OVERVIEW REPORT Agriculture and Natural Resource ... · Queensland, New South Wales, Victoria and...

OVERVIEW REPORT

Agriculture and Natural Resource Managementin the Murray-Darling Basin:

A Policy History and Analysis

Report to the Murray-Darling Basin Commission

OVERVIEW REPORT

Agriculture and Natural Resource Managementin the Murray-Darling Basin:

A Policy History and Analysis

Report to the Murray-Darling Basin Commission

Ian Reeve Lionel Frost Warren Musgrave Richard StaynerInstitute for RuralFutures

School of BusinessLa Trobe University

Economic Consultant Institute for RuralFutures

Institute for Rural FuturesUniversity of New EnglandArmidale, NSW 2351

Tel: 02 6773 2220Fax: 02 6773 3245Email: [email protected]: http://www.ruralfutures.une.edu.au

April 2002

i

Contents

Preface ........................................................................................................................................... iiiAcknowledgments ....................................................................................................................... iii

Summary......................................................................................................................................... v

1 Background............................................................................................................................ 11.1 The Human Dimension Strategy .................................................................................... 11.2 The project objectives..................................................................................................... 1

2 Scope of the Report .............................................................................................................. 32.1 What is meant by policy.................................................................................................. 3

2.1.1 Definition ................................................................................................................. 32.1.2 Processes and institutions...................................................................................... 3

2.2 Policy areas included in the report ................................................................................. 33 Context: The Land and the Nation...................................................................................... 5

3.1 Australia is Different........................................................................................................ 53.1.1 Australian soils are different................................................................................... 53.1.2 Australian hydrology is different............................................................................. 5

3.2 Public Policy .................................................................................................................... 63.3 Environmental Policy ...................................................................................................... 8

4 Agricultural Industry and Trade Policy............................................................................ 114.1 Introduction.................................................................................................................... 114.2 The Evolution of Industry and Trade Policy................................................................. 124.3 The Impact of General Policy Trends on Economic Activity in the MDBC................. 14

4.3.1 The changed world economy............................................................................... 144.3.2 An inelastic supply of farm land ........................................................................... 144.3.3 Assisting the industries and interfering with trade............................................... 16

4.4 Sustaining the Gains in Productivity............................................................................. 175 Farm Policy .......................................................................................................................... 19

5.1 1788-1901: Settling the Land ....................................................................................... 195.2 1901-1970: Agriculture’s Role in Continuing the ‘Nation Building’ ............................. 195.3 1970-2000: Adjustment in a Mature Farm Economy................................................... 20

5.3.1 From the ‘farm’ problem to industry adjustment.................................................. 205.3.2 From farm policy to rural policy............................................................................ 23

6 Water Resources Policy..................................................................................................... 256.1 Phase 1 — the First Steps............................................................................................ 25

6.1.1 Victorian initiatives................................................................................................ 256.1.2 Emulation by other States .................................................................................... 266.1.3 The River Murray Commission ............................................................................ 276.1.4 Overview of Phase 1 ............................................................................................ 28

6.2 Phase 2 — the March of Irrigation ............................................................................... 286.2.1 Irrigation Expansion.............................................................................................. 286.2.2 The Ebb of the Irrigation Tide............................................................................... 306.2.3 Overview of Phase 2 ............................................................................................ 31

6.3 Phase 3 — the Late 20th Century Reforms................................................................. 326.3.1 The 1980s ............................................................................................................. 326.3.2 The Murray-Darling Basin Ministerial Council ..................................................... 336.3.3 The 1990s ............................................................................................................. 34

ii

6.3.4 Overview of Phase 3 ....................................................................................................367 Land Resources Policy.......................................................................................................39

7.1 The 19th Century Legacy..............................................................................................397.2 Expanding Agriculture and Erosion — 1900-1930.......................................................407.3 The Soil Conservation Acts — 1938-1951...................................................................417.4 Assessment and Extension — 1951-1975...................................................................43

7.4.1 Erosion Surveys ....................................................................................................437.4.2 Amendments to the soil conservation acts ..........................................................437.4.3 Trends in the post-war period...............................................................................45

7.5 Enter the Commonwealth..............................................................................................467.6 State Policies in the 1980s............................................................................................477.7 The 1990s ......................................................................................................................47

8 Overview and Issues for Consideration...........................................................................518.1 Overview ........................................................................................................................518.2 Farm Policy....................................................................................................................53

8.2.1 Human and social capital......................................................................................538.2.2 Regional development ..........................................................................................53

8.3 Water Resources Policy................................................................................................548.4 Land Resources Policy..................................................................................................55

9 Bibliography .........................................................................................................................57

10 End Notes .........................................................................................................................65

iii

Preface

Government policy for agriculture and natural resource management (NRM) has a profoundinfluence on the ways in which natural resources are utilised. There is broadacknowledgment that agriculture will have to be practised differently from now on, in order toreverse the trend towards environmental degradation in many parts of the Basin. There is aneed for new policy directions, especially considering the urgent need to address drylandsalinity and related issues.

This report is part of a project instigated by the Human Dimension Program of the Murray-Darling Basin Commission and was undertaken by the Institute of Rural Futures based at theUniversity of New England in NSW.

The project initially produced an Overview Report which is a description of the broad trendsin 20th century government policy which impacted on land use practice in the Basin. AWorkshop was then held to debate and agree upon the four most significant areas where ashift in policy could, in the long term, encourage and facilitate sustainable farming practices.Each of these four areas is the subject of an issues discussion paper. These papers aredesigned to be a broad canvassing of ideas which will contribute to the debate about thedirection NRM will take in the future. Authors were asked for suggestions to move theagenda forward, and the ideas contained in the papers are not necessarily endorsed by theCommission.

Overview Report: Agriculture and Natural Resource Management in theMurray-Darling Basin – A Policy History and Analysis

Issues Paper 1: Legal Issues Relating to Water Use

Issues Paper 2: Resource Governance and Integrated Catchment Management

Issues Paper 3: Regional Development Issues

Issues Paper 4: Human Dimensions of Structural ChangePlease note that these are a linked set of documents and are fully referenced in the bibliography at the end of eachcomponent report.

Acknowledgments

Each of the papers has been reviewed by one or more external reviewers, as well as by themembers of the project Steering Committee. The papers have gained significantly from thehelpful comments and suggestions provided by these reviewers and their assistance isgratefully acknowledged.

v

Summary

This overview report forms the first part ofproject MP 2004: Agricultural and naturalresource management in the Murray-Darling Basin: a policy history andanalysis.

