Ten billion dollars? A mere bagatelle

Those of us who suspected the federal government’s grand Murray-Darling basin rescue plan was policy on the run had our suspicions confirmed in Senate Estimates hearings last night, when the government’s Senate Leader, Nick Minchin, confirmed that the $10 billion package did not go to Cabinet for approval before it was announced. Further evidence provided this morning indicates that the Department of Finance was informed about the expenditure package just two days before it was announced, and they will cost the plan once the states agree to it.

Senator Minchin suggests that it amounts to “one billion dollars a year, which is less than half a per cent of Commonwealth Government expenditure” and says “let’s keep it in perspective.” I’m sure lots of people on public housing or dental care waiting lists or carers without adequate support or those with disabilities or sole parents who have had their already meagre incomes cut by the government as a ‘work incentive’ will also keep this in perspective and recognise that those funds just aren’t available.

Regardless of the merits of the Murray-Darling proposal, this incident shows two things. Firstly, in an election year, a billion dollars is not particularly significant to the government when there’s political problems to be fixed or votes to be bought. Secondly, it is a reminder that many funding promises that involve amounts of money spread over a range of years are close to meaningless, as they are regularly modified in subsequent years – sometimes by spreading the money out over a greater number of years, and sometimes by reducing it as a result of ‘shortfalls’ in spending. Many funding promises have lots of pledges to spend ‘up to‘ a certain amount, fully anticipating that actual expenditure will fall well short. The initial big announcement sounds like there is a lot of money, but often it can include ‘old’ money taken from existing programs, or be contingent on contributions from elsewhere.

I can recall examples of being burnt by this not long after I entered the Senate. In 1999, the Australian Democrats negotiated a commitment from the government to spend $400 million over 4 years on a greenhouse gas abatement program. This ended up being spread over more than double that, dramatically reducing its impact – not to mention that some of it was spent on things like flying bureaucrats around to try to spike Kyoto Protocol negotiations. There was also a promise to spend up to $264 million on a grant scheme for off-grid electricity users to convert from diesel to renewable energy systems, to assist the uptake of renewable remote area power systems. The “up to” factor meant that actual spending on this fell well short of what was pledged. Apart from the tragedy of missed opportunities in these cases, it means one has to fight harder to maintain advances. It also means being wiser, and some later achievements have not been so easily undermined.

For example, even though the government’s National Plan for Water Security categorically states “the government will invest $10 billion over 10 years”. But in spelling out the funding, it contains the following commitments:

  • the Commonwealth Government will invest up to $3 billion over 10 years to address over-allocation in the MDB;
  • The Commonwealth Government will invest up to $500 million in practical projects to improve the efficiency and effectiveness of river operations and storages in the MDB;
  • We are prepared to invest up to $3 billion in buying back water entitlements and assisting irrigators in the unviable or inefficient parts of schemes to exit the industry.

Leaving aside the fact that a funding promise over 10 years will almost inevitably be varied along the way, $6.5 billion of the $10 billion comes under the ‘up to’ qualification. This means eventual funding may be well less than this, and there is no guarantee that the unspent funds will go into other aspects of water security. This is not always a bad thing, as you don’t want to spend money on something that doesn’t present decent value just so you can you’ve spent it. But it is worth being aware that the headline funding figure is very rubbery at best.

It is unfortunate that, when the real figures subsequently come to light, the level of attention paid is always a small fraction of the headlines derived from the initial announcement. This practice is not new to the current government, but the necessary qualifications on the announcing statements are rarely made clear. It means one has to take all government funding packages with a large helping of salt whenever they are announced.

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8 Comments

  1. Good catch by the committee system. This is also a good example of the legislative being a necessary oversight on the executive.

  2. Having picked grapes oranges at and around the Mildura area,the people of the Murray are getting the Howard bum steer.What more needs to be said by these incompetent wishy washy time servers.Mildurians and surrounding areas will be happy ,you ,the Senator, are on the job on this matter,the previous mentioned bore,is unlikely to accept the population along the Murray will figure out his deceit quickly.

