Victoria’s Water minister Lisa Neville has told an Echuca farmers’ forum a new, independent study of the socio-economic effects of the Murray-Darling Basin plan made for “very sobering reading.”
Ms Neville told the Victorian Farmers Federation (VFF) forum the government’s own modelling backed that of the Goulburn Murray Irrigation District (GMID) Leadership Forum.
The forum’s study found the plan was costing Victoria at least $550 million per year.
Ms Neville said the government’s study supported its approach to invest in water efficient infrastructure and measures that balanced the competing needs of local communities, agriculture and the environment.
“It’s saying, as we get more dry periods, it’ll get tougher, and if you take out more productive water, it will get really tough,” Ms Neville told the forum, which attracted around 100 people.
“We are at that tipping point and that is why this report is so critical.”
Farmers had survived so far by using the market and modernising, “but we are at a critical point now.”
She again ruled out buybacks, of productive water.
“We need to get the 650GL and we don’t want any buybacks to get there,” Ms Neville said.
“We cannot continue to take productive water out of the system and expect our communities to survive and thrive.
“We need a Basin Plan that actually works, a plan which delivers against the legislation, which is a triple bottom line.”
While it was not catastrophic, it was at a “critical point” and informed decisions needed to be made.
“One the things we will be seeking is for the Murray Darling Basin Authority (MDBA) with proper governance, to extend its socio economic work to be a comprehensive review, like we have done.
“We want it to look at not just individual property owners but also community impacts of the plan, to use the census data which comes out shortly.”
Ms Neville said the report pointed out the impact of the Basin Plan was greater than predicted.
“The climate change overlay is part of that, there is no question about that, we have a 24 per cent reduction in rainfall since 1997,” Ms Neville said.
“You are taking water out, through the Murray Darling Basin Plan, but you are also seeing declines in your storage levels, which weren’t really factored in when doing the plan.
“And that will get worse, there is no question about that – all the predictions say that will get worse, over the next 30 years.”
Ms Neville said water availability was made worse through the buy-backs, and the way they were done.
“There was a 75pc increase in farmers selling high reliability water shares, and some used it as a mechanism to pay back debt, people thought they could come back into the market, when they needed to.
“But, in the end, if you have less water in the market than was predicted, its going to cost you much more, and be harder to buy back.
“I think some of those predictions were incorrect, at the time.”
Ms Neville said irrigators who sold water in the buy-backs were increasingly reliant on purchasing water on the allocation market.
“In 2007-08, we had ranging from 0-12pc of people relying on the allocation market, we are now at 52pc,” she said.
The dairy industry, which sold more entitlements to the Commonwealth than any other industry, was now more exposed to higher water prices and heavily reliant on the allocation market.
She said the socio-economic study had shown without the Basin Plan milk production would be 30pc higher, with 78pc of farmers unable to pay more than $200/ megalitres for water.
“Dairy is now more exposed and very heavily reliant on the allocation market,” Ms Neville said.
As more water was taken out of production, horticulture was also being affected.
The horticulture sector owned more than 40 per cent of high reliability water shares and would also be more vulnerable if there was more demand on the water system.
The Victorian and NSW governments have appointed an independent expert panel to review the offsets mechanism in the Plan.
The review would inform both governments on how to deliver real environmental outcomes, without short-changing Basin communities.
The socio-economic study and outcomes from the expert panel process would inform discussions at the next Ministerial Council meeting to be held later this month.
