ID :
94080
Thu, 12/10/2009 - 08:38
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http://m.oananews.org//node/94080
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Holes in water buyback scheme detailed
(AAP) - The Productivity Commission has criticised the Murray-Darling Basin water recovery plan, saying restrictions imposed by the Victorian government are limiting the effectiveness of the buyback.
While the commission has endorsed a $3.1 billion plan for purchasing water
entitlements, it has questioned a $5.8 billion federal government program that
provides subsidies for investing in water saving infrastructure.
Subsidising the cost of investing in the water-saving infrastructure is not
generally a cost-effective way of obtaining water for the environment, the
commission said in a draft report released on Wednesday.
The investment in infrastructure was also unlikely to be the best way of sustaining
irrigation communities, or assisting their transition to a future with less water,
the commission said.
But the most damning criticism was directed towards the Victorian government and
restrictions it imposes on water trading, with the commission saying they could
limit the effectiveness of the buyback.
"Impediments to water trading imposed by state governments, most particularly in
Victoria, are adversely affecting the buyback and should be removed as soon as
possible," the report said.
Victoria's agreement to allow exemptions to a four per cent limit on out-of-area
trade of water was an improvement, but because the purchases can only occur from
specified areas, the constraints were distortionary and decreased the cost
effectiveness of the buyback.
"The four per cent limit on out-of-area trade of water entitlements should be
eliminated as soon as possible," the report recommends.
The commission was also critical of NSW which had replaced a blanket ban on sales of
water to the Commonwealth with annual volumetric caps.
While the new system was less distortionary than Victoria's restrictions, it limited
options for conducting a faster buyback should it be necessary.
"Limits on the amount of entitlements that can be sold to the Commonwealth through
the buyback should also be eliminated," the commission said.
Liberal senator Simon Birmingham said the report highlighted a failure by the Rudd
government to achieve effective national management of the Murray-Darling Basin.
"The result of these constraints is that the buyback of water entitlements is less
efficient, with a higher burden placed on the other basin states, namely Queensland
and South Australia," he said.
Senator Birmingham, who was appointed opposition parliamentary secretary for the
Murray-Darling Basin earlier this week, said Climate Change Minister Penny Wong
needed to take action to solve the problems.
"It is high time Minister Wong took responsibility for solving these failings rather
than allowing basin states to play them out through the legal system while the
Murray-Darling system suffers the consequences."
While the commission has endorsed a $3.1 billion plan for purchasing water
entitlements, it has questioned a $5.8 billion federal government program that
provides subsidies for investing in water saving infrastructure.
Subsidising the cost of investing in the water-saving infrastructure is not
generally a cost-effective way of obtaining water for the environment, the
commission said in a draft report released on Wednesday.
The investment in infrastructure was also unlikely to be the best way of sustaining
irrigation communities, or assisting their transition to a future with less water,
the commission said.
But the most damning criticism was directed towards the Victorian government and
restrictions it imposes on water trading, with the commission saying they could
limit the effectiveness of the buyback.
"Impediments to water trading imposed by state governments, most particularly in
Victoria, are adversely affecting the buyback and should be removed as soon as
possible," the report said.
Victoria's agreement to allow exemptions to a four per cent limit on out-of-area
trade of water was an improvement, but because the purchases can only occur from
specified areas, the constraints were distortionary and decreased the cost
effectiveness of the buyback.
"The four per cent limit on out-of-area trade of water entitlements should be
eliminated as soon as possible," the report recommends.
The commission was also critical of NSW which had replaced a blanket ban on sales of
water to the Commonwealth with annual volumetric caps.
While the new system was less distortionary than Victoria's restrictions, it limited
options for conducting a faster buyback should it be necessary.
"Limits on the amount of entitlements that can be sold to the Commonwealth through
the buyback should also be eliminated," the commission said.
Liberal senator Simon Birmingham said the report highlighted a failure by the Rudd
government to achieve effective national management of the Murray-Darling Basin.
"The result of these constraints is that the buyback of water entitlements is less
efficient, with a higher burden placed on the other basin states, namely Queensland
and South Australia," he said.
Senator Birmingham, who was appointed opposition parliamentary secretary for the
Murray-Darling Basin earlier this week, said Climate Change Minister Penny Wong
needed to take action to solve the problems.
"It is high time Minister Wong took responsibility for solving these failings rather
than allowing basin states to play them out through the legal system while the
Murray-Darling system suffers the consequences."