  3. Senator,at the risk of sounding like a complete amateur scientist,I just wonder about the research so far,because well for masny years the Murray was an expensive item.The Colignan Nangiloc area near Mildura was the last area I worked in.These reverse name towns or place are close to billabongs ,had a problem with the rising salt table and the farmer I worked for had lost part of his farm from bad advice not recognising the nematode problem,and adjacent orange orchards on another farm had restrictions on movements.Thats to background my interests.I had been reading here and thereabout these problems,and wondered why the billabongs werent used,in some manner for water storage.Since then ,without reading any scientific literature,I believe many of the problems of the Murray rest with the fact these ancient geological meanders,are not part of the present flow of water,and even with these low water levels they should be still part of the process as the evolution of the river suggests.Whilst billabongs are generally seen as sort of flood plains they also store water under,trees and shade.The drawback for water quality and flow is leaf litter,a not unsubstantial problem,until what humans require ,just, simply reduce that as significant.Personally, I would like to see the water diverted to these billabongs,at some time in the year,the movement and reduction of the sandbars,which only are like they are because the real flows of the Murray hasnt been for a long time,and shade cloth either on the surface of the billabong is placed once leaf litter is collected,or above water line to disallow leaf litter.Walking through the billabongs then, it amazed me how the trees were surviving on little water.The billabongs are before the water gets to the major town city of Mildura.It maybe also possible to reuse the waste water of Mildura and the piped water and old trenches could play a role in establishing a recycle effort including salt reduction and even sewerage water recycle.

  4. With great respect Anderw this is hardly the greates case of detectvei clouseeau known to mnakind.

    I can’t think of the number of times at State adn Federal level on both sdies of polcitics that programs have been rebadged, reannounced, had funding shifted between yeasrs, worked out in the ministers office on an envelope, dreamed up wind tested funded and announced and sunk without a trace days later. Christ I ‘ve even sat there and done it myself!!

    The most accurate part of this post is the last sentence modified to “It means one has to take all government (modify to politicians) funding packages with a large helping of salt whenever they are announced.

  5. Part 1
    The Framers of the Constitution in their wisdom refused to give constitutional powers to the Commonwealth of Australia, other then to legislate as to what was “reasonable use” of water in relation of navigation, of the Murray-Darling basin. As they made clear water is owned by no one.
    The problem we have is that if you are a popular sport star, etc, or even a donkey you can stand as a candidate and if elected vote on legislation regardless not having any competence in what is constitutionally permissible.
    It is then the man-in-the-street who has to battle in the courts to pursue justice.

    Be it 10 billion dollars (costed or uncosted) isn’t going to cause a single drop of water to rain more then otherwise would. Hence, the issue is not politicizing WATER but to take politics out of it (As Premier Rann bravely urged) and to have common sense prevail.
    Mr. Malcolm Turnbull already made clear in an ABC 7.30 Report that he is not going to take action against “over-allocation”. Well, surprise, surprise, the Commonwealth had legislative powers since federation to curtail “over-allocation” and still persist not to take any appropriate action to stop “over-allocation”.
    As the Framers of the Constitution made clear the riparian rights of water and its usage was not a political issue but an “legal” issue that could only be resolved by the High Court of Australia if the problem arose in that regard.
    My recent correspondence about this to all federal Members of Parliament should have made them aware of this.

    It would be impossible to harness all water from flood area’s but if the States combine their efforts then a lot of the water could be harnessed and pumped into water reservoirs.
    Likewise, there must be a revolution in irrigation/agriculture/farming/industry usage of water.
    For example, industries and cotter farms should be re-located near salt water area’s where they can use desalination plants to use for this.

  6. Part 2
    By this freeing up a lot of drink water.
    Even the Fire Brigade should have fire hydrants connected to gray water supply, as to avoid the waste of drink water.

    Artesian water should be drawn from below ground, as the late MR JAROSLAV HLAVKA MIE AUST CP ENG, who was employed then by the Melbourne Board of Works already in the 1980’s pointed out it was then time to do so to avoid in the future to suffer shortage of water, as this artesian water could supply the entire needs of Melbourne for example.

    There is a lot that can be done without any need at all to so to say transfer legislative powers to the Commonwealth of Australia. Indeed, as the Framers of the Constitution warned that anyone who were to get his hands on legislative powers of water would by this basically have the powers to influence property prices, the local industry, etc. As after all, they all require to use water.

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