river red gum forests in New South Wales and Victoria gives an indication of the potential size and economic importance of these forests, with 86,112 m3 of sawlogs, 51,000 m3 of railway sleepers and 31,000 tonnes of chipwood harvested annually.


Swan Hill 1896, view of Murray River from upstream of punt.  The absence of riparian vegetation is striking.  There are two schools of thought:  one attributing the absence of river red gums to the impact of logging;  a second claiming aboriginal burning impacted on river red gum regeneration and resulted in an open landscape.  Note there are no tree stumps in the photograph.


Swan Hill 1996, view of Murray River from bridge that now crosses the river at about the same spot as the punt once did.  There are now healthy river red gums on both banks of the river.


The Barmah-Millewa Forest (between Deniliquin and Echuca, Map 1) has been identified as a priority site for receiving additional environmental flow. (61)  A review of the history and management of this forest (62) gives an indication of the current health of this forest relative to earliest records.  In the early 1800s, the forest is thought to have been more open than it is today and composed of fewer, larger, older trees.  During the late 1800s, large quantities of timber were cut for building and operating river boats, gold mining and as sleepers for local and overseas railways.  The extent of the logging, including along the entire river frontage to a distance of approximately three kilometers from the River bank, resulted in concern that the forest would be entirely cut out.  A Conservator of Forests was appointed in 1888.  His focus was on protecting the forest from over-cutting, controlling over-grazing, introducing silviculture treatment and protecting the forest from fire.  Export duties were imposed to reduce timber removal.  During this period the average annual harvest of Victorian red gum is estimated to have been approximately 48,000m3.  The current extent of the Barmah forest (23,000 hectares) is thought to be a result of the extensive regeneration that also occurred at this time, in part a consequence of wet years during the 1870s coinciding with the decline of Aboriginal burning practices and preceding the introduction of sheep, cattle and rabbits.

Significant quantities of timber continued to be harvested from the Barmah forest during the 1900s.  There was an official assessment of the Barmah forestry resources in 1929-30 and then again in 1960-61.  The 1960-61 assessment indicated a considerable increase in growing stock and total sawlog volumes, notwithstanding that significant volumes had been harvested in the intervening period and despite the fact that river regulation since the construction of the Hume Dam in the 1930s had changed flow regimes. (63)

An assessment was again conducted in the late 1980s.  By this time, however, the focus had changed from assessing the forest for its timber resources to recognizing its value as a wildlife habitat.  The Barmah forest was listed as a Ramsar site (64) in 1982 making it a "Wetland of International Importance" because it is, "a particularly good representative of a natural or near-natural wetland" and "regularly supports more than 20,000 waterbirds."  According to the 2002 Barmah Forest Ramsar Site Draft Strategic Management Plan, (65) "Barmah is of special value for maintaining the genetic and ecological diversity of the region because of its size, variety of communities and its high productivity."

Over recent years, the Victorian Government has regulated down commercial forestry activities to the extent that commercial harvesting is now limited to 2,500 hectares with a limit of 370m3 of sawlogs per annum from the Barmah forest.

The impression given in the Wentworth Group's documents, and generally reported in the media -- that vast numbers of ancient red gums are dying along the entire length of the Murray River -- is not substantiated by the available evidence.


4. DISCUSSION

Rather than employ scientists whose aim it is to find out about the world because it interests them, government agencies now instead employ managers whose aim it is to tell us, often at the behest of environmentalists, how we can and can't enjoy our natural heritage.

Bob Carter 2003

It would appear that the more distant we are from an environment, the more likely we are to believe it is in crisis. (66)  Most Australians live in cities a long way from the Murray River.  We are dependent on media reports as a primary source of information.  Not only do "bad news" stories sell more papers, but "bad news" stories with a human touch -- villains in the form of irrigators who take water from red gums and fish -- sell even more papers.

The media are the gatekeepers, but ultimately they rely on scientists to give authority to their stories.  We rightly expect our scientists and research institutions to give us an honest appraisal of the situation.  After all, research is fundamentally about establishing the facts.  The available data do not suggest that indicators of river health show general decline.  Indeed, with the possible exception of native fish stocks, the river environment appears to be in a relatively healthy state.  Yet this is seldom the story presented by key research institutions which overwhelmingly promote the myth of an ecological disaster -- a crisis.

