Water restrictions are tough politics

Posted 3 August 2009

Dr Lin Crase

Water restrictions are now commonplace in most cities in Australia, even if the rules around them are far from consistent. Locally, water restriction levels have different meanings and cross-border anomalies continue to baffle residents.

Without trying to explain why these differences persist, it might be worth reflecting on whether they should exist at all, at least in the longer term.

At a national scale, households use a relatively small proportion of the water resource – about 11 per cent, compared to the 67 per cent used by agriculture. This distribution varies substantially by catchment and river system. For example, about 96 per cent of all water in the Victorian Murray is extracted for agriculture and 80 per cent of extractions in the NSW Murray are used by agriculture.

Urban water restrictions can only control outdoor water use, which generally runs at about 40 per cent of all water used by households. In addition, for inland cities like Albury and Wodonga the bulk of indoor water use does not materially reduce total water availability to downstream users, since it is commonly returned to the river system after treatment.

In simple terms the global impact of water restrictions on water availability in the Border region is modest, at best. In contrast, the symbolism and politics are all too real.

Presently, there are sufficient water resources in the Murray system to meet what is euphemistically referred to as 'essential human needs'. Some irrigators will have a portion of 'carry-over' water from last year on hand. This is water that was available to them last year but was not used. I suspect that many farmers with carry-over will be waiting to see how the season unfolds and will be carefully watching storage levels to see if reasonable allocations are made this year. If not, many will opt to sell their water in the water market.

There are no substantial legal impediments preventing Councils and Water Corporations from purchasing some of this water, provided storages reach a level to activate the water market. There are however financial implications and significant political hurdles.

On the financial front the urban water supplier would need to be able to purchase the irrigation water at a price that would enable them to recover costs. This should be feasible, given the range of prices witnessed in the market last year. However, the different structure of water charges in Albury and Wodonga plays a significant part in all this.

In Albury, most households pay relatively little for the water they consume, with the first 225 kilolitres charged out at 54 cents. The bulk of the household bill is actually made up of fixed charges, set at about $500 when you include water and sewer. Thus, water restrictions do not seriously impact on the revenue received by the Council.

The fixed charges in Wodonga are set at about $370 for most households but they pay about three times as much for consumption at $1.56 per kilolitre.

In simple terms, North East Water has much more scope for entering the water market and more incentive, since it relies less on the fixed charges. In contrast, Albury Council could enter the market to buy water and alleviate restrictions but they have less scope to cover their costs, and less incentive because their revenues are heavily influenced by fixed charges. Before asking for Federal advice on the disparity in water restrictions across the border it might pay Albury to consider the structure of their own water charges.

On the political front, both communities face a backlash from state governments who, on the face of it, support water reform, but would prefer to avoid any perceived conflict amongst rural and urban water users.

Regrettably, politics has always dominated decisions about water in this country which suggests that water restrictions are likely to be more severe than they need to be for the foreseeable future.

First published in the Border Mail on 22 July, 2009.


LaTrobe University Law and Management web site.

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