Melaleuca Media
Pull the Plug

Sick of puns and newspaper headlines on Paradise Lost and Paradise Drowned the State government is trying to direct common discourse towards the Burnett River Dam.

It is not working of course.

This article was submitted under the title of "The Odd Politics of Paradise" but the Courier Mail opted for the huge headline of "Pull the Plug" (30 November 2002)

Odd Politics of Paradise

The State government is pushing ahead with Paradise Dam, against a backdrop of increasing acrimony between the States and Commonwealth on water issues. Phil Dickie reports on the growing row and the increasingly troubled dam

Water politics is set to hit centre stage this week, with an expected Federal State confrontation on who sets and who pays for water property rights.

At least two reports of significance are also close to release – a National Competition Council report which could see Queensland lumbered with a substantial financial penalty, and draft water allocation rules for the Burnett catchment, site of Queensland’s controversial $210 million taxpayer funded and possibly unnecessary Paradise Dam.

The Burnett catchment which empties into the sea at Bundaberg is littered with dams and weirs that are monuments to the simpler days when National Party politicians commissioned dams for their supporters and named them after each other. Heading downstream from the Bjelke-Petersen Dam is the Claude Wharton Weir. Up a tributary lies the Fred Haigh dam.

More modern preference is to identify the place not the politician; so the Goss government legacy is the controversial Walla Weir.

For the even more controversial dam set to dwarf them all at the abandoned old gold town of Paradise, there is now apparently to be a new naming convention. Sick of puns and newspaper headlines on Paradise Lost and Paradise Drowned the State government is trying to direct common discourse towards the Burnett River Dam.

It is not working of course. Everyone from construction workers to conservationists calls it Paradise Dam. So do most ministers in unguarded moments.

But the days when dam decisions (and often damn decisions) could be made with impunity by the States are now long over. The new power in water politics is the Council of Australian Governments (CoAG).

A landmark meeting in 1994 kicked off a process which has seen most city dwellers paying for the water they use and rural land owners forced to at least consider concepts like cost recovery. Water rights began to be separated from land titles, and markets where they can be traded have been established.

It sounded all very free market – and much of it was – but it also opened up the possibility of reserving an allocation for the river itself. Gradually Australia started to move from a system where it was surprisingly common for more than 100 percent of water to be allocated to farmers towards one where the ideal was for the scientists to establish the required environmental flow before the water was allocated.

CoAG may, however, have come full circle. The brawl scheduled for Friday in Canberra has its roots in rural landholder resentment at water being taken off them and put back in the rivers for environmental reasons. A push by the National Farmers Federation to establish property rights for water allocations, clearing permits and the like has been picked up by the Federal National Party and endorsed – in part – by Prime Minister John Howard.

The upcoming CoAG is the forum in which the Federal government is trying to establish these rights and have the States pay the compensation that would be attached to doing anything environmental with them. The States, led by Queensland and New South Wales, are professing predictable outrage. This meeting, already deferred from September, is unlikely to settle anything.

If CoAG has a creature on water issues it is the National Competition Council, now coming up to its third round of State by State reports on the 1994 water reform agenda. The NCC is a feared instrument because it has the power to recommend to Federal Treasurer Peter Costello that money be withheld from the States hat

Its latest report hit Treasurer’s desk in August, and may be released with his decisions as early this week. It is awaited with some trepidation by the Beattie government, already on notice over its failure to reduce the vast flows being taken out of the Condamine-Balonne by the likes of Cubbie Station.

Also getting its first significant mention in an NCC report will be the government’s particular baby, Paradise Dam. The government’s hope is that when the council finally settles down to do a full assessment next year it will somehow manage to find that a big dam meets the required CoAG criteria of being “economically viable and ecologically sustainable”. The risk is that the NCC will find that is really all a bit of a smelly old porkbarrel.

This risk has increased as the sugar industry heads for the doldrums, the search for potential private partners in Paradise goes spectacularly nowhere and the major industrial project linked to the dam sinks deeper into the mothballs.

Despite this, the Beattie government is determined to press ahead with the construction and Burnett Water, the company spun off from government to get the approvals (from government) do the building and dole out the water is now engaged on seeking suitable contractors to build the road to the construction site.

According to a spokesperson for State Development Minister Tom Barton the NCC has been kept fully briefed on the project. The Commonwealth was also a party to the Environmental Impact Assessment which showed the dam was “economically viable and the environmental impacts can be successfully mitigated or avoided.”

But the NCC is also listening to and reporting on the concerns of the dam’s critics, notably environmentalists, upstream land users and local governments. No doubt, it is also being kept aware of internal State government dissension on the dam, and the growing debate about procedural irregularities and a lack of transparency all the way down the road to Paradise.

There is little room for doubt that the Paradise Dam and its raft of associated projects was plucked out of a political rather than an economic list of priorities. The National Party is notably pro-dams, and the Borbidge government drew up a list of priorities in 1997.

The Burnett had effectively only recently taken delivery of the controversial Walla Weir, which they had initially promised to be satisfied with. All Borbidge offered as a priority project was a catchment study, never completed.