It is not generally understood that the many scientific reports that have led to the perception that the River is in poor health actually make their comparisons with a natural river, but a natural river with water.  The Murray River flows through a semi-arid landscape and there will inevitably be droughts.  Without dams and locks, the river's water level will fluctuate wildly -- gushing and then running dry, potentially leaving stagnant billabongs in its wake.  When the explorer Charles Sturt discovered the Darling River in the dry season of 1829 he found the water too salty to drink.  A year later, again at the Darling, he found that "The waters, though sweet, were turbid and had a taste of vegetable decay as well as a slight tinge of green".  These observations, which pre-date European agriculture in Australia, indicate that the catchment can be naturally highly saline and turbid with high levels of blue-green algae.

As a consequence of the engineering works, in particular the Snowy Mountains Hydroelectric scheme, the Murray-Darling system now has a storage capacity of approximately 36,645gigalitres.  When this is combined with an average annual flow of approximately 24,000 gigalitres, the system has a potential total annual capacity of approximately 60,465 gigalitres.  Although diversions have increased over the last 50 years to 11,041 gigalitres, because storage capacity has increased at a much greater rate, the actual percentage of water used by irrigators relative to the system's total potential capacity has only increased marginally from 13 per cent in 1950 to 18 per cent in 2002.  Permanent water in the dams has benefited not only agriculture but increased the carrying capacity of large areas for native wildlife.

While the impression we have been given is that up to 80 per cent of the Murray River's average annual flow is diverted for irrigation, this is a misleading representation of the MDBC's hydrological modelling.  The reality is that diversions for irrigation average 34 per cent of total Murray River inflows, while approximately 41 per cent of inflows flow to the sea in an average year.  Most key reports published by the MDBC do not present the information in a form where the total water budget can be understood in this way.  Instead, there is an emphasis on diversions and on comparing actual flows with natural flows estimated from computer modelling studies.

If the ultimate objective is a natural river, then we must reject the cultural heritage and economic wealth created by the engineering works, including the Snowy Mountains Hydroelectric Scheme.  If we want a truly natural system then the problems of saline water and algal blooms, particularly during droughts -- phenomena endemic to the Murray -- should be accepted as natural rather than decried as unhealthy.  "Healthy" and "natural" may be mutually exclusive in the context of a semi-arid environment.  The current approach, where a decline in all indicators of river health is assumed, and more water is promoted as the solution, is not supported by the available evidence.

The MDBC information paper on fish (67) that was developed in response to the landholder's survey which suggested that native fish stock were improving, began by acknowledging the "gulf between scientific advice on native fish populations in the River Murray System, and the beliefs of many people that live and fish along the river".  The difference is about two different world views.  The position of the scientists, while purporting to be based on an evaluation of the data, perhaps really just reflects their strong conservation ethic and belief in "the Litany":  that resources are running out, that air and water are becoming more polluted -- even in situations when there is tangible evidence of improvement. (68)  In contrast, those who live and fish along the river have a less pessimistic philosophy.  The locals believe that the end of commercial fishing, a substantial restocking effort, significant improvements in on-farm practice and the construction of the many salt-interception schemes must have done some good for the environment.

River salinity levels were particularly high during the drought of the early 1980s.  But thanks to the major salt-interception schemes built over the last 20 years, the salinity level at Morgan -- a key site just upstream from the offshoot pipes for Adelaide -- has actually halved.  That salinity levels continued to improve during the recent drought surprised many people and contradicted information on the CSIRO Website.  The CSIRO has still not made public acknowledgement that salinity levels are falling.  Instead, they continue to promote the impression that groundwater and salinity levels are rising.  The reality is that irrigators along the Murray River have met the challenge of rising groundwater and are effectively managing the situation to the extent that levels have dropped over almost 90 per cent of high-risk irrigated land since 1995.  Importantly, CSIRO fails to recognize our ability to intervene with engineering solutions when required.

That salinity levels are generally improving, groundwater levels falling and nitrogen, phosphorus and turbidity levels stabilizing should not be surprising given the billions of private and public dollars spent on land care initiatives over the past two decades.  These facts are good news, and should be more widely acknowledged.

Aquatic macroinvertebrates (bugs) are sensitive to pollutants and as such are a good measure of river health.  The MDBC used macroinvertebrates as the surrogate for all biota in its recent assessment of Murray River health.  However, instead of comparing macroinvertebrate levels now with what they have been over recent decades, comparisons were made with hypothetical pristine environments.  In the context of the Murray River -- a system that has been extensively modified with dams and locks -- this choice of comparison could be construed as ensuring the river fails this important test of well-being.

