Government Water Scam

Written by Citizens Electoral Council Research Team

Prime Minister John Howard has presented legislation to the Parliament, authorising the Federal Government to seize control of all of the water of the Murray-Darling Basin from the states, and to put it under a new Federal agency with dictatorial powers. Just before Victorian Premier Steve Bracks

and his Water Minister John Thwaites suddenly resigned on Friday, July 27, Bracks charged that Howard’s actual intent was to privatise all of the Basin’s water. Caught, Howard bellowed that Bracks was “desperate, stupid, inaccurate and just totally wrong.”

It is Howard who is desperate. The global financial system is now crashing down, and the financial oligarchy which owns Howard is attempting to grab control over such vital assets as raw materials, food, and water, so as to maintain their political power when their paper, and even their banks vaporise. Howard’s legislation will give his owners control over the Basin’s water for which they will charge whatever they want, and, by bankrupting most of the farmers there, in Australia’s food bowl assuredly will food.

Howard lied that he had no secret plan to privatise the Basin’s water, butthe plot is hardly a secret: it has been underway since another rabid privatiser, Prime Minister Paul Keating, initiated it in 1994 through anagreement of the Council of Australian Governments (COAG), and as part of the same National Competition Policy which led to the other privatisations in gas, electricity, transport and  elecommunications. It picked up steam when the Murray-Darling Basin Commission started interstate water trading in 1998, and accelerated rapidly when Howard created his National Water Initiative (NWI) in 2003, and then the National Water Commission (NWC) in December 2004, to implement the NWI. Its final phase is the legislation now before Parliament, which Howard intends to ram through before the Federal election, and it has the full backing of Kevin Rudd’s ALP. Howard’s enraged reply to Bracks notwithstanding, Howard, his Water Minister Malcolm Turnbull, and all of the key personnel of the institutions named above have constantly trumpeted their intent to privatise water, often under such typical NWC euphemisms as the “principles of consumption-based pricing

and full cost recovery”. Or, when NWC Chairman Ken Matthews lectures all over the country, he emphasises such “Reform Challenges” as, in his words:

* The water stewardship concept engages the private sector in improved water management. To [sic] often, water is seen as just the business of governments and in my view this is both myopic, and wrong;

* pricing reform not keeping pace with the task (e.g. recovery of water management costs; recovery of urban investments);

* strengthen competition and innovation and private sector opportunities;

* significant government subsidy of infrastructure still says the sector is not ‘normalised’.

The Prime Minister and Cabinet’s own website even features the study, “A Discussion Paper on the Role of the Private Sector in the Supply of Water and Wastewater Services”. Echoing Bracks, NSW’s Minister for Lands and Regional Development, Tony Kelly, declared on August 2, 2007, “I am just a

little bit worried this is all about making water another commodity so that Macquarie Bank can be able to buy and sell it and make an absolute fortune”.

An absolute fortune, indeed: under the 1994 COAG agreements, governments

corporatised their water utilities, which are worth over $70 billion, but

would be sold for far less. The real money would be made in charging

consumers and the few remaining farmers tens of billions more for water.

The Murray-Darling Basin is the breadbasket of Australia, which accounts for

71% of all of our irrigated crops, and feeds 61% of all Australians. At stake, therefore, is the security of our national food supply, as well as the social and economic viability of regional Australia throughout the Basin.

Deregulation of the dairy industry and the initial phases of water privatisation have already contributed to the collapse of Australia’s farms by 20,000 from an official figure of 150,391 in 1994 to 130,526 today, though in reality there are far fewer, because the Australian Bureau of Statistics has changed their definition of what is a farm, from one with $22,000 of agricultural output to only $5,000, inflating the farm numbers.

The Privatisation Scam

Privatisation has a simple premise: the less water there is, the more can be charged for it. Thus, there was and has been no serious Federal Government attempts to expand water supplies throughout the entire, horrific drought-ridden period which began coincident with Keating’s initial moves toward water privatisation in 1994-95, right through until today. Water supplies to farmers have been shrinking throughout that period, not solely inaction, including, most recently, the cut-off of water allocations, and the diversion of ever-larger quantities into “environmental flows”.

