The Federal Government’s plan to use buybacks to secure more water for the Murray-Darling Basin is likely to cost billions of dollars and push up the cost of water for irrigators.
The National Farmers’ Federation claims the government had inadvertently revealed that water buybacks will make up at least a third of water recovery under the revised Murray-Darling Basin Plan, at a starting price exceeding $3 billion.
NFF Water Committee chair Malcolm Holm said that in signalling a change to the legislative cap on buybacks, Federal Water Minister Tanya Plibersek had shown her hand.
“The minister has said last week the current 1500 Gl cap on buybacks will be lifted,” Mr Holm said.
“Currently, they still have around 225 Gl of headroom under the cap, and a gap of 750 Gl to complete the plan. So by lifting the cap, the minister is saying buybacks will exceed one-third of the remaining recovery.
“To launch headlong into buybacks of that scale would be devastating.
“Those caps and protections were put in place for a reason — based on the maximum volume of buybacks communities could withstand.”
Mr Holm said the government’s admission that responses to a recent basin plan consultation had not yet been considered had left communities furious.
“The fact that buybacks are the focus when the minister has over 1000 Gl of buyback-free options sitting unread on her desk is a complete disgrace.
“The minister is signing the death warrant for these towns and hasn’t even reviewed the alternatives.”
The NFF has written to Ms Plibersek posing 13 initial questions that Mr Holm said now needed answering in the wake of the government’s initial basin plan announcement.
“There are a lot of gaps in information at the moment,” he said.
Australian Water Brokers Association president Andrew Martin said buybacks were likely to push up prices if the Commonwealth enters the market.
He said the water market responds to supply and demand signals, so the entrant of a buyer taking water out of the pool would increase prices.
Mr Martin also warned that the cost of farm produce would have to increase as the cost of water increases. The alternative would be less irrigated areas.
He said the dialogue around the proposed buybacks had been about the health of rivers, but he had concerns about the financial and mental health of farmers as well as the health of communities
The buybacks were going to be targeted at recovering the 450 Gl, but Mr Martin said the 450 Gl was originally an optional part of the plan, with the socio-economic test as a qualification.
“Completing the plan is the mantra but the plan didn’t actually require the extra 450 Gl unless it could be achieved without social and economic effect.”