The extent of the subjectivity potentially associated with modelling pre-European conditions based on limited data is illustrated by the revised findings for the lower Balonne -- from severely impaired to near-pristine.  That the revision only followed an outcry from local irrigators is significant and illustrative of the potential problem when conclusions are based on very limited data collection coupled with computer modelling.  The MDBC's 2001 booklet Snapshot of the Murray-Darling Basin River Condition, in which the false picture was included, however, has never been revised nor have the efforts of the local community in pointing out the scientific errors been acknowledged.  Instead, the document containing the incorrect information continues to be cited as an indication of the declining health of the Murray-Darling Basin system.

The status of native fish populations is potentially an important indictor of river health.  With respect to the Murray River, expert opinion estimates that native fish numbers are currently at 10 per cent of pre-European levels.  Given the closure of the commercial fisheries over the last decade and a significant restocking effort, as the locals suggest, it might be expected that native fish numbers would now be on the increase.  Given the importance of the issue from both an environmental and economic perspective, the general paucity of statistics is remarkable and limits any detailed assessment of the current situation.  It is evident, however, that government scientists have sought to establish and maintain the perception of declining native fish stock.

From an analysis of the commercial catch data, in conjunction with an analysis of the number and species of fish ascending the fishway at Torrumbarry weir over the last 11 years, I have made the following observations:

  • In the early 1960s, there appeared to be a dramatic collapse in the Murray cod fishery;
  • Over the last 40 years, Murray cod numbers have been relatively stable but low;
  • Understanding what caused the apparent collapse in population numbers in the 1960s may be critical to developing effective policies to build current populations;
  • Numbers of the endangered native silver perch may be on the increase and were recorded ascending the Torrumbarry fishway at similar numbers to European carp -- an introduced pest species.

There are stressed River Red Gums and their plight was documented following a survey by the Murray-Darling Basin Commission in March 2003.  This survey has been quoted as evidence for the claim that vast numbers of 300-year-old trees are dying along the entire Murray River.  However, the survey did not distinguish the number of trees visually assessed as stressed from the number of trees actually dying and does not comment on the likely age of the trees.  The problem was acknowledged as being limited to South Australia and due as much to the extended drought as river regulation.

In November 2003, State and Federal Agricultural and Environment Ministers agreed to return up to 500 gigalitres of water to the Murray River with a particular focus on six "icon" sites.  While less than the 1,500 gigalitres recommended in the MDBC report, the quantity is nevertheless significant.  The water will have to be bought back from irrigators and can be expected to cost Australian taxpayers in excess of $600 million.  Rural communities expect reduced agricultural output as water is sold and some agricultural land retired.

The plan has been widely reported as the first time water has been given back to the Murray River.  Again a myth is being promulgated.  For example, the Barmah forest is one of the six icons and this forest has enjoyed an environmental flow allocation of 100 gigalitres per year since 1993.  Allocations for the Barmah forest are typically carried over from year to year and then used to supplement floods.  For example, 300 gigalitres was used in the year 2000 to prolong major bird and fish breeding stimulated by natural flooding.

An additional 80 gigalitres is now being proposed for the Barmah forest.  This would bring its allocation with the 100 gigalitres already allocated, and a potential 25 gigalitres from Victoria's Flora and Fauna Bulk Entitlement for Northern Victoria, to 205 gigalitres.  This, in effect, represents an investment by the Australian taxpayer of approximately $246 million for the watering of this forest at current prices for irrigation water.

The 2002 management plan for the Barmah forest clearly states that it is a wetland area of exceptional diversity and high productivity in terms of fish, birds and red gums.  Clearly, since 1993, we have supported this diversity by making a water allocation to this forest of 100 gigalitres per year.  Yet the media headlines, reflecting information in media releases and reports from high-profile scientists, suggest that most red gums along the Murray River are dying and that we are not currently allocating water as environmental flow.