The greater part of the report is adescription of the broad trends over the20th century in trade and industry policy,farm policy and water resources and landresources policy in the Basin, taking inboth Commonwealth policy and thepolicies of the State Governments ofQueensland, New South Wales, Victoriaand South Australia.

The history of agricultural and naturalresource management policy in theMurray-Darling Basin falls into two eras,separated by what might be termed apolicy watershed in the late 1960s andearly 1970s. During the first six decadesof the 20th century, policy wasunderpinned by the assumption that theexpansion of agriculture and thesettlement of the Basin and other inlandregions was essential if the nation was toprosper. With this unquestionedassumption, the natural corollary wassignificant government intervention incommodity and land markets, and massivegovernment investment in water andtransport infrastructure, and in agriculturaland soil conservation extension services.

The policy watershed of the late 1960s andearly 1970s ushered in the second era ofpolicy making. Tariff protection began to

be dismantled, Australia lost itspreferential treatment in British markets,and industry efficiency and globalcompetiveness replaced nation-building asthe rationale for both water and farmpolicy. However, while farm and waterpolicy, and public policy more generally,were characterised by the withdrawal ofthe involvement of governments in theprovision of services to agriculture, therewas growing government involvement inareas such as catchment planning and theadministration of landcare.

The policy watershed of the late 1960s andearly 1970s also marks the beginning of aperiod of greater diversity andexperimentation in agricultural andresource management policy in the Basin.Most visible among the policyexperimentation has been the COAGwater reforms and landcare programswhich, respectively, brought cooperativefederalism and group extension to newheights in water and land resourcemanagement policy.

However, there is still an urgent need forfuther policy experimentation as the forcesof globalisation and structural changecontinue to place pressure on the viabilityof many farms in the Basin, and as theenvironmental legacies of past policyinitiatives and omissions continue totransform the landscape. The companionissues papers to this report discuss this ingreater detail.

Institute for Rural Futures 1

1 Background

1.1 The Human DimensionStrategy

The Murray-Darling Basin Initiative hasbeen established to give effect to theMurray-Darling Basin Agreement betweenthe Commonwealth Government and theGovernments of South Australia, Victoria,New South Wales, ACT and Queensland.The aim of the Agreement is: 'to promoteand co-ordinate effective planning andmanagement for the equitable, efficientand sustainable use of the water, land andother environmental resources of theMurray-Darling Basin'.

It has been recognised at an early stagethat effect ive natural resourcemanagement will require a deeperunderstanding of its human dimensions.To this end, the Human DimensionStrategy was approved by the Commissionin November 1999. The ImplementationPlan for the Human Dimension Strategyrecognises that changes will be required toorganisational cultures within the partnerGovernments. To this end the Plan adoptsa learning organisation model, animportant aspect of which is thatorganisations should learn from their ownexperiences and history. The Plan has anumber of foci, one of which is knowledgegeneration, dissemination and adoption.

This is being achieved through a suite ofresearch projects within the StrategicInvestigations and Education (SI&E)Program. One of these research projects(MP 2004) deals with the history ofagricultural and natural resourcemanagement policy in the Basin. It willcontribute to organisational learningwithin the partner Governments, as well as

addressing other priority areas within theprograms of the Murray-Darling BasinCommission. These areas include theprovision of contextual frameworks tovalidate policy directions, and improvingthe understanding of key socio-economicfactors that influence the ecologicallysustainable development of the Murray-Darling Basin.

1.2 The project objectives

This overview report forms the first part ofproject MP 2004: Agricultural and naturalresource management in the Murray-Darling Basin: a policy history andanalysis.

The aim of the project is to ‘identify thedrivers of past policy and the impacts ofthis policy on land use practice in theBasin’.

Specifically, the project objectives are:

ß to identify the drivers of pastagricultural and natural resourcemanagement policy among the partnergovernments of the Initiative;

ß to identify in broad terms the impact ofthat policy on land use practice;

ß to match historic policy trends tospecific land use issues; and

ß to identify appropriate new policydirections to facilitate the developmentand adoption of sustainable farmingpractice.


2 Scope of the Report

2.1 What is meant by policy

2.1.1 Definition

Public policy is a course of action taken bya government for the purpose of achievinga particular goal. Government inaction ornon-decision, when consistently pursuedover time against pressures to the contrary,can also be regarded as policy. Bothforms of public policy are givenconsideration in this report. The term‘policy’ is used both for intended coursesof action proposed by political partiesseeking government, and for courses ofaction actually taken by governments.This report is concerned with the latter1.

Where public policy involves governmentaction, this may involve one or more ofthe following policy instruments2:

ß direct regulation, including mandatedself-regulation, such as whengovernments require industries toestablish and monitor standards ofperformance,

ß voluntarism, in which governments takea facilitating or co-ordinating role andenter into voluntary agreements withindividuals, firms or organisations, andwhere there may be subtle rather thanexplicit incentives for compliance,

ß education and moral suasion,ß provision, by which governments

themselves undertake all the actionsnecessary to achieve a particular goal,

ß economic instruments, including thecreation of property rights and markets,fiscal instruments such as taxes andsubsidies that aim to bring about thedesired behaviour by affecting prices;financial instruments such as revolvingfunds and interest rate subsidies; theimposition of civil liability for theconsequences of behaviours thatgovernments wish to constrain,performance bonds; and the removal ofperverse incentives.

2.1.2 Processes and institutions

There is, however, more to anunderstanding of policy than the relativemerits of policy instruments. Policieshave impacts on social and economicconditions, new issues emerge and policieschange over time. From an historicalperspective, policy processes areimportant in explaining how changes inpolicy occur. Among the influences onpolicy processes are specific organisationsand groups of people, such as governmentagencies, interest groups, professionalsand the media. There are also less easilydefined influences, such as institutions,ideologies and culture. Figure 2.1sketches some of the relationships amongthese influences on the evolution ofagricultural and resource managementpolicy.

2.2 Policy areas included in thereport

Almost all public policy pursued by thepartner Governments will have someinfluence upon land use within theMurray-Darling Basin, and consequentlyupon environmental quality and thesustainability of agriculture in the Basin.

