Productivity Commission says plan is lagging behind schedule and $5bn of taxpayers funds is at risk

This article is more than 2 years old

This article is more than 2 years old

The Murray-Darling Basin plan could fail to deliver on its next phase and $5bn of taxpayers’ funds is at risk unless urgent changes are made to how the plan is being implemented, the Productivity Commission has said in its five year review.

The commission found the plan so far has delivered a significant amount of water to the environment. It found 20% of water once used for agriculture was helping restore rivers and wetlands.

But it sounded alarm bells about progress on the next steps, warning that the plan is lagging behind schedule and some projects were unrealistic.

It also warned governance arrangements within the Murray-Darling Basin Authority (MDBA) are inadequate and recommends splitting the authority into two to create a separate body to look at the states’ compliance with the plan.

“Now is the opportunity to make important ‘stitch in time’ changes to ensure delivery of an effective plan. Without immediate action, there is a significant risk of less water for irrigation, the cost to taxpayers blowing out and, in the future, communities wondering whether it was all worthwhile,” commissioner Jane Doolan said.

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Some $9bn of $13bn allocated to the plan has been spent so far, mainly on buying water from farmers.

But the plan has now moved into its more complex implementation stage where environmental gains will come from a range of projects such as lowering evaporation, removing constraints built along the river and using water more efficiently. There is still about $4-5bn to be spent.

The Australian Conservation Foundation welcomed the commission’ s “clear-eyed assessment of the serious governance failures that have weakened the implementation of the Basin Plan at the expense of a healthy river system”.

But ACF was disappointed the commission largely ignored the impact of climate change on the plan.

In particular the commission warns the water resource plans being developed by the states are lagging behind schedule and there is a “material risk” of poor quality plans”. These plans contain the all-important detailed rules on how water will be managed and shared in each catchment, from embargoes on pumping environmental water, to pump size and metering.

It recommends extending the June 2019 deadline for some plans, rather than accepting bad plans.

So far only one of 36 plans has been submitted and approved by the MDBA.

Facebook Twitter Pinterest ‘Without immediate action, there is a significant risk of ... the cost to taxpayers blowing out,’ commissioner Jane Doolan said. Photograph: Mike Bowers/The Guardian

NSW has been a standout laggard, despite the controversy over its administration of water in the Barwon-Darling and allegations of water theft revealed on the ABC’s Four Corners more than a year ago.

Doolan said it was important that plans requiring complex rule changes were subject to community consultation, so that people accepted them. A rollover of existing plans to meet the deadline would be a poor outcome, she said.

The commission also warned that a suite of projects known as the supply measures projects – which are said to deliver the same environmental outcomes as buying 605 GL of water for the environment – “are highly ambitious, if not unrealistic”.



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“If key projects fail, environmental benefits will be delayed and the additional costs to taxpayers are potentially in the order of $480m,” the commission said.

SA Alliance senator Rex Patrick said the senate had signed off on amendments to the plan, which cut environmental water targets, without the benefit of seeing any information about the projects.

“We were unable to see the information that the productivity commission has now clearly seen,” he said.

The commission warned that the supply measures were potentially much more expensive than buying it from farmers.

It was also highly critical of the efficiency projects which are designed to deliver a further 450GL by 2024. It rated the risk of not achieving the outcomes as “high”.

“There has been no update to the modelling to estimate what environmental benefits can be realistically achieved, given proposed constraints easing projects are unlikely to achieve the anticipated flow rates at key sites or be fully operational by 2024,” the commission said.

It has also recommended the MDBA implement gateway reviews of major projects and greater use of independent assessments. Projects like the Menindee lakes reconfiguration are at a very early stage of development and early assessments by the MDBA questioned whether it would deliver the environmental outcomes promised.

ACF said the final report should make it clear that governments should be prepared to buy water if the projects failed to deliver.

The commission also cast doubt over current governance arrangements and the processes for assessing the projects.

“The current institutional arrangements for implementing the plan do not give the commission confidence that the significant risks ahead will be well managed,” associate commissioner for water John Madden said.

Doolan said the MDBA had two functions: facilitating the states to implement the plan and ensuring compliance with the plan. She said it had become increasingly clear that these functions could be in conflict.

The commission is recommending a separate basin plan regulator, which would ensure the states complied with the plan and undertook their own compliance with state laws.

The review did not consider whether the plan was adequate to address climate change or whether the most recent amendments passed by the parliament that trimmed the water recovery targets put the plan at risk.

“Our role under the Water Act is to review how the MDBA is implementing the plan,” Doolan said.

“The scope of the plan and the balance of the plan were outside our review,” she said.

The commission is encouraging submissions on its draft report.

The Productivity Commission report comes as the South Australian Royal Commission also inquiring into the Murray-Darling Basin plan revealed that the high court proceedings against it to block it subpoenaing federal employees had been dropped, after the commission dropped its efforts to compel appearances.

This is because the South Australian government has refused to extend the timetable for the commission to report. Commissioner Bret Walker SC has said this meant he could not afford fairness to the witnesses and still report in time.

Counsel assisting Richard Beasley revealed that several of the potential witnesses were whistleblowers from within the MDBA who would only appear if compelled.