The Australian Conservation Foundation (ACF) has indicated that it is not interested in "engineering solutions" or the allocation of water for "two or three museum pieces" with reference to the Barmah Forest and other "icon sites". (69)  The ACF and others have suggested that real floods, but "smaller than those that had caused major damage" (70) are needed to "save the environment" and continue to campaign for the release of 1,500 gigalitres of water "for the river".  It has been suggested that the process of returning the river to a natural state begin with the dismantling of the Torrumbary and Euston weirs. (71)

The extent to which conservationists and government scientists have embraced a romantic reconstruction of nature that has little connection with reality, is evident in the MDBC report on the survey of the River Red Gums.  The Summary begins, "The shaping of the landscape by Indigenous people was mostly harmonious, and in comparison, the dramatic changes brought about by river regulation and European land use practices is relatively new in this timescale.  Therefore, it is probable that we are only now beginning to see the widespread impacts of regulation and floodplain ecosystem response."  The reality is that much of the current extent of, for example, the Barmah forest, is thought to be a consequence of floods in the 1870s that occurred after the decline of Aboriginal burning that severely impacted on red gum regeneration.  It is well documented that the Aboriginal presence, far from having a benign impact on the landscape, resulted in the extinction of many animal species (72) and maintained the Australian flora, particularly in semi-arid regions, in a fire-mediated sub-climax. (73)

In many regions, in the absence of fire, there has been a general and rapid thickening of woodlands resulting in more trees now than there were before European settlement.  In other regions which were extensively cleared, including the Mallee region, problems associated with rising water tables should have already manifested themselves.  Rising groundwater was clearly a problem in the 1970s.  However, since the 1980s, surface and subsurface drainage schemes and other land management techniques have brought the problem under control.  Yet, MDBC reports continue to rehash old issues and invoke misleading notions of the landscape pre-European settlement.  This suggests a lack of discipline and knowledge from the scientists involved.


5. IN CONCLUSION

As a nation we are unclear how we really want the Murray River to be managed.  We have not really thought through the implications of "natural" as opposed to "healthy" in the context of an old river that runs through a semi-arid environment.  In such an environment, during the inevitable frequent droughts, "natural" logically equals dead fish and stressed red gums as surface water recedes and groundwater levels drop.

Our scientists are currently compiling environmental indicators of river health all-the-while making their comparisons with hypothetical pristine environments where "pristine" falsely equals "well watered".  If, instead, we set our management goal as improving trends based on current conditions (that is, a healthy working river), then the issue of trying to estimate the natural or pristine environment becomes redundant. (74)

The current environment is so modified as a consequence of the engineering works constructed to "drought proof" the region that there is a need for honest discussion of these issues.  After such a discussion we may be in a position to consider the real costs and benefits of watering river red gums as opposed to food crops -- including when, how and who should pay.

Assuming that the agreed objective is a healthy river environment rather than a natural environment, there will be a need to separate the myths from the reality and to start making relevant comparisons.  There will be a need to apply the scientific method in a disciplined way, including through the direct measurement of useful indicators so that relevant environmental statistics can be compiled.

If, on the other hand, the agreed objective is a natural system, then prepare to begin dismantling the Snowy Mountains Scheme at the River's source and the barrages at the Murray's mouth -- but beware:  the economic impact will be significant.


ENDNOTES

1.  CSIRO Australia, The Helix magazine, February-March 2003.

2.  See http://www.acfonline.org.au/asp/pages/print.asp?IdDoc=1500 (8 November 2003)

3.  MDBC, "Ecological Assessment of Environmental Flow Reference Points for the River Murray System", Interim report prepared by the Scientific Reference Panel for the Living Murray Initiative, August 2003;  See http://www.acfonline.org.au/asp/pages/print.asp?IdDoc=1500 (8 November 2003);  CSIRO Australia, The Helix magazine, February-March 2003.

4.  The Wentworth Group of Concerned Scientists, "Blueprint for a National Waterplan", July 2003.

5.  Whalquist, A., "National challenge needs steely courage", The Australian, 31 July 2003;  "Drying Out", The Economist, 12 July 2003;  "Rann calls for Murray crisis meeting", ABC Online, 13 August 2003;  Robinson, R., "No quick solution to an overdose of salt", The Australian Financial Review, 14 August 2003.

6.  "Water -- are we being sold down the river?", Petition to the Ministerial Council from the Murray Valley Community Action Group, August 2003.

7.  In the early 1990s there was recognition that the Barmah forest needed more water.  Irrigators in NSW and Victoria made a voluntary contribution of 100 gigalitres per year from their then allocations for this forest.  NSW Murray Water Sharing Plan, NSW Department of Land and Water Conservation December 2002;  Brett Tucker, Murray Irrigation Ltd, personal communications, November 2003.