Any attempt to identify the forces drivingagricultural and natural resourcemanagement policy must start with aconsideration of public policy generally,and basic institutional foundations such asthe Australian Constitution, before movingto a closer examination of agricultural andnatural resource management policy. Thisis reflected in the following chapters,which move from a general considerationof public policy in Australia in the 20thcentury to macro-economic and tradepolicy, to farm policy and finally to waterand land resource management policy.

Institute for Rural Futures4

Figure 2.1 Influences on policy processes3. The red arrows define the broad phases in cycles of policyevolution: cyclical emergence of policy-relevant problems due to changes in economic, agricultural andnatural resource conditions; the movement towards a policy response and subsequent institutionalchange; and policy implementation and its impacts on economic, agricultural and natural resourceconditions. These conditions are also influenced by factors external to the agricultural economy andecosystems of the Basin (top left). The policy process is represented by the central column and theconnecting red arrows, while the broad influences on the policy process are grouped either side of thecentral column. These include the role of scientific knowledge (top right), of existing institutional andadministrative arrangements (bottom right) and of political processes (centre left). In recent decades,the media (centre left and top right) has played an increasingly important role both in the articulation ofissues and in the interactions between public opinion and political attention to these issues.


3 Context: The Land and the Nation

An enduring theme in the European history of Australia is the adaptation ofsociety and the economy, and of the very culture of the nation to the physicalconditions of the continent. Like the cabbage tree hat, old ideas and new meanswere blended together to deal with the exigencies of an environment vastlydifferent from that of Europe. Agricultural and natural resource managementpolicy-making were an important part of this adaptation, but were notconducted in isolation from public policy-making more generally or, in the caseof the latter, in isolation from environmental policy-making. This sectionprovides an overview of the environmental differences relevant to this study,before turning to a brief contextual account of the history of public policy andenvironmental policy in Australia.

3.1 Australia is Different

While the British settlers arriving in 1788could see that the land was different fromGreat Britain, their understanding ofagriculture could not provide any guide asto whether this difference requiredadaptation on their part and, if so, whatsort of adaptation was needed. Theagricultural settlement of the Murray-Darling Basin, and Australia as a whole,was inevitably an experiment. Twohundred years of experimentation haveyielded some important lessons, andlessons are still being learnt.

3.1.1 Australian soils are different

As Flannery (1994) has described, theAustralian landscape carries the imprint ofover 80 million years of geologicalquiescence, during which nutrients havebeen leached and soil constituentsredistributed to form generally infertilesoils with great contrasts in their physicalcharacteristics. In contrast, the soils ofEurope have been exposed only to someten thousand years of soil-formingprocesses after the retreat of thePleistocene ice sheets. These soils aremore homogeneous in their physicalcharacteristics and more fertile.

This difference provided the conditions forimmediate agricultural failures in the first

decades of European settlement.However, it has taken two hundred yearsof set t lement and agricul turalexperimentation for a much moresignificant difference to be appreciated. InEurope, human settlement followed theretreat of the ice sheets, with humandisturbance replacing the geologicaldisturbance of glaciation. The result wasecosystems that coevolved withdisturbance and agriculture. Flora andfauna adapted to the disturbance andpulsing of nutrient flows that areinevitable in agricultural landscapes.

By contrast, in Australia agriculture wasimposed on ecosystems that had taken tensof millions of years to adapt to the lownutrient status and erratic climate, anddeveloped a biodiversity and aconcentration of endemic species manytimes richer than that of Europe. Theinherent ‘leakiness’ of Europeanagriculture with respect to water andnutrients has been inimical to this rich andunique biota, as well as causing the majorlandscape readjustment processes that wecurrently understand as land degradation4.

3.1.2 Australian hydrology is different

In terms of its continental average rainfall,Australia is a a dry continent, althoughbecause of its low population density, the


available water per capita is not low incomparison with other countries. A moreuseful characterisation of Australia’ssituation is that much of the continent’swater is in the wrong place, or arrives atthe wrong time (Smith 1998). What is notso widely understood, is that Australia’srainfall is unpredictable, has a highseasonal variability and a high frequencyof droughts and floods (McMahon et al.1992; State of the Environment AdvisoryCouncil 1996). The variability of annualrunoff and precipitation relative to thelong term averages are respectively two tofour times than that of countries of similarlatitude and climatic zones. Variability isestimated to be greater than that of anyother continental region, and about twicethat of Europe (McMahon at al. 1992,Smith 1998).

This extreme variability has profoundimplications for the economics of waterresource development. In brief, it meansthat, to be viable, any level ofdevelopment requires considerably greaterprovision for storage than is the generalexperience in the Northern Hemisphere.Smith (1998) claims that, for a given levelof supply security, Australian dam storagecapacities need to be twice that of theworld mean and six times that of Europe.This has serious implications for theeconomics of water resource development.A further implication is that, for a givenlevel of supply security, the disruption ofnatural river functions, following theconstruction of storages and otherinfrastructure, is also likely to be greater inAustralia.

3.2 Public Policy5

As a result of the expansion of mining andpastoralism during the 19th century, theAustralian economy at the time ofFederation was based on the export of rawcommodities. While other smalleconomies had no choice but to favouropen international markets, Australia’swealth of natural resources and politicalcircumstances made it possible to institutea system of tariffs to protect its

domestically orientated manufacturingindustry (Castles, 1988).

The public policy initiatives upon whichthis domestic defence were built had theirorigins in the alliance betweenprotectionist Liberals (under AlfredDeakin) and the Labor Party in the firstdecade after Federation. Australia wasrelatively advanced in the development ofthe Labor movement because of theconditions in its mining and pastoralindustries. This political alliance was amanifestation of what Kelly (1992) termedthe ‘Australian Settlement’ — themutually beneficial policies of the WhiteAustralia policy that protected Australianworkers against cheap immigrant labour,domestic tariffs to protect the emergingmanufacturing sector, industrial arbitrationto protect workers’ conditions, statepaternalism to protect citizens against theexigencies of life in a newly settledcountry, and imperial benevolence on thepart of Britain to protect the fledglingnation against foreign threats.

By 1910, Australia was comparable to theScandinavian countries (also smallresource rich economies) in its progressivesocia l pol ic ies , but d i f fer ingfundamentally in that workers wereprotected by the ‘Australian Settlement’,rather than the comprehensive welfarestate that emerged in the Scandinaviancountries.