With Labor’s Nita Cunningham then in the seat – but only just – Premier Peter Beattie opened the 2001 election campaign by announcing first a massive water supply increase and then a dam to provide it.

The Burnett has not been immune to the concerns afflicting other catchments around Australia – declining river flows, concerns about salinity and unequal access to water. Consequently, it was one of the first Queensland catchments to benefit from the sort of comprehensive flow and water management study specified by the 1994 CoAG agreement.

But the study was undertaken under the shadow of an already clearly flagged dam decision. “It always appeared as though there was only one right answer, and that was environmental flows that allowed for the extractions would come from the Paradise Dam,” said Queensland Conservation Council’s acting Rivers Project Officer Dr Carol Booth.

The draft report appears to show some recognition of this contradiction, committing the government to taking decisions in “a transparent manner” to “accommodate existing or future development of significant economic and social importance”

But while bits of the process have been relatively transparent, much has been as opaque as the Beattie government can possibly make it. This is perhaps especially true of some of the questions on economic viability most likely to enliven the interest of the NCC.

State Treasury was early on alive to some of the inherent contradictions of the big dam proposal for the Burnett. The thrust of the CoAG policy has been to promote more efficient water use and more high value water use by increasing its price – hopefully to the extent that there is an economic return on the investment in water supply. New infrastructure especially is supposed to be built with these principles in mind.

Treasury noted that with high additional volumes of water to be allocated (the dam option) water costs were higher than any reasonable charge that could be levied on “low margin” users who would be receiving the majority of the extra water – lucerne growers, cane growers and dairy farmers.

More benefit would come from low additional volumes of water (no need for a dam) which would be taken up by high margin users – basically the fruit and vegetable growers.

“On the evidence available, there can be no reasonable expectation of any economic benefit from expansion of water allocation beyond the 73,000 ML a year envisaged in the low volume scenarios,” said Treasury’s Office of Economic and Statistical Research.

Nor was the prospect of the Bundaberg 2000+ sugar and pulp mill a justification. “If the downstream industries are dependent on subsidised inputs, then they are not commercially viable or sustainable,” Treasury noted..

The State government successfully sat on this damning report for nearly two years, defying a Queensland Conservation Council search for it through Freedom of Information queries. Indeed, the report had been whipped in front of Cabinet more than three months after the FOI application was lodged and one month after the FOI application was refused.

When the report leaked, the reaction of the Premier was furious, telling Parliament that the reports “are very old and are no longer relevant in terms of time”.

“Economic assessments completed during the environmental impact statement process clearly demonstrated that the project is economically viable,” Mr Beattie said.

In fact, the economic assessments completed during the environmental impact statement process do not much address the central issue of high volume, high cost supply to low margin users at all. Close scrutiny of the tables show the big returns relative to taxpayer dollars come much more from raising an upstream weir than from a $200 million dam.

If anything, the position has worsened with sugar prices lower. The Federal Government’s Hildebrand review of the sugar industry identifies Burnett growers as relatively high cost producers. Presumably – although the report does not say this – they are also higher in the queue to be thrown overboard if industry reorganisation occurs either as a result of the rationalisation requested by Canberra or through market forces managing to exert an effect over and above the effect of subsidy and handout.

Dairy is in its own doldrums and, according to Multiplex project manager Mr Michael Wilson, the Bundaberg 2000+ mill is “on hold”. High hopes were held for a new industry of chicory growing and processing, but this also is now in doubt.

The State government put the best face on the project’s failure to interest private partners by saying consultants Deloitte Touche Tohmatsu had advised that the dam was an unsuitable project for private finance, ownership and operation. Within government, the message being received was that there was no point even looking for partners in Paradise.

The State government is holding very close to its chest another report that apparently comes to the same conclusion from a completely different direction. Just south of the Burnett is relatively water poor Hervey Bay, where tiny utility Wide Bay Water has won multiple awards, international consultancy contracts and much acclaim as possibly Australia’s leading exponent of the Least Cost Planning approach to providing water services.

In its own tiny bailiwick, Wide Bay Water has reduced water consumption per person per day by one third in less than four years – and made around $7 million in capital supply works unnecessary. In theory, Least Cost Planning is relatively simple. It involves looking for an optimal mix of water supply, efficiency and conservation measures in place of the usual – and very expensive – option of meeting increased demand almost exclusively by increasing supply capacity.

Acting Wide Bay Water chief executive officer Mr Peter Care confirmed that some time ago Wide Bay Water and the Sydney University of Technology worked together on a State Government-commissioned review of least cost planning options for the Burnett Catchment. Wide Bay Water and the Sydney University of Technology wouldn’t comment on the report and the State Government has yet to concede that it has such a report.

Proceeding with the dam may turn out to have been the high cost less benefit option at the end of the day. If the NCC takes a dim view of the proposal, it becomes high risk of financial penalty option as well.

Despite this, its going ahead. “This is a government that keeps its election commitments,” said Mr Barton’s spokesperson.