Alleged 'waste' of $4bn in Murray-Darling basin buyback scheme

Irrigation near Griffith - the heart of a burning question over water rights, water buybacks and alleged waste of taxpayers money.
Irrigation near Griffith - the heart of a burning question over water rights, water buybacks and alleged waste of taxpayers money.

An ABC Four Corners report on water rights buybacks in the Murrumbidgee valley has been roundly criticised by farm groups claiming bias and a lack of understanding of the fundamentals of the $4bn Basin water buyback scheme.

The report quoted several people saying the $4 billion water infrastructure buyback scheme was a "national disgrace" and a complete failure for the environment with no known benefit to the river systems. It said much of the government money was channeled into new irrigation schemes on farms.

It also showed instances where farmers had obtained buyback money to use on water efficiency measures on their farm for works they would have undertaken anyway.

It also featured NSW Farmers of the Year, the Andreazzas of Griffith, saying the scheme appeared to be a waste of taxpayers' money. They had used $100,000 of water buyback money on earthworks, after selling some of their water entitlements.

It also showed the Baxters of Berrigan who sold water entitlements for infrastructure improvements on their farm, saying they also would have done the improvements anyway.

Glen Baxter tweeted after the program: "Each megalitre of water traded for infrastructure has become part of the environmental portfolio. It's left farmers with a smaller consumptive pool, higher water prices and underutilized infrastructure."

He also retweeted this comment: ''so that means when nuts, or cotton or any other sector expands to use more water, it's at the expense of another sector like rice or dairy using less water. It doesn't mean more water used in irrigated agriculture across southern Basin".

The program questioned the expansion of the Webster company's nut and cotton production in the Murrumbidgee valley and claimed Webster had received over $41 million in Commonwealth water infrastructure money from water buybacks.

The Federal Minister for Water David Littleproud countered the assertion the scheme was for big business saying: "some 95 per cent of the On Farm Irrigation Efficiency Program projects are worth less than $1 million, with average project size of $152,000 across the 1500 projects. These are almost all small projects involving small farmers, not big companies".

Water Minister David Littleproud said the Four Corners program misrepresented the success of the water buyback scheme in the Murray-Darling Basin that was supporting communities by reinvesting in water saving infrastructure.

Water Minister David Littleproud said the Four Corners program misrepresented the success of the water buyback scheme in the Murray-Darling Basin that was supporting communities by reinvesting in water saving infrastructure.

"The Plan has so far delivered 2100GL of water back to the river system with about another 500GL to go. 1200GL was recovered through buybacks mostly under Labor, 700GL through water efficiency projects and the balance through state government programs and gifted water," he said.

"Recovering large parcels of water from a company through water efficiency projects instead of effectively closing dozens of family farms in a small community through water buybacks is unarguably much better for those communities and the real families who live in them."

Both Mr Littleproud and the Murray-Darling Basin Authority say the ABC did not contact them for comment for the program. The Land has asked the ABC to give their views on the criticism of the program.

National Farmers Federation president Fiona Simson said the NFF would be "methodically working through the inaccuracies and errors pedalled in last night's program and would register a formal complaint seeking corrections from the highest level within the ABC".

The NFF's Fiona Simson wants the Four Corners program on the Federal water infrastructure buyback scheme taken to the highest level at the ABC "for corrections".

The NFF's Fiona Simson wants the Four Corners program on the Federal water infrastructure buyback scheme taken to the highest level at the ABC "for corrections".

"At no point during the 45 minutes of television was reference made to the fact that since 2012 the Plan had returned 2100 gigalitres of water to the river system with almost 700GL coming from efficiency and infrastructure projects. A significant achievement in itself. Or that the majority of efficiency projects, were not carried out by large corporate farms but family farming operations with works valued at, on average, less than $152,000," she said.

Ms Simson said "little to no focus was given to the fact that farmers were required to sell water entitlements to the Government, i.e. return water to the environment, in order to access the infrastructure efficiency program. Therefore providing a net water gain to the environment."

"And absolutely no mention was made of the tough scrutiny that applications to access the programs are subject to or the milestone reporting and random 'spot checks' that are carried out by the Australian National Audit Office."

"But, we simply won't let representations like last night's 4Corners go unchallenged."

Greens senator Sarah Hanson-Young called for a Royal Commission after the Four Corners report.

"Billions $$ was meant for saving the Murray-Darling and the environment. Instead big business & foreign corporates are using it as a slush fund to maximise their profits.

"We need an immediate freeze on the accounts, and the Auditor-General needs to be called in!" she said in a tweet.

Cotton Australia's Michael Murray, General Manager, said the 'Cash Splash' story "guided the audience down a path of misrepresentation about the fundamentals of the Murray-Darling Basin Plan".

"It is understandable that the average viewer might have concerns about the Plan's irrigation efficiency programs that the show focused on. Given the way the show was presented, it would be understandable for a viewer to question whether the environment has gained anything under the Plan," Mr Murray said.

"However, at no stage did the episode attempt to explain how the Basin Plan has recovered 2100GL of water for the environment, with just under 700GL coming from irrigation efficiency and infrastructure projects. There also wasn't any effort to highlight the economic stimulus communities have received from the programs, rather than the economic devastation straight 'buybacks' have afflicted on many Basin communities.

"The idea propagated by Four Corners that irrigators are 'using more water' by taking up water efficiency schemes is false. The only way an irrigator can acquire more water is if they buy a licence that allows them access to more water from the existing water licence pool.

"Under the Plan, the government can either purchase water through buybacks or acquire water through funding irrigation efficiency schemes.