As the strategy of domestic defencebecame institutionalised in the periodbetween World Wars I and II, and changesin the political landscape resulted inCommonwealth Governments that werecoalitions between the Nationalists and theCountry Party, the policy of tariffprotection remained despite the earliersupport for free trade among ruralinterests. The acquiescence to tariffprotection of manufacturing by theCountry Party was purchased politicallywith similar measures that were beneficialto rural interests, such as tariff protectionfor domestic foodstuffs, bounties onproduction and irrigation subsidies (apolicy framework that has been termed


‘protection all round’). The extensiveinvolvement of State and CommonwealthGovernments in in f ras t ruc tu redevelopment such as irrigation was bothan economic necessity in a recently settledcountry short of capital, and a politicalnecessity to placate rural interests which,nonetheless bore much of the costs ofprotection of manufacturing industry —amounting to a transfer of wealth from theprosperous rural sector to the threatenedmanufacturing sector.

Up until the 1930s, economic policy-making was dominated by the ideas ofneo-classical economics which did notfavour government intervention in nationaleconomies. With the Great Depression,the development of John MaynardKeynes’ ideas about an interventionist rolefor government, and the replacement ofconservative governments by governmentsrepresenting workers’ interests in anumber of countries, economic policy-making underwent a ‘KeynesianRevolution’. In Australia, this did notoccur until the Curtin Labor Governmentcame to power during World War II.

As experience was gained with Keynesianeconomic management, and particularlywith the post-war economic boom,conservative political parties began toaccept Keynesian economics as a form of‘hands off’ intervention that did notrestrict the autonomy of private enterprise.

In Australia, the election of the MenziesGovernment, a coalition between theLiberal Party and the Country Party led byJohn McEwen, brought protectionism,state developmentism and Keynesianeconomic management to new heights. Asother countries signed up to the GeneralAgreement on Tariffs and Trade that hadbeen launched by the USA in 1947,Australia continued to build tariff wallsaround a domestic manufacturingeconomy that flourished briefly during the1950s while it served a rapidly growingpopulation bolstered by post-warimmigration and the baby boom.Adjustments to Australia’s fixed exchangerates were used as a means of protecting

agriculture from low overseas commodityprices and addressing concerns about thebalance of payments.

While tariffs had come under criticismfrom within the Tariff Board itself as earlyas 1965, it was the end of the post-warboom in the early 1970s that resulted inthe dismantling of Australia’s tariffprotection. With stagflation a problem inmany Western economies, Keynesianismlost ground to neo-classical economicorthodoxy, globalisation began toundermine the capacity of nationalgovernments for Keynesian intervention intheir economies, and social and economicchange weakened the coalition of intereststhat had made Keynesianism possible.

The Whitlam Government reduced tariffsand changed the role of the Tariff Boardunder the new name of the IndustriesAssistance Commission. After a hiatus inthe dismantling of protection during thetime of the Fraser Government from 1976to 1983, the Hawke Government floatedthe Australian dollar and introducedmeasures to deregulate the financialsector.

The worsening outlook in internationalmarkets for Australia’s commodity exportsin 1985, the fall of the Australian dollarand rising current account deficits andoverseas debt showed beyond all doubtthat the nation could no longer rely on itsprimary industries to support an inefficientand uncompetitive manufacturing sectorprotected by tariffs. In response, theHawke Government in the late 1980s putin place a regime of phased tariffreductions.

In public policy more generally, the lasttwo decades of the 20th century have seena revival of the laissez faire ideals ofclassic liberalism. The term ‘economicrationalism’ has been used widely in thisconnection (often in a reckless way andby groups whose interests are threatened)which fails to distinguish between ‘soft’economic rationalism which argues thatgovernments should leave markets to dowhat markets do best, and ‘hard’


economic rationalism which argues thatmarkets can do just about everythingbetter than governments.

The imprint of soft economic rationalismis to be seen everywhere in public policyat the close of the 20th century —manifest in reductions of governmentspending, corporatisation, privatisation,introduction of ‘user pays’ systems,outsourcing of government services,private sector investment in publicinfrastructure, industry deregulation andmarket creation. A further feature, somewould argue, is reregulation, viz, theintroduction of new forms of regulationrequired to remedy new forms of marketfailure.

3.3 Environmental Policy

Natural resource management policy fallswithin the broad area of public policyconcerned with environmental matters.Environmental policy has become an areaof study in its own right in the decadesfollowing the rise of modernenvironmentalism in the late 1960s. Anumber of historic trends can be identified(see, for example, Fisher, 1993; Doyle andKellow, 1995; Fenna and Economou,1998; Economou, 1999; Conacher andConacher, 2000) that are relevant to anunderstanding of the history of naturalresource management policy. Thefollowing account draws extensively fromthese sources.

The key event in the history ofenvironmental policy was the rise ofmodern environmentalism in the late1960s — a phenomenon that occurred inall Western nations. This is not to say thatthere was no environmental concern orenvironmental policy prior to this time.Rather, these concerns did not capture thepol i t ica l a t ten t ion tha t manyenvironmental issues enjoy today. Inaddition, public policy initiatives to dealwith what would be regarded asenvironmental problems today wereanalysed and justified with relatively littlereference to the concepts of environmental

science and ecology — which conceptshad yet to enter public and politicalconsciousness. The most commonframing of these problems was derivedfrom the common law concept of‘nuisance’ — the deleterious impact of theactivities of one citizen upon another. Theearly air and water pollution legislation ofthe 1950s and 1960s aimed to provide amore efficient way of dealing withnuisances than individual citizens bringingactions in common law against each other.This legislation generally attempted toprovide a statutory definition of whatconstituted a nuisance.

However, ameliorating deleteriousenvironmental impacts is only one part ofenvironmental policy. Another importantpart is concerned with coordinating andregulating the activities of citizens andfirms who wish to make commercial useof natural or mineral resources. In theperiod prior to the rise of modernenvironmentalism, this was largelyachieved through institutions foundedupon property rights. For most of the 19thand 20th century it has been held that thereception of common law in Australiafrom the United Kingdom invested in theCrown, and subsequently in the Statelegislatures, absolute ownership of all landand land-related resources6. Access wasgranted by the Crown or Ministers of theCrown by such means as freehold title,leasehold tenures, and various licences andleases to take timber, fish, or explore forand extract minerals. With the exceptionof freehold title, these leases and licencesgeneral ly a l lowed governmentsconsiderable latitude in exercising controlover the holders of them, although muchof this control was directed at promotingdevelopment rather than protecting theenvironment. In some cases, such as forleasehold tenures, the actual amount ofcontrol exercised by governmentscompared to the potential available tothem was relatively small.