The whole process of privatising government assets, including water, was begun internationally under the Thatcher government in Britain, and was designed by a London-based think tank, the Mont Pelerin Society (MPS), the granddaddy of all right-wing, deregulationist, pro-globalist think tanks internationally. The MPS was set up after World War II by the British Crown and its chief financier, Harley Drayton, to organise against the type of strong national government represented by President Franklin Delano Roosevelt in the U.S., which would not kneel to the financial oligarchy.

Given the Crown’s role in privatisation, it is lawful that the President of the Murray-Darling Basin Commission is the Rt. Hon. Ian Sinclair, a member of Her Majesty’s Privy Council. On behalf of, and answerable only to the Crown, the Privy Council is the ruling body of Britain and its still-existing empire (“Commonwealth”). Upon induction, all members swear sole allegiance to the Crown, and an oath of complete secrecy regarding any Privy Council business throughout the empire.

All of the chief personnel involved in Howard’s “water reforms”, from the Murray-Darling Basin Commission through his National Water Commission, are either hard-core privatisers or radical environmentalists. Notably, Howard stacked the MDBC and NWC with former officials of the radical right-wing, Big Business-financed National Farmers Federation (NFF), and with environmentalist fanatics, notably from the notorious Wentworth Group of Concerned Scientists [sic]. (As in the global warming scam, Big Business is in bed with the environmental lobby, which it has heavily financed.)

The Role of the NFF

The single most important figure in determining water allocations in the Murray-Darling Basin, has been Dr. Wendy Craik, Chief Executive of the Murray-Darling Basin Commission since 2004, and the Executive Director of the NFF from 1995-2000.

However, since the MDBC could not force changes in water flows and allocations, Howard founded the NWC to establish the infrastructure and policies for such mandatory changes, and two of its seven ruling Commissioners were top figures in the NFF: Peter Corish, the national president of the NFF from 2002-2006 when he left to join the NWC, and longtime Howard hit-man, David Trebeck, the founding Deputy Director of the NFF and the mastermind of the 1997-98 plot to bust the Maritime Union of Australia (MUA). NFF personnel also co-wrote the Workplace Relations Act 1996 as the precursor to the present, anti-human Work Choices Act. Many think that the NFF’er and MDBC boss Craik is the obvious choice to head up the new Murray-Darling Basin Authority, which will dictate what her Murray-Darling Basin Commission could only suggest.

The NFF itself has endorsed Howard’s new legislation, though it is obvious that it will decimate regional Australia. Their endorsement is not surprising, since the NFF is known by most farmers as “No Family Farms”, and was founded to help push free trade and deregulation throughout the economy, as it is now doing with water.

The full story of the NFF is told in the Citizens Electoral Council’s 1998 96-page pamphlet, Stop the British Crown Plot to Crush Australia’s Unions we will summarise the essentials here.

When Howard first came to power in March 1996, six members of his government were closely affiliated with the H.R. Nicholls Society, a radical deregulationist spin-off from the Crown’s Mont Pelerin Society. These included Howard himself, Defence Minister Ian McLachlan (a former president of the NFF), Treasurer Peter Costello, Minister for Workplace Relations Peter Reith, Assistant Treasurer Rod Kemp, and Minister for Employment David Kemp.

The H.R. Nicholls Society was named after the turn-of-the-century editor of the Hobart Mercury, who crusaded against Mr. Justice Higgins, the President of the Commonwealth Court of Conciliation and Arbitration, for his finding in the famous 1907 Sunshine Harvester case, that labour must be paid a “living wage” sufficient to support a worker, his wife, and three children.

The H.R. Nicholls Society, in turn, was indistinguishable from the leadership of the NFF, who had helped found H.R. Nicholls. The NFF itself had been founded in 1979 by members of the blueblood, Anglophile Australian Woolgrowers and Graziers Council, to lobby for free trade and to bust up the farmer-labour alliance policy of longtime Minister of Trade, the legendary John “Black Jack” McEwen, based upon a policy of rapid economic growth generated by a policy of “Protection All Around”, for both agriculture and for manufacturing. The AWGC’s Executive Director was David Trebeck, soon to be the founding Deputy Director of the NFF. Money poured in from Big Business to finance NFF actions against the unions, including the “wide combs” dispute in the shearing industry, and the Mudginberri abattoir conflict.

