The Productivity Commission says much could be done to improve the Federal Government’s $3.1 billion Murray-Darling water buyback program.

The Government is using a three-prong attack to deal with water shortages in the Murray-Darling Basin.

It has set aside $3.1 billion for water buybacks, $5.8 billion in water saving infrastructure upgrades and it has asked the Murray-Darling Basin Authority to design a basin management plan to set sustainable limits.

But that plan is not due until mid-next year and now the commission has questioned why the Government went ahead with the program before completing the plan.

That blueprint will spell out how all water should be allocated for consumption, production and environmental use, and the commission has been heavily critical of the Government’s multi-billion dollar water-saving infrastructure upgrades.

The commission’s Dr Neal Byron says the Government is buying back water now, without yet having a basin management plan in place.

“We have no problems really with the three different parts of the planning,” he said.

“But we think much better outcomes could have been achieved, probably for less money too, if they’d done the planning first and then worked out, knowing how much water you need to recover in each district, then have the buy-back that was actually targeted and calibrated to achieve that amount of water.

“And the infrastructure upgrades – some money could be spent on that, but we couldn’t understand why twice as much money was going into infrastructure upgrades as was going into buybacks.”

Flawed buyback program

In short, the commission says insufficient thought has been given to the design of the buyback and infrastructure programs.

It says further buybacks should be delayed until a basin plan is in place and the Government ought to consider clawing back the billions it has set aside for infrastructure.

The commission says its more cost-effective to buy water back instead of repairing and upgrading infrastructure.

Dr Byron says the $5.8 billion spend on water-saving infrastructure could be a waste of taxpayers’ money.

“They’ve allocated that much and that goes back to three years ago I guess, the previous government, but not much of that has been spent yet,” he said.

“That’s because a lot of the infrastructure upgrades haven’t yet passed through the basic tests of whether they’re actually worth doing.

“Some of the proposals that have come in were just so expensive that there was no way that anybody could justify spending that much money to save so little water in building large amounts of new infrastructure.

“So although there’s money notionally set aside for that, we’re suggesting that as much as possible that could be reallocated in order to get more environmental water at lower cost.”

States hampering buybacks

The Productivity Commission found that state restrictions on water trading are hampering buybacks and distorting markets, and should be abolished as soon as possible.

South Australian Senator Nick Xenophon had insisted the Government order the report as a trade-off for support of the Government’s $42 billion stimulus package.

Now Senator Xenophon says the commission’s report is more evidence that there should be a full federal takeover of the Murray-Darling Basin.

“You can’t get a good result for the river system and for the communities that rely on the river unless there’s a full federal takeover of the river system,” he said.

“Right now the states are standing in the way of sensible solutions because of parochial interests.”

On Tuesday the Coalition’s spokesman on water, Barnaby Joyce, ridiculed Productivity Commission reports, saying he used them when he had run out of toilet paper.

He says he has not read this report yet and will not comment until he has.

Water Minister Penny Wong has issued a statement saying it is likely the Government will not accept all the commission’s findings.

Water buybacks have been embraced by the current and previous Federal Government as a cost-effective way of forcing irrigators into using lower amounts of water, while at the same time giving more of the precious resource back to the environment.

It has become a red-button issue in regional areas as wetlands have been cut off and irrigators have struggled with the prolonged drought.