While there were many scientists andother interest groups who raised concernsabout environmental problems during thefirst half of the 20th century (see, for


example, Powell. 1993 or the account ofthe history of the Austral ianenvironmental movements by Hutton andConnors, 1999), rarely was it suggestedthat governments did not have the meansto deal with these problems. The keyaspect of the rise of modernenvironmentalism in the late 1960s wasthat the four pillars of early 20th centuryenvironmental policy — common lawnuisance, statutory nuisance, absoluteownership by the state of unalienatedlands and resources, and property rightsgranted by the state — came undercriticism as part of the problem rather thanthe means to a solution. This periodspawned a number of social movements inaddition to the environmental movement(for example, anti-nuclear, anti-war andwomen’s and gay rights movements), allof which demanded radical changes to thepolitical, economic and social institutionsof the day, including increased publicconsultation and participation ingovernment decisions affecting theenvironment.

While governments did not accede to allthe demands that were made in the late1960s and early 1970s, there hasnevertheless been an enormous increase inthe diversity of environmental issues thathave received serious political attention,and in the diversity of policy responses. Anumber of trends over the last two decadesof the 20th century can be identified.

Firstly, a number of the institutionalarrangements for public participation inenvironmental decision-making have beenpartly dismantled since the heyday ofpublic participation in the 1970s,7

although it should be noted that landresource management is an environmentalpolicy domain that has gone against thistrend8.

Secondly, as in most Western countries,t h e r e h a s b e e n e x t e n s i v einstitutionalisation of science in dealingwith environmental conflicts. The firststep in this process was the concept ofenvironmental impact statements andstatutory requirements for such statements

as part of development approval. Also atan ear ly s tage, environmentalconsiderations were readily absorbed intothe practice of urban and regionalplanning which, as a professionaldiscipline, had been in existence forseveral decades prior to the rise of modernenvironmentalism.

A further aspect of the institutionalisationof science has been the attempts bygovernments to shift political conflictsover the environment and development outof the political sphere by setting upinstrumentalities or procedures whose rolewould be to resolve the conflict by neutralscientific analysis (for example, theAustralian Heritage Commission, theResources Assessment Commission andRegional Forestry Agreements). At theCommonwealth level, and in partnecessitated by the residual powers of theStates under the Constitution over landand water policy, this reached its zenithduring the term of the Hawke Governmentand since that time there has beenconsiderable devolution of proceduralresolution of environmental conflicts tothe States.

Allied to this has been the trend towardsmerging government departments withenvironmental responsibilities. Theseparate departments that had emergedduring the late 19th and 20th centurieswere appropriate to the task of transferringthe land and resources in governmentownership to various forms of privateproperty. However, when theenvironmental conflicts of the 1960s and1970s emerged, this division ofresponsibility across departmentsembroiled Cabinets in the resolution ofdifferences between departments. Themerging of departments meant that theseconflicts had to be resolved withinagencies, thus relieving Ministers of theonerous burden of politically sensitivedecisions likely to offend major sectionsof the electorate whichever choice theymade.

Another trend in environmental policyover the last twenty years or so has been


the increasing involvement of theCommonweal th Government inenvironmental policy, part of which is aconsequence of the growth ininternational environmental agreements.Starting with the Lake Pedder Committeeof Inquiry in 1973, the CommonwealthGovernment has successfully used itssection 51 powers to challenge and/orterminate State supported developmentprojects (for example, Lake Pedder, theFranklin, Fraser Island, the Daintree).These actions have generally beensupported by the High Court when Stateschose to challenge Commonwealthpowers.

However, the relationship between theStates and the Commonwealth in mattersof environmental policy has not beensolely adversarial. Another trend towardsthe close of the 20th century has been thegrowth in Commonwealth-State networksinvolved in consensual policy-making.The diversity of institutions includesMinisterial Councils, the ESD WorkingGroup process, Inter-GovernmentalAgreements and more informal groups ofgovernment representatives. An importantaspect of the strengthening of cooperativefederalism that has made it possible forC o m m o n w e a l t h i n f l u e n c e o n

environmental policy to reach far beyondits section 51 powers is vertical fiscalimbalance — the fact that theCommonwealth raises about 70 per cent oftaxation revenue in Australia, but isresponsible for about 50 per cent ofgovernment expenditure. Consequently,tied grants and related means by whichrevenue is distributed to States enable theCommonwealth to exert considerableinfluence in policy matters that in the firsthalf of the 20th century would have beenregarded as the exclusive domain of theStates. The introduction of the GST hasexercerbated the vertical fiscal imbalance(James, 2000), with the result that theC o m m o n w e a l t h i n f l u e n c e o nenvironmental policy will continue toreach well beyond its section 51 powers.

Much of environmental policy in the lasttwo decades of the 20th century can beseen as experimentation with, and aworking through of conditions of,co-operative federalism. GivenAustralia’s federal system of government,the division of powers in the Constitution,and the trans-boundary extent ofe n v i r o n m e n t a l p r o b l e m s , t h i sexperimentation will continue to be animportant part of environmental policy inthe Basin.


4 Agricultural Industry and Trade Policy

4.1 Introduction

For the first two thirds of the 20th century,agricultural industry and trade policy hasbeen associated with measures ofassistance that are targeted towardsfarmers who are engaged in particularprimary industries producing for domesticand overseas markets. Assistance isdefined in the Productivity CommissionAct of 1998 as ‘any government act that,directly or indirectly, assists a person tocarry on a business or activity, or confers apecuniary benefit on, or results in apecuniary benefit accruing to, a person inrespect of carrying on a business oractivity’. Agricultural industry policiesmight benefit producers by the availabilityof needed infrastructure and services thatare priced below their full cost, and by thedisposal of government-owned land at lessthan the market price. Such policies havetended to be the responsibility of colonialand state governments. Trade policycentres on the degree to which theeconomy abides by the principles of freetrade. Governments may interfere withfree trade by assisting domestic producersthrough tariffs, quotas, anti-dumpingduties, and regulatory restrictions onimported products, and tax concessions,subsidies, and price support schemes.Since Federation, trade policy has tendedto be the responsibility of thecommonwealth government.