When then-Transport Minister John Sharp in early 1997 commissioned a report

into “waterfront reform”, he awarded an $80,000 contract to the Canberra-based industrial consultants, ACIL Economics (later known as ACIL Tasman), whose principals were NFF officials David Trebeck and Paul Houlihan, who was to be one of three authors of the union-busting Workplace Relations Act. Without tender, ACIL was then given a further $600,000 to develop the master plan to smash the MUA, complete with Dubai-trained strikebreakers from among Australian military veterans, overseen by Defense Minister and former NFF president Ian McLachlan.

To help crush the MUA, Big Business poured in funds to the NFF’s Australian

Farmers Fighting Fund (AFFF), which newspapers reported totaled $100 million. It was overseen by two well-known farmers: former Coles Myer chairman Nobby Clark, who was a partner with Rio Tinto in the world’s largest diamond mine, Argyle in WA; and HR Nicholls cofounder Charles Copeman, who as a CRA executive had sacked his entire unionised workforce at Robe River in WA. Its trustees included NFF Executive Director Dr. Wendy Craik, who later headed up the National Competition Council until Howard tapped her to head the MDBC in 2004.

Besides the NFF’ers, another Howard appointee is Professor Peter Cullen, a member of the Wentworth Group, which advocates cutting off water supplies to agriculture and similar genocidal actions. In fact, contrary to Howard’s phony pledge of “no forced reduction in allocations”, Cullen openly calls for precisely that, as in The Australian on January 10, 2007.

Among his other posts, Cullen is a member of the Natural Heritage Trust Advisory

Committee, which specialises in locking up land in perpetuity.

The Wentworth philosophy is most famously expressed by the quack “scientist” Tim Flannery, who demands that Australia’s population be cut back to six million, and by

fellow Wentworth member Prof. Mike Young of the University of Adelaide, who

also calls for compulsory acquisition of water allotments because “the market is too small”, as in his recent discussion paper. In fact, “buying water on the market should come before spending on water infrastructure, to allow the market to show which irrigation systems warrant future investment and which should be scrapped,” Young told Stock & Land on June 12, 2007.

“Some systems will inevitably be abandoned as water flows from them, with associated impact on rural communities”, but, he chortled, “this would be a sign that the market is working.”

Still another Howard appointee to the NWC is Chloe Munro, who oversaw the

electricity sector “reforms” (i.e. wholesale privatisation) under former Victorian Premier and Mont Pelerin stooge Jeff Kennett.

How the Scam Actually Works

In January 2007, Howard gave merchant banker Malcolm Turnbull the newly

tailor-made Cabinet post of Minister for the Environment and Water Resources, precisely for the purpose of overseeing the privatisation of the Murray-Darling under the MDBA. Turnbull is unabashed about his enthusiasm for water privatisation. In a speech quoted in The Australian on July 26, 2007, Turnbull summarised the sweeping powers of the new MDBA:

“It will represent the biggest reform of water management in Australia’s history, and it will see the Murray-Darling Basin on the path of a sustainable and secure water future. For the first time there will be one body setting and enforcing a sustainable diversion limit across the basin that recognises the interaction between surface water and ground water.

There will be a basin-wide approach to establishing a water market and water pricing. The Murray-Darling Basin Authority will set salinity and water quality objectives and develop and implement a Basin Environmental Watering PlanS”

Turnbull said nothing about creating new water supplies, because the new Act

is not intended to, but is entirely aimed at privatisation. Indeed, the NWC’s chief scientist Dr. Colin Chartres has repeatedly come out against creating new water supplies, as by desalination, in favour of solely relying on “rainfall as the primary source of water”, while the NWC’s chairman Ken Matthews has denounced the idea of bringing some of the huge water supplies in northern Australia south, as “fanciful”.

The intent to privatise is obvious in the Act’s objectives. As summarised by the NWC, its key points are:

1. water access entitlements and planning;

2. water markets and trading;

3. best practice water pricing;

4. integrated management of water for environmental and other public benefit outcomes;

5. water resource accounting;

6. urban water reform;

7. knowledge and capacity building; and

8. community partnerships and adjustment.

The initial premise from which everything in the new legislation will flow, is an “audit” of exactly how much water “exists” in the Murray-Darling Basin. That, of course, can be a highly subjective matter depending on the criteria of those doing the audit, not only as to quantity, but also depending on their calculations for salinity, “climate change”, the need for “environmental flows”, etc. not to mention whether or not they intend to create additional supplies.

In plain English, they can say that the water supply is whatever they “find” it to be; determine whatever supplies should be allocated for whatever uses they want (70% currently goes for irrigation); and can thus cut off the tap to farmers at will, causing the price of water to zoom and bankrupting farmers by the hundreds and thousands. The CSIRO is currently doing an audit for the NWC, and behold! thought. “If the CSIRO’s water calculations emerge as forecast by Dr. Chartres they may spell disaster for many farmers in Victoria, South Australia and NSW S Mr. Howard said the audit would determine the sustainability of irrigation.” (The Age, July 26, 2007)

Howard already announced in April this year, that the general allocation of water for the water year from August to May 2008 will probably be zero. That could result in staggering losses of as much as $36 billion ($6 billion in direct production and the rest in associated industries) according to Prof. Wayne Meyer, Professor of Natural Resource Science at the University of Adelaide (April 20, 2007 The Age), even before considering the much higher prices for food.

There is additionally a question as to how much Howard himself is responsible for the predicted zero allocation. Howard held a “Drought Summit” with the state premiers in November 2006. Ken Pattison of the Pyramid Hill-Boort Water Services Committee has reported that he told Howard at the time that a disaster was coming and that he should shut off water to recreational lakes in South Australia, and hold more back in the Snowy, Dartmouth and Hume reservoirs or “face a crisis within 24 weeks”. Howard did nothing, the result of which was summarised by Wakool Shire Mayor Ken Trewin: “hundreds of thousands of megalitres of stored water has been squandered to SA where it largely evaporated in Lakes Alexandrina and Albert at the expense of the rest of the communities upstream.” (Herald Sun, April 20, 2007)

Bankrupting Agriculture

Two preconditions for privatising water are to separate the ownership of water from the land, so that it is “tradeable”, and then jack up its price so that it is profitable for the new water barons. The first took place several years ago, and helped lead directly to the second, in large part through huge government purchases of water, which forced up the price dramatically.

Chris Lahy, a dairy farmer from the Murray Valley, recently described the process, “As soon as they separated land title from water title it allowed trading. This  appened just after 2000, about 2002. When the water title was separated from land, we saw water prices go up by virtually 300%, from your modest $30 per megalitre up to on average 100 per megalitre and in the drought times we were paying $200 or $270 for water and at that price it was unsustainable and you could not grow or produce anything that was going to make money. That was going to send you broke. For us on our farm, $175 a megalitre once you got to that point, there was no point irrigating anymore because the cost of buying water and delivery exceeded your income.”

Craik’s MDBC gives each state an allocation, which it then divides up among its users, a process easily open to abuse, particularly as states are under pressure to increase environmental flows. Lahy described how it worked in NSW: “100% water allocations were reduced by the NSW state government in real terms by 13% down to 87%. That 13% was to allow for evaporation, infiltration and environment.

That water was taken away from farmers’ allocations without a single cent of compensation nor discussion. Then what started happening, at the end of the season, was that parcels of water that were tagged ‘environment’, they were selling it back to us. What the hell is going on  A June 30, 2007 Sydney Morning Herald article by Daniel Lewis and Marian Wilkinson summarized why prices are soaring, and the tap is being increasingly shut for farmers, through the actions of the MDBC/NWC and thehost of government-funded radical environmentalist authorities.

“With farmers, management authorities and governments laying claim, thebattle for water in the Murray-Darling Basin has reached fever pitch.

“Competition for water in the Murray-Darling Basin has gone from a non-event monopolised by farmers to an aggressive multi-billion-dollar game in a few short, remarkable years.

In Australia’s food bowl, irrigators have been crowded by the likes of RiverBank, the Murray-Darling Basin Commission, the National Water Commission, Water for Rivers, catchment management authorities, the Living Murray, the Achieving Sustainable Groundwater Entitlements Program, the National Water Initiative, the Australian Government Water Fund and the NSW Wetland Recovery Plan. “So many vehicles for restoring water health and security in response to so many suffering farmers, thirsty towns, stressed rivers, aquifers and wetlands. Now the Prime Minister, John Howard, has trumped the lot with his $10 billion national plan for water security.

“All this competition for water means it looks more like liquid gold than ever before.”

Lewis and Wilkinson cite the case of Water for Rivers to show why water prices are soaring.

“Water for Rivers was set up in 2003 after an inquiry into the ailing Snowy River. Construction of the Snowy Mountains Scheme saw the iconic river  reduced to two per cent of its natural flow in the upper reaches. With $375 million from the NSW, Victorian and Federal Governments, the Albury-based enterprise has the job of finding 212 gigalitres so 21 per cent of the Snowy’s natural flow is restored. It also has to find 70 gigalitres for the Murray System.

“A recent paper written by the chairman, Richard Bull, said Water for Rivers reclaimed its first 80 gigalitres for $80 million.  But other water-procuring schemes have proliferated and ‘as an outcome of these forces, project prices have dramatically increased from about $1 million a gigalitre to $3 million a gigalitre,’ Bull says. Some project proponents suggest $5 million per gigalitre as a going rate.’ Once the National Plan for Water Security starts operating ‘it is not outlandish to suggest that further project costs may increase a further 100 per cent $6 million per gigalitre’  he predicts that once the Federal Government starts spending its $3 billion dedicated to buyback, the cost of water licenses will ‘go through the roof’.”

To show how far that process has already advanced, Lewis and Wilkinson cite their interview with Cliff Twigg.

“Cliff Twigg is a dairy farmer who sits on the management board of the West Corurgan irrigation scheme near Corowa, on the Murray. The district has been unsuccessfully targeted by the Living Murray. ‘The Government offered $1000 [a megalitre] and we just laughed at them,’ Twigg says. ‘They came back and said we will give you $2000. They wanted 10,000 megs. You will hear some of the deals they are doing are up to $5000 a meg now.’

“Twigg said he was determined to see no water leave Corurgan and undermine the investment he had made in irrigation. ‘We have only got to lose 10 per cent of our allocation and it’s non-viable. If we don’t get that allocation we are running at a loss. I want to keep water because I want to stay as an irrigator. It’s our lifeblood. You can’t dairy without water’.”

In terms of water allocations, Craik’s MDBC is running another scam, in which desperate farmers trade in their “General Security” allocations for a much smaller level of allegedly guaranteed “High Security” allocations, and at a substantially higher price. But then, the MDBC (through the state governments which it directs), delivers only a fraction of the “High Security” water.

Chris Lahy described how it has worked:

“High security water is divvied out to wine grapes, table grapes, nuts of all sorts amount of water, but their use per hectare is a lot lower. For example for a dairy farmer, your water usage per hectare was quite high.

Then they started putting in a new equation meant was it didn’t matter what you do with irrigation water, it was all unproductive, because they say flood irrigation is an evil, because the dollars per megalitre per hectare did not stack up well against high security users. But the thing is the dairy industry says,

‘That’s crazy man, we’re producing milk. Every person in this country has milk in their house should be a priority for water delivery, even if we don’t get high security water. Fortunately they saw the sense in that, and said maybe we should supply something called ‘modified stock and domestic’ or ‘modified water’ for dairy farmers during the drought time, but it still was not enough. It was too little action too late. A lot of farmers just went broke.”

And Howard’s claim that there will be no forced acquisition of water is of course a fraud, because desperate farmers will have to sell their water.

Further, when private companies take over the water, they will obviously spend the bare minimum on repairs or upgrading of vital water infrastructure, all the NWI/NWC propaganda about “full cost recovery for infrastructure” to the contrary. University of Adelaide’s Prof. Wayne Meyer pointed out the obvious:

“We have public water systems that are 50 to 80 to 100 years old all in increasing need of upgrading and replacement.” If such repairs/replacement is not done, “there is no way out short of going into catastrophic closure”. Does anyone seriously think that the (bankrupt) Macquarie Banks of this world are going to pour tens of billions of dollars into water infrastructure? They clearly do not intend to, but to grab the 70% of the Basin’s water now used for irrigation, bankrupt the farmers, and divert that water at skyrocketing prices to the cities.

Howard’s new water legislation will devastate the rural sector in the MD Basin, a fact that is so obvious, that the Federal Government has absolutely refused to conduct the normal “social impact” study for such far-reaching legislation. However, an independent study at the Australian National University warns of “social dislocation from small and medium-sized farms being forced out of the market by the price of water. Local communities would be devastated.”