Commissioned by the Federal Government, the ABARES (Australian Bureau of Agricultural and Resource Economics and Sciences) report says the government’s plans to claw back more water from irrigators will drive up water prices and reduce production.
Its release coincided with the Federal Government’s announcement of a $300 million compensation package, which Shadow Water Minister and Deniliquin-based Senator Perin Davey and NSW member for Murray Helen Dalton says proves the water cannot be obtained without impacting on rural communities.
NSW Irrigators’ Council chief executive Claire Miller said these basin communities already struggle to survive droughts when water is scarce and too expensive to grow key crops such as rice, which keep vital processing jobs in towns like Deniliquin.
‘’This report shows more government buybacks will add to costs and water scarcity, leaving these and other vulnerable communities in an even more precarious position,’’ Ms Miller said.
‘’Murrumbidgee and mid-NSW Murray communities have little scope to diversify their economies beyond irrigated agriculture.
‘’If they could, they would have already done so in response to the price and production impacts of previous buybacks.’’
The ABARES report says more buybacks would increase average water allocation price by about 10 per cent, or $45 per megalitre, Ms Miller highlighted.
‘’What it doesn’t say is that that $45 per megalitre is on top of an average $72 per megalitre increase ABARES has already attributed to past water recovery in earlier reports.
‘’And in Australia, averages mean nothing. An average $45 per megalitre increase can be expected to surge to hundreds of dollars extra during droughts when prices soar.’’
The report indicated additional water recovery will hurt the Murrumbidgee Valley and the Murray Valley above the Barmah Choke, with the rice industry taking the biggest hit among basin commodities.
Northern Victoria is also vulnerable, but ABARES admits it does not have the data to properly model dairy impacts.
“The government’s announcement of $300 million to assist Murray-Darling Basin communities will barely touch the sides on what irrigation-dependent communities will need,” Ms Miller said.
‘’The economies of agricultural communities are all linked to production. If water buybacks proceed, then communities will need much more than a local sugar hit.
‘’Job losses will extend to rural supply stores, hairdressers, frontline services and hospitality. If agriculture suffers, then the whole community suffers.
“When water prices are already high in a drought, that extra added by buybacks is the straw that breaks the camel's back for many farm enterprises.”
Senator Davey said it was disappointing taxpayers still don’t know how much Labor’s plan will cost, noting the ABARES report only modelled impacts on irrigated agriculture in the Southern Basin.
“What we do know, thanks to thre report by ABARES, is that even a small amount of buybacks will see water allocation prices increase and irrigated agricultural production decrease,’’ she said.
“ABARES, who looked at allocation prices in their modelling, acknowledged that considering the market value of entitlements is a more reliable measure of the actual cost of recovery.
“Based on the government’s figures on its most recent buybacks, we know it paid $8000 per megalitre for water entitlements in the Condamine-Balonne, and between $3200 per megalitre for general security and $11,000 per megalitre for high security in the NSW Murray.
“This real world, not modelled, example of the amount the government will need to pay makes a mockery of the Albanese Government’s claims water buybacks won’t have a major impact on the Australian economy or add pressure to the cost of living.”
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