8.  See http://www.atse.org.au/publications/focus/focuspowell.htm

9.  See http://www.abs.gov.au

10.  Lomborg, B. The Skeptical Environmentalist, Measuring the Real State of the World, Cambridge University Press, Cambridge, 2001.

11.  MDBC, An Audit of Water Use in the Murray-Darling Basin, June 1995.

12.  Annual inflow was calculated during the 2000 National Land and Water Audit, Andy Close, Manager Water Resources Group, MDBC, personal communications, November 2003

13.  See, also, Andrew Brown, "Water Trading in the Murray Darling Basin", The 2003 NSW Local Government Water Management Conference.  Taree/Foster August 2003, http://www.lgov.org.au/docs/policy/water/2003%20wmconf/abrownMDBC.pdf

14.  Reference has been made to storage capacity being 25 per cent of runoff (see http://www.lgov.org.au/docs/policy/water/2003%20wmconf/abrownMDBC.pdf ).  However, this figure does not include total capacity, i.e., on-farm storages associated with surface water diversion licences.

15.  MDBC, Water Audit Monitoring Report 2000/01, September 2002.

16.  Benson, L., A. Markham, R. Smith, "The Science behind the Living Murray Initiative", Murray Irrigation Limited, Deniliquin NSW, October 2003.  See http://www.murrayirrigation.com.au/download/3176826.pdf

17.  MDBC, An Audit of Water Use in the Murray-Darling System, June 1995.

18.  MDBC, Review of the Operation of the Cap, August 2000.

19.  New South Wales Water Resources Council, "Water Facts", June 1991.

20.  See http://www.dlwc.nsw.gov.au/care/salinity/references/execsumm/lachlan.html

21.  MDBC, Murray-Darling Basin Environmental Resources Study, 1987.

22.  Hodge, A., "States cut Murray lifeline", The Australian, 31 March 2001;  MDBC, The Living Murray Information Facts Sheet, No. 11, (see http://www.thelivingmurray.mdbc.gov.au/content/index.phtml/itemId/15579/fromItemId/2747)

23.  "The Impacts of water regulation and storage on the basin's rivers", Education Centre, MDBC Website.  See http://www.mdbc.gov.au/education/encyclopedia/water_regulation/water_regulation_impact.htm (26th November 2003)

24.  MDBC, Salinity and Drainage Strategy -- Ten Years On, 1999.

25.  Pradeep Sharma, Senior Modelling Engineer, MDBC, personal communications, July 2003.

26.  MDBC, "Ecological Assessment of Environmental Flow Reference Points for the River Murray System", Interim Report, August 2003.

27.  See http://www.onlineopinion.com.au/view.asp?article=632 and http://www.ipa.org.au/Speechesandsubmssns/jmwaterforum2.html

28.  Charters, C., M. Stauffacher, G. Walker, T. Hatton, "Is the River Murray Water Quality Deteriorating?  A Salinity Perspective".  (see http://www.clw.csiro.au/priorities/salinity/rivermurray/index.html)

29.  Smitt, C. Jolly, I, Dowling, T, Walker, G., "Assessment of Historical Data for the Murray-Darling Basin Ministerial Council's End-of-Valley Target Stations", CSIRO Land and Water, Technical Report 40/02, October 2002.

30.  Cook, PG F.W. Leaney and I.D. Jolly., "Groundwater Recharge in the Mallee Region, and salinity implications for the Murray River -- A Review", CSIRO Land and Water, Technical Report 45/01, November 2001.

31.  MDBC, Basin Salinity Management Strategy 2001-2015, 2001.  In particular, see Table 1, Lock 6 to Morgan.

32.  MDBC, Salinity and Drainage Strategy:  Ten years on, 1999, 1999.  In particular, see Table 4 and sum the first four regions listed for New South Wales (Berriquin, Denimein, Cadell and Wakool).

33.  Norris, R.H., P. Liston, N. Davies, J. Coysh, F. Dyer, S. Linke, I. Posser, B. Young, Snapshot of the Murray-Darling Basin River Condition, MDBC, 2001.

34.  Bennison, G. Suter, P., "Macroinvertebrates In The Murray", (Editors Mackay, N., D. Eastburn), MDBC.  1990.

35.  Benson, L., A. Markham, R. Smith, "The Science behind the Living Murray Initiative", Murray Irrigation Limited, Deniliquin NSW, October 2003.  See http://www.murrayirrigation.com.au/download/3176826.pdf page 25 for a discussion of the issues.

36.  Australian Water Technologies, Water Quality Review -- Stage 2.  Data Analysis, Report to the Murray-Darling Basin Commission, Report Number 50.

37.  Address to a meeting at Moree, NSW on 6th August 2003, by the Deputy Prime Minister & Leader of the National Party, The Hon John Anderson.

38.  See http://www.mdbc.gov.au/publications/factsheets/factsheet_nfs.html (Cited 4 November 2003).

39Draft Native Fish Strategy for the Murray-Darling Basin 2002-2012, Murray-Darling Basin Ministerial Council, June 2002.

40.  MDBC, "Native fish in the River Murray:  Status and Trend", Information Paper, (no date).

41.  Jim Barrett, Manager, Native Fish, MDBC, personal communications, 14 August 2003.

42Ibid.

43.  John Lolicato, Chairman, Wacool Landholders Association, personal communications, August 2003.

44Fish and Rivers in Stress:  The NSW Rivers Survey, J.H. Harris and P.C. Gehrke (eds).  Cooperative Research Centre for Freshwater Ecology, Canberra, 1997.  See http://enterprise.canberra.edu.au/WWW/RiverSurvey.nsf

45.  "Good Cod!  Anglers refute threatened species claim", Deniliquin Pastoral Times, 4 July 2003.

46.  M. Auldist, "Riverina Revival" in Freshwater Fishing Australia, Issue 63, Winter 2003, page 32.

47.  Reid, DD, JH Harris, DJ Chapman, NSW Inland Commercial Fishery Data Analysis, FRDC Project No. 94/027.  December 1997.

48Ibid.

49.  Andrewarta, H.G & L.C. Birch, The distribution and abundance of animals, University of Chicago Press, Chicago.  1954.

50Draft Native Fish Strategy for the Murray-Darling Basin 2002-2012, see www.mdbc.gov.au

51.  MDBC, "Native fish in the River Murray:  status and trend", Information Paper No. 4, (no date).

52.  MDBC, Rivers as Ecological Systems:  The Murray Darling Basin, 2001.  See page 48.

53.  Olive, L.J., J.M. Olley, A.S. Murray & P.J. Wallbrink, "Variations in sediment transport at a variety of temporal scales in the Murrumbidgee River, NSW, Australia.  Effects of Scale on Interpretation and Management of Sediment and Water Quality", Proceedings of a Boulder Symposium, July 1995, IAHS Publication No. 226.

54.  Olive, L.J., J.M. Olley, A.S. Murray & P.J. Wallbrink, "Spatial variation in suspended sediment transport in the Murrumbidgee River, NSW, Australia.  Variability in Stream Erosion and Sediment Transport", Proceedings of the Canberra Symposium, December 1994.  IAHS Publication No. 224.

55.  Olive, J.J., J.M. Olley, P.J. Wallbrink & A.S. Murray, "Downstream Patterns of sediment transport during floods in the Murrumbidgee River, NSW, Australia", Z. Geomorph. N.F. Suppl.-Bd, 105, 1996, pages 129-140.  Berlin.

56.  MDBC, "Ecological Assessment of Environmental Flow Reference Points for the River Murray System", Interim Report, August 2003, see in particular page 13.

57.  R.L. Oliver, B.T. Hart, J. Olley, M. Grace, C. Rees and G. Caitcheon, The Darling River:  Algal Growth and the Cycling and Sources of Nutrients, MDBC Project M386, 1999.

58.  See http://www.deh.gov.au/water/policy/coag.html

59.  MDBC, Preliminary Investigations into Observed Decline along the River Murray below Euston, Technical Report 03/03., March 2003.

60.  Akeroyd, M.D., G.R. Walker and M.B. Kendall, "Historical water use of Eucalyptus largiflorens in response to river regulation and salinity", Proceedings of the International River Symposium, Brisbane 2002.

61.  McKenzie, D., "Murray Boost Surprise", The Weekly Times, 12 November 2003.

62.  Dexter, B., "Notes on management of the Barmah River Red Gum forest:  past-present-future", Unpublished report, July 2002;  Fahey, C., "Barmah Forest -- A history", Department of Conservation, Forests and Land, Victoria, 1986;  Department of Sustainability and Environment, "Forest Management Plan for the Mid-Murray Forest Management Area", Revised May 2002.  (http://www.dse.vic.gov.au/web/root/domino/cm_da/nrecfor.nsf/TOC/3251B7AD854ADBC1CA256BB9001BF1C2)

63.  Department of Sustainability and Environment, "Forest Management Plan for the Mid-Murray Forest Management Area", Revised May 2002.

64.  Ramsar is the name of the town in Iran where the International Convention on Wetlands was signed in 1971.  The convention is an intergovernmental agreement for the conservation of important wetland areas.  Wetlands listed under the agreement are referred to as Ramsar sites.  See http://www.ramsar.org.

65.  Parks Victoria, Barmah Forest Ramsar Site -- Draft Strategic Management Plan, October 2002.

66.  Lomborg, B., The Skeptical Environmentalist:  Measuring the Real State of the World, Cambridge University Press, Cambridge, 2001.

67.  MDBC, "Native fish in the River Murray:  Status and Trend", Information Paper Number 4, (no date).

68.  In The Skeptical Environmentalist:  Measuring the Real State of the World (Cambridge University Press, 2001) Bjorn Lomborg explains how people lament the poor state of the environment, including that resources are running out, air and water are becoming more polluted, including in countries and situations when there is tangible evidence of improvement.  This is referred to as subscribing to the litany of environmental woes.

69.  Hunt, P., "Call to save five Murray sites", The Weekly Times, October 29 2003.

70.  Dalton, S., "Bring on the royal flush", The Weekly Times, October 29 2003.

71.  Hodge, A., "Dam-buster goes with the natural flow", The Weekend Australian, 21 February 2001.

72.  Lyons, K., F.A. Smith, J.H. Brown., "Of mice, mastodons, and men -- human caused extinctions on four continents", 2002 Denver Annual Meeting, The Geological Society of America (http://gsa.confex.com/gsa/2002AM/finalprogram/abstract_45023.htm);  for a discussion of associated issues see:  http://www.usyd.edu.au/ publications/news/ 010727News/2707_bones.html

73.  Burrows, B., "Tree clearing -- rehabilitation or development on grazing land?" IV International Rangelands Conference, 1999, Townsville, Australia;  Neldner V.J., Fensham, R.J. Clarkson, J.R. and J.P Stanton, "The natural grasslands of Cape York Peninsula, Australia.  Development, distribution and conservation status", Biological Conservation, 1997, 81, pages 121-136.

74.  Benson, L., A. Markham, R. Smith, "The science behind the Living Murray Initiative", Murray Irrigation Limited, Deniliquin NSW, October 2003.


Caspian Tern with chick.  In the year 2000, 300 gigalitres of water was used to prolong major bird and fish breeding stimulated by natural flooding in the Barmah Forest (near Echuca).  This forest was listed as a Ramsar site in 1982 because it is a particularly good representative of a natural or near-natural wetland and regularly supports more than 20,000 waterbirds.


ACKNOWLEDGEMENTS

When I looked at key indicators of the Murray River's health, I thought it would be a fairly straightforward task of reading and analyzing relevant government reports and scientific papers.  Instead, I found that the most relevant data were unpublished and not easily available.  I am indebted to the individuals who helped me track down this information -- in particular, local fishermen, and officers at the Murray-Darling Basin Commission and Murray Irrigation Limited.  I would like to acknowledge the work of Terry Holt, Reservoir Controller, Torrumbarry Weir, for collecting detailed information on fish (apparently the only current time-series data available for the river) and for making this information generally available.


PHOTO CREDITS

Front cover:  Murray River water running into Gulpa Creek, near Barmah, just downstream of the Edward River anabranch.  Photo taken by Catherine Norwood, Murray Irrigation Ltd.

Map 1:  Adapted from an image courtesy of the Murray-Darling Basin Commission.

Photo of Dry River Bed:  Courtesy of Daryl McDonald, farmer and fisherman from Murrabit, near Kerang.

Map 2:  Adapted from an image courtesy of the Murray-Darling Basin Commission.

Photos at Swan Hill 1896 and 1996:  Courtesy of Roy Threadgold, Swan Hill.

The photo of the Caspian Tern and chick was taken by Peter Merritt.