'Huge cost' in returning water to Murray-Darling river system
* Lauren Wilson and Mark Schliebs * From: The Australian * October 08, 2010 12:00AM
RETURNING water to the Murray-Darling river system may cost many billions of dollars more than predicted.
The social cost, meanwhile, will be felt in the tens of thousands of jobs to be lost in rural communities.
For the first time in four years, water is flowing along the 2400km course of the Murray.
Fed by rains and floods that have fallen across the entire Murray-Darling Basin, a muddy swell now stretches along the dunes of the Coorong, in South Australia, and spills out through the river's mouth, colouring the waters of the Southern Ocean a murky brown.
A guide to the Murray-Darling Basin Plan, to be released today, is expected to recommend cutting the water allocation of irrigators by between 27 and 37 per cent, taking 3000-4000 gigalitres of water from farmers and returning it to the river to ensure its survival.
The NSW Irrigators Council predicts that, on those numbers, about 23,000 jobs would be lost in NSW alone. The warning rings in the ears of Griffith citrus grower Laurence Salvestro, who believes any cut to irrigators' water allocation would put another nail in the coffin of the Riverina region of southern NSW. "When you start taking away 37 per cent of the water you use, it's like cutting 37 per cent of your legs off," he said. "There's nothing here except agriculture. Every business here is related to agriculture in one way or another."
Julia Gillard chose yesterday not to rule out a multi-billion-dollar cost blowout in her bid to revitalise the Murray-Darling Basin, as economic modelling predicted planned cuts to water allocations would well exceed the money set aside to buy back water from farmers.
Yet-to-be-published economic modelling obtained by The Australian shows cuts of more than 20 per cent would result in a massive budget blowout.
The modelling - by ANU academic Quentin Grafton, director of the university's Centre for Water Economics, Environment and Policy - shows the Gillard government would be left with a $2.32bn budget blowout if it pushed ahead with cutting the water entitlements of Murray-Darling irrigators by 30 per cent.
This is on top of the $3.1bn the government has already allocated for water buybacks under its "restoring the balance" scheme to improve environmental flows along the basin. If the government moves for cuts towards the top of the range recommended by the Murray-Darling Basin Authority, that costing blowout could double.
Professor Grafton has predicted the government would have to pay $4.73bn on top of the budgeted $3.1bn if it were to buy back 40 per cent of water allocations. While Professor Grafton would not comment yesterday on the economic fallout of cuts within the 27-37 per cent range, he said the government should consider using some of the $5.8bn set aside to improve irrigation infrastructure to fund the buybacks.
The Prime Minister last night failed to hose down speculation that the government faced a costings blowout if it proceeded with its commitment to buy back water from willing irrigators.
"I think the appropriate thing here is to go through the process," Ms Gillard said. "The Murray-Darling Authority will be releasing its plan as I am advised tomorrow. That will then be the subject of consultation and discussions that work will be led by (Water) Minister (Tony) Burke."
Mr Burke, who yesterday visited the Murray mouth, last night told The Australian that although the government remained committed to revitalising the Murray-Darling, the process would not have an impact on the budget's bottom line.
"Any purchases made to help bridge the gap will only be made from willing sellers and there will not be an impact on the forward estimates," Mr Burke said.
"I understand that any adjustment doesn't only affect irrigators, it also affects communities."
The Australian understands that the guide to the Murray-Darling Plan will recommend uneven cuts across the basin, with the Murray, the Murrumbidgee, the Goulburn Valley and Condamine-Balonne among the regions to face the greatest cuts. NSW Nationals senator Fiona Nash said the Coalition would fight any "drastic" cuts to water allocations in the Murray-Darling. "If the reports are correct, it would be devastating for irrigation communities across the basin such as Deniliquin and Griffith in the Riverina - not just for the farmers who've already endured drought, but the local businesses that rely on the agriculture industry," Senator Nash said.
Fellow Nationals MP Barnaby Joyce said compensation should not just be given to irrigators but to "every house and every business" in regional communities affected by the cuts.
Departmental advice given to Finance Minister Penny Wong when she took office said the Murray-Darling Basin plan was one of the potential commitments that could place pressure on the government's ability to meet its commitment to deliver a surplus in 2012-13.
Independent MP Tony Windsor, whose seat of New England lies in the Murray-Darling Basin, said he would push for adequate money to be spent on irrigation infastructure not just on compensating irrigators.
Murrumbidgee Irrigation, owned by irrigators, yesterday used ABS data to estimate the valley would lose $1bn and 7500 jobs if a 37 per cent cut in water entitlements happened.
Coleambally Irrigation co-operative chief executive John Culleton said the loss of revenue would be "astronomical", with national repercussions.
Alexandrina Mayor Kym McHugh said his community around the Coorong, the Lower Lakes and the Murray mouth had been waiting a long time to see the river reconnect with the sea.
"It's lifted a weight off people," Mr McHugh said.
Additional reporting: Pia Akerman
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