If assistance is defined in that way, it isclear that farmers in the MDB have beenreceiving assistance since land was firstmade available for settlement. Colonialgovernments abandoned the sale of land atauction, with the price to be paidimmediately in cash, by the end of the1860s. People in all colonies could thenselect areas of Crown land on credit, to berepaid over several years. Governmentsprovided railways to reduce transport costsand assisted in making water available fordomestic and stock use. Governmentsbuilt irrigation works and assisted local

irrigation bodies in obtaining finance forthe construction of secondary works. Itwas thought that this would benefit manymore farmers, and deliver greatereconomies of scale, than would have beenthe case had irrigation been left solely toprivate enterprise. Governments alsoattempted to assist small-scale producersthrough closer settlement and soldiersettlement schemes.

The reasons why governments tended toprovide a high and continuing level ofassistance to rural producers will beexamined in this section. Governmentinvestment was intended to encouragefurther investment by the private sectorthat would make it possible for ruralregions to be settled more closely. Theneed for closer settlement was justifiedboth on economic grounds and by belief inthe tenets of Jeffersonian agrarianfundamentalism which extolled the moralvirtues of a society of yeoman farmers.These policies were encouraged by a highlevel of demand from people who wantedfarms of their own and by the strength ofdemand for certain primary products. Theconcern of government was to increase thesupply of farmland by raising its averageproductivity. When the initial attempts atestablishing irrigation schemes proved tobe unsuccessful, governments attempted tomake the schemes work rather thanabandon them altogether. The issues thatwere thought to have the greatest influenceover the success of irrigation –engineering, the pricing of water, thecapital requirements of small-scalefarmers, and the processing of output –aroused much debate, but the vision ofAustralia as a closely-settled, irrigatedland did not. Until the 1930s the majorpolicy emphasis was on increasing thenumber of farmers who were paying forirrigation water to increase theproductivity of their land, even though‘one would have expected that further


investment in irrigation would have beendiscouraged on economic grounds untilthe existing schemes demonstrated thatthey were capable of paying interest on thecapital invested’ (Davidson 1969: 74).Irrigation became ‘locked in’ as an activecomponent of government policiesbecause it was considered that its success,which was seen as crucial to Australia’sfuture, would probably only come after aperiod of trial and error.

After the 1930s governments started tolose much of their enthusiasm for creatinga closely settled pattern of rural land use,and became increasingly concerned withprotecting the incomes of producers whowere already on the land. Mosteconomists argue that although suchassistance generally provides benefits tothe firms and industries that receive it, thiscomes at a cost to other sections of theeconomy. In some cases certain forms ofindustry support – notably for R&D – candeliver net benefits to the community. Butwhile subsidies and price support schemesincrease returns to individual producers,governments may have to cover the costsof these measures by increasing taxes andcharges, cutting back on other spending, orby borrowing more. Market interventionof this nature tended to prop up inefficientproducers and entrench a high coststructure in the Australian economy. Bythe mid-1980s the forces of globalisationhad exposed the inefficiencies of industryassistance, and a wide-ranging program ofeconomic reform was begun that led tomajor gains in productivity. The currentpolicy challenge is to maintain themomentum of improvements in efficiency,while spreading the burden of adjustmentmore equitably across the community.

This section considers three issues. In 4.2the general issues associated with theevolution of agricultural industry and tradepolicy are considered. How these issueshave affected policy developments in theMDB is explored in section 4.3, while thepolicies that are needed to sustain recentproductivity increases are examined in 4.4.

4.2 The Evolution of Industryand Trade Policy

In the years immediately after Federation,Australia developed a series of laws andinstitutions that would dominate politicallife until the 1980s. Support for ideasabout the desirability of restrictedimmigration (the White Australia Policy),protecting and assisting industries, thebasic wage and arbitration, a reliance ongovernment for the provision ofinfrastructure and improvements inwelfare, and the maintenance of strong tieswith Britain, was bipartisan and wasaccepted by Conservative, Liberal,Country Party and Labour Partypoliticians. National unity on these issuesprovided the basis for what Kelly (1994)calls the ‘Australian Settlement’.

For Kelly, the leading figure in theconsolidation of the Australian Settlementwas Alfred Deakin of the Liberal Party.Deakin’s support for industry protection,which had been an established policy inVictoria since the Gold Rush, was at oddswith the free trade interests that dominatedin New South Wales. In the newCommonwealth, support for protectioncrystallised because Deakin formed acoalition of protectionists and the issuewas also supported by the Labour Party,and later the Country Party. Ruralinterests had traditionally opposedprotection of manufacturing because itincreased the costs of many primaryproduction inputs and was seen assomething that lured young people fromthe bush to the cities. However, by the1920s the Country Party, under the adroitleadership of Earle Page, had agreed tosupport manufacturing protection in returnfor assistance to rural producers, in theform of marketing organisations,subsidies, and price support schemes.

This protection for both the urban andrural sectors of the economy becameknown as ‘Protection All Round’. Theterm is somewhat misleading: it does notmean that all industries enjoyed a uniformlevel of protection. Protection levelsfluctuated over time and across industries,


as individual industries sought to advancetheir own interests. As Butlin, Barnard &Pincus (1982: 74) note, the essence ofProtection All Round was ‘in theaccommodation of conflicting interestsrather than merely the permissive use ofregulatory agencies for the interests ofspecially affected interests’. Thephilosophy reached a peak in the 1950sand 1960s, due to the political strength ofthe minister for agriculture, trade andcommerce, Sir John McEwen. By the1970s Australia had one of the highestlevels of manufacturing protection in theworld.

The major burden of protection fell on theefficient export sector – chiefly wool,wheat, and minerals – by raising itsproduction costs. Heavily protectedindustries had an incentive to producemostly for the domestic market. In timesof economic growth, when conditions inthe world economy and growingconditions in Australia favoured primaryexporters, protection did not impingeunduly on Australian living standards.The efficient sectors of the economy couldafford to carry the burden of protectedmanufacturers and small-scale ruralproducers, the smaller markets and higherlabour costs that resulted from restrictedimmigration, and the cost pressures ofregulated labour markets. But in times ofslower productivity growth and lessfavourable conditions in overseas markets,protection in one industry was likely tolead to losses in others. Protection AllRound was one of the weak spots in theAustralian economy that made itvulnerable to high rates of unemploymentduring the Great Depression (Butlin,Barnard & Pincus 1982: 75).