"While the upfront cost of buybacks is cheaper, the irrigator and their local community cannot make up for the lost production by the entitlement leaving the productive side for the environmental side.

"Efficiency projects are a more appropriate option because irrigators can do more with their remaining water, thereby underpinning communities.

"Here is the accurate breakdown of the efficiency scheme process that Four Corners so spectacularly failed to explain:

  • The water entitlement-holder nominates how much water their proposed project will save, and what works need to be done.
  • The Commonwealth (either directly, through the states, or another third-party) then agrees on how much to fund the project and what share of the estimated savings it requires (normally 50%).
  • The Commonwealth's share of the water entitlement is then transferred to its holdings as a licence entitlement.

"It is the irrigator who bears the risk; if the expected savings do not eventuate, there is no option for the irrigator to have the water entitlement returned. It is patently and demonstrably wrong to say there is no checking as to whether the savings are real. They are real, because the entitlement holder transfers the entitlement."

The NSW Irrigators Council's Luke Simpkins said: "Infrastructure programs require irrigation farmers to hand water back to the Government before the project starts. These programs result in real water being returned to the environment. The water register allows information on the amount of water transacted to the environment to be documented transparently. Projects are audited and undergo heavy scrutiny, with the funds administered by delivery partners - not irrigation farmers."

The program quoted a former director of the MDBA, Maryanne Slattery, who now works for the Australia Institute, claiming it was "horrifying" that a scheme designed to help the environment was "allowing irrigators to use more water".

"That program was supposed to reduce the amount of water that was going to irrigation, when it's actually increased the opportunities for irrigation ... all subsidised by taxpayers," she said.

Webster chairman Chris Corrigan. His company didn't want to be involved in the program because of perceived bias against it from previous programs.

Webster chairman Chris Corrigan. His company didn't want to be involved in the program because of perceived bias against it from previous programs.

Ms Slattery says the region where Webster was building dams was unsuitable for dams because of the high evaporation rates.

"You just see dam after dam after dam, these massive on-farm dams, in a place that is as flat as a table, that just should not have dams," she said.

"And then when you realise they're being paid for by the Commonwealth, under a supposedly environmental program, that's just horrifying."

Murrumbidgee Irrigation featured heavily in the program. Webster declined to be interviewed for the Four Corners Cash Splash program, citing the claim it felt the ABC had misrepresented their position in the past.

In a strong reply to the ABC's request for an interview for Cash Splash, the ceo of Webster Maurice Felizzi told an ABC researcher in a letter:

"This ... seeks to create a false narrative using simple, publicly available facts.

"This is an ..... attempt to derail rural companies, policy and the people involved in constructive agricultural pursuits."

The ABC put a number of questions to Webster before the program and this is how it responded.

"So, to answer (the) questions: - Webster is the biggest holder of water in the MDB outside of government. Answer: Webster have no way of knowing and neither does (the reporter).

- The chairman of Webster is Chris Corrigan. Answer: Yes, this is publicly available information.

- A company Mr. Corrigan led, Qube, donated $51k to the Liberal party in 2012. Answer: Webster has no way of knowing this. It presumably is publicly available information but of no relevance whatsoever to Webster.

- Brandan [sic] Barry is General Manager in charge of water at Webster, and is also a board director of the NSWIC. Answer: Yes, this is publicly available information.

- It also notes connections the Robinson family have had to Webster, and the links they have to irrigation lobby groups. Answer: The Robinson family through AFF (Australian Food and Fibre) were shareholders in Webster until 07 November 2018. Webster at no time asked or commissioned AFF or the Robinson family to contact or represent the interests of Webster with any politician nor do we have any knowledge that they did so."

As of midday on Tuesday, the ABC had not reported any reaction to the Four Corners program, but with an opinion piece on ABC online from The Conversation, saying the Murray-Darling issue was 'complicated'.

The opinion piece was from Q J Wang, a professor of infrastructure engineering, and Avril Horne, a research fellow at the Department of Infrastructure Engineering, both at the University of Melbourne. It says a study suggested the buyback scheme was delivering to the environment.

"To investigate these claims, the Murray-Darling Basin Authority commissioned us to undertake an independent review to examine the best available data for every irrigation efficiency project funded across the basin.

"We found the government investment into irrigation efficiency projects has achieved 85 per cent of the 750 gigalitres per year target. The remaining 15 per cent of the target may be affected by unintended side effects.

"This policy means it does not make sense to compare the effect of efficiency projects directly with the recovery of environmental water."

In another statement late yesterday, the Commonwealth Environmental Water Holder also disputed the basis of the program.

It said the plan is "delivering real water to the environment".

"This water for the environment is being recovered from within the available take limits set for water use across the Basin.

"Through implementation of the Basin Plan, the Commonwealth Environmental Water Holder has on average around 2000 gigalitres of water available each year for the environment. In fact about 20 per cent of the water previously used for irrigation across the Basin has been returned to the environment under a combination of water buy-backs and on-farm water efficiency projects.

"This water is being used to make a real difference to the environment and the communities that depend on it.

"In the Murrumbidgee River just last summer water for the environment helped prevent further fish deaths.

"Over 2000 kilometres of rivers across the Northern Basin has been reconnected during sustained drought.

"We have bought back endangered species from near extinction, including the endangered native Murray Hardyhead fish, now successfully returned to New South Wales for the first time in over 10 years.

"The Commonwealth Environmental Water Holder does not have a role in administering water recovery programs. Design, operation and delivery of water recovery programs is a matter for the Federal Department of Agriculture.

"The Commonwealth Environmental Water Office was not approached by Four Corners for interview or comment."