This is stunning news. Irrigators in the Murray-Darling Basin may be denied water allocations for the first time throwing into doubt up to $10 billion worth of agricultural production. This will push up food prices and reduce Australia’s GDP growth below 3%. According to PM Howard only town and urban water supplies in the MBD will be guaranteed this year unless drought-breaking rains occur in the next 6-8 weeks along the river system. The Bureau of Meteorology is forecasting only a 50% chance of above average rainfall over the coming winter.
The Federal Government is now spending $17 million per week assisting 17,500 farmers – an 80% increase over last years. It has also committed to a $10 billion national water reform package of which nearly $7 billion is devoted to an inept attempt to provide a technological solution to the underlying problem of excessive water allocations. The main advantage of the plan will be to give the Commonwealth the power to address water resource issues as a national problem.
Politically the fear is than, in an election year, the incumbent government will attempt to address concerns with more handouts that fail to address underlying problems. Likewise, the attempt by Julia Gillard and Anthony Albanese to link the current drought with global warming is opportunism that does not address real issues of concern.
Water allocations in the Murray-Darling Basin must be decisively reduced and agricultural activities such as dairying, viticulture and orcharding, that require smoothed delivery of water in an environment where drought is intrinsic, should not be dealt with as special cases that call for exemptions from general restrictions. Raising dairy cattle in semi-arid regions where there is total dependence on erratic irrigated water supplies is nonsense.
Tough love is needed. If assistance is to be given to farmers it must direct them to adjust permanently to environmental and economic realities – not just to provide incentives to hang on and perpetuate what everyone in the community (including the farmers themselves) know is an underlying problem.
Rising food prices will hurt consumers short-term but will offer advantages to efficient producers who are not reliant on overstretched irrigation supplies. They will help resolve chronic issues of excess capacity in areas such as viticulture. They also provide the right types of incentives for farmers to think intelligently about their agricultural product mixes and their incentives to invest in improved irrigation efficiencies.
The drought is a disaster for households depending on incomes maintained by overallocated water supplies. This disaster can and should be addressed with government aid but aid that offer long-term solutions to long-term water supply issues not temporary solutions that reflect a short-term need to vote buy.