The Australian Settlement was concernedwith the distribution, rather than thegeneration, of national income. In goodtimes the Australian economy neverreached its full potential; in difficult timesthe economy was sluggish and slow torespond to challenges. During the 1980s

globalisation – the international mobilityof labour, finance and capital –highlighted these defects. In a globalisedeconomy, in which international investorsand financial markets could continuouslyreassess the flexibility and cost structureof the Australian economy, it becameincreasingly costly to continue providingthe ‘cosseting and caring’ trade andindustry policies of the AustralianSettlement. In the face of decliningcommodity prices (a global trend sinceWorld War I, broken only by the post-World War II boom), the primary exportsector became less able to carry the burdenof protection.

The theoretical foundations for the newpolicy and institutional framework toreplace the Australian Settlement waseconomic rationalism. From the mid-1980s onwards, a concern for ‘getting thefundamentals rights’ and ‘creatingcompetitive capability’ replaced thetraditional ‘getting the prices right’ focusof governments. The so-called NationalC o m p e t i t i o n P o l i c y t a r g e t e dimprovements in workforce andmanagement skills, and the creation of‘best practice’ in the provision of hard andsoft infrastructure. Within this policyframework, and despite the apparentinconsistency with the principles ofeconomic rationalism, industry policieshave persisted — having evolved toencompass enhancement initiatives ratherthan barrier protection (Withers andWanna 2000). Competition policies haveled to painful shakeouts and re-allocationsof resources, but the result was majorproductivity gains during the 1990s:Australia’s rate of multi-factorproductivity growth, which averaged 1.4per cent per annum since 1964-5,increased to 2.4 per cent from 1993-4 to1997-8. During the 1980s and 1990s,Australia’s productivity growth went frombeing half the OECD average to doublethe OECD average (ProductivityCommission 1999a: 65; 1999b: 246).


4.3 The Impact of GeneralPolicy Trends on EconomicActivity in the MDBC

4.3.1 The changed world economy

The major patterns of land use andinfrastructure provision in the MDB wereset in place during what historian EricHobsbawm (1994) calls ‘the longnineteenth century’. This was the periodfrom the 1780s to 1914 when theIndustrial Revolution spread from Britainto other parts of the world and a worldeconomy emerged based on the exchangeof goods manufactured by industrialnations for the food and raw materialsproduced by newly settled regions such asAustralia and the Americas. Worlddemand for primary production wasdirectly linked to the growth of worldmanufacturing production. Australiabecame a rural exporter, transformingnative vegetation into pastoral runs andfarmland for the production of wool andfood at the same time that the Britisheconomy was transforming its methods ofproducing textiles and increasing its urbanpopulation rapidly. The link between theworld’s primary producing and industrialregions was one of mutual dependence.As more countries industrialised, the trendwas for primary product prices to remainfavourable, which enabled societies ofrecent white settlement to import capitalfrom Europe. It was assumed that worlddemand for primary products wouldremain at a high level. As Sir Isaac Isaacswrote in 1901, ‘the multiplication ofmouths to be filled is inevitable andindefinite’ (Isaacs 1901: 11).

During what Hobsbawm calls ‘The ShortTwentieth Century’ (from World War I tothe collapse of the Soviet Union in 1991),conditions in the international economyhave impinged on the economic fortunesof Australian farmers. The world’sprimary production and industrial sectors,intimately linked in the long nineteenthcentury, became ‘uncoupled’ during thisperiod as global agricultural outputincreased faster than demand (Drucker1986). After World War I, it became

apparent that the former certainty abouthigh primary product prices could not bemaintained. European manufacturersstruggled to break back into their oldmarkets, many of which had been lost tothe United States and Japan. In the 1920sa great expansion of world foodproduction, much of it coming from NorthAmerica, had depressed food prices.There was also a general decline in theproportion of income spent on food.

While irrigation schemes were generallyconceived, designed, and set in concreteduring a period of optimism, for much ofthe subsequent period producers have hadto cope with oversupplied markets andrising production costs. As early as the1920s farmers in the MDB began to lookto their parliamentary representatives tostabilise marketing operations and helpalleviate their debt burden.

4.3.2 An inelastic supply of farm land

Before World War II, many people inAustralia, and in other parts of the world,associated wealth, security, and freedomwith land. Amongst people who workedfor others, in city factories or as farmlabourers, there was a strong demand toown a farm of one’s own. Theformulation of policies to provide ordinarypeople with access to land, which inearlier periods had been tied up in largeestates, was one of the most importantoutcomes of the Gold Rush. Even peoplewho had no interest in farming personallywanted the rural population to increase, asfarmers were a major source of taxrevenue (through land sales, customsduties, and railway revenue) and cheapfood contributed substantially to highliving standards. The desirability ofproviding a farm to everyone who wantedone was an article of faith for mostAustralians, and their colonialgovernments.

While the demand for farmland wasconsistently high, the supply of farmlandremained inelastic (in other words, thesupply of land did not increase as fast as


the market price that people were willingto pay for it). Much of the continent wasof no productive use. The grasslands ofthe MDB were dry and lacking in fertility.Timbered areas did not have thesedrawbacks, but it took what seemed to bea lifetime to clear them. The supply ofland could only be increased bytechnological change that allowed land tobe cleared or cultivated more easily, bygood seasons of rainfall that saturated andsoftened the soil, or by governmentssubsidising the sale of land by making itavailable at less than the market price.When any of these things happened, theincreased supply of farmland resulted in arapid shift of the margin of settlement, butalso created a fresh set of problems. Thuswhen above average rainfall encouragedsettlers to move to South Australia’snorthern areas in the 1870s, the return ofnormal dry conditions in the early 1880sleft many farmers in a precarious position,as Meinig’s (1962) classic study shows.There was a similar situation on Victoria’snorthern plains: settlement boomed in the1870s because of liberal land laws (thatallowed people to take up 320 acres oncredit), good rainfall, and the use of aSouth Australian invention, the stripperharvester. By the early 1880s, however, arun of dry seasons had set in and thefertility of the soil was starting to give out.Having encouraged people to take up land,the Victorian government now faced theproblem of how to keep them on it.

One solution, which was to have a majorimpact on the economy and environmentof the Basin, was the development ofirrigation. From the mid-19th century towell into the 20th century, irrigation wasseen as a means to settling greaternumbers of people on the land9. This waspart of the overriding theme of Australianagricultural industry policies before the1930s — the belief that governmentpolicies could increase the supply offarmland and make it possible for greaternumbers of families to be able to make aliving from the land. As the editor of theAge (20 July 1906) put it: ‘we want ourcultivable land to be more thoroughly andintensely worked, so that a small farm will

yield the young producer as good a livingas the larger areas of our early days gavehis father’. In fact, the reverse happened.Wheat growers progressively enlargedtheir holdings so that they could usemachinery in a cost-effective way andkeep sheep to supplement farm income. Inthe irrigation areas, falling prices andsalinisation made small holdingsuneconomic and this encouraged farmersto sow pastures of clover and introducedpasture species. In the closer settlementareas during the 1930s ‘some leases ofunsuccessful farmers in older settlementswere cancelled and their lands weredivided and added to neighbouring blocksto bring them up to larger living areas,which recent economic experience andproblems of land management had shownto be necessary’ (Rutherford 1964: 105).Although the main target of public capitalformation was rural Australia, the privatesector responded more substantially toinvestment opportunities in urban areas,especially after World War I (Sinclair1970).

Above all, the great hope of the late 19thand early 20th century was that Australiacould emulate the success of irrigation inAmerica, where irrigation turnedCalifornia’s Central Valley into the mostproductive farming region in the world.There was a significant exchange of ideasand technology between California andAustralia as both regions attempted totransform the natural environment into anidealised, garden landscape (Tyrrell 1999).But closely settled irrigated agriculture didnot in the long term thrive in the USeither, and the trend there was towards‘big spreads’ – larger, agribusinessproduction units (Johnson 1993). If closersettlement did not work in America, wherethere were greater quantities of water,labour cheaper, and domestic marketsbigger, it is in retrospect no great surprisethat it did not work in Australia, either.

By the 1930s, the dream of a denselypopulated, irrigated Australia was notcompletely dead. The building of theSnowy Mountains scheme was evidenceof that. But as Tyrrell puts it: the idea


‘lived on in popular imagination long afterthe dream of using it to build a democracyof small-scale and a landscape of gardens,farms and forests had been severelycompromised’ (Tyrrell 1999: 173).

4.3.3 Assisting the industries andinterfering with trade

Long before the ideal of a closely settledrural Australia had lost popular currnecy,Australian governments had beguninterfering with free trade and assisting theproducers who remained on the land. Thebasic framework was put in place duringthe 1920s (Wadham, Wilson & Wood1957). A voluntary system of pricecontrol on butter was introduced in 1926,which paid a bounty on local prices toraise them above export prices. This wascomplemented by tariffs on importedbutter. Price discrimination – the use of atwo-price system that paid a higher pricefor domestic sales than for foreign ones –proved to be popular with farmers becausethe price elasticity of demand for foodtended to be lower for domestic consumersthan for foreign consumers (Edwards1992). As a result, the higher domesticprice boosted the total revenue earned byproducers. This meant that the pricesreceived by producers were kept aboveworld prices by artificial means.Subsidies were paid to exporters of beefand canned fruit. The Australian Appleand Pear Council, formed in 1931,controlled the production and marketing offruit. The Australian Dried FruitsAssociation was empowered to controlmarketing in that industry. TheAssociation encouraged members to adoptnew technology, notably the ‘cold dip’method, and developed the successful‘Sunraysed’ brand. Rice, which was wellsuited to the heavy soils of theMurrumbidgee Irrigation Area, wasencouraged by tariff protection. NewSouth Wales established a Rice MarketingBoard and a Rice-growers Association,and representatives of the two bodiesconferred with government departmentseach year to determine the acreage thatcould be planted by each farmer. TheOttowa agreement of 1932 gave

Commonwealth producers preferredaccess to the British market.

In 1932 the Victorian government wroteoff much of the debts of those families stillworking closer settlement and soldiersettlement holdings. During the 1930s andearly 1940s holders of uneconomic closersettlement and Mallee land were paid afinancial incentive to walk off theirproperties. The land was then used toallow remaining farmers to enlarge theirholdings (Rural Reconstruct ionCommission 1944: 72).

Supplementing these schemes was a rangeof general assistance measures, such as theRural Adjustment Scheme, whichprovided low-cost finance for producerswho could demonstrate their capacity toestablish viable enterprises in the longterm, various income tax concessions, andfertiliser subsidies.

These developments proved to have alasting impact (Butlin, Barnard & Pincus1982: 133-8). When World War II began,the Commonwealth established wartimepowers of acquisition for mostcommodities. The bodies thatadministered these powers were generallysympathetic to, and representative of, theinterests of growers. The earlierdevelopment of growers’ associations andmarketing bodies simplified the process.For example, compulsory pooling ofwheat production for sale by theCommonwealth government wasintroduced during World War I, and thearrangement was resumed in 1939 withmarketing in the industry being placed inthe hands of the Australian Wheat Board.During the war Australia was expected tobe a major rural supplier and farmers wererequired to increase output. This wascontinued in the post-war period due to thefood requirements of a reconstructingEurope. During these inflationary years,the two-price policy was reversed andgrowers received subsidies if theirproduction costs rose above domesticprices. For a time, world demand forprimary production was high and little, if


any, thought was given to restricting thegrowth of output.

After the Korean War, primary produceprices fell quickly once again, and thetwo-price system was restored. Priceswere now guaranteed to be at least equalto the cost of production, and as worldprices fell to below the costs of productionof less efficient farmers, the level ofsubsidies paid to farmers overallincreased. By the early 1960s theproducers of every farm commodity wereenjoying higher levels of protection thanhad been the case in the immediate post-war years (Lewis 1967: 309). Until themid-1960s no effort was made to restrictthe growth of output. Farmers receivedprices that were substantially above thosethat would have cleared world markets andwhich equalled the marginal costs ofinefficient growers. This lockedAustralian agriculture in to a high-coststructure by protecting small-scale,inefficient growers and boosting theincomes of efficient ones. As Butlin,Barnard & Pincus (1982: 136) conclude:‘The preservation of high-cost farmingimplied an allocation of resources to therural sector that would not otherwise haveoccurred and created a major socialproblem of restructuring that wasbecoming recognised by the first half ofthe sixties’.

4.4 Sustaining the Gains inProductivity

The initial exploitation of the resources ofthe MDB was dominated by the woolindustry. Wool producers required largeareas of land and the use of Crown landfor this purpose was permitted in returnfor only a nominal fee. Wool growingrequired little labour. The commodity wasnon-perishable and had a high value inrelation to its bulk, which offset the highcost of land transport. A network of townsprovided needed services and casuallabour. After the Gold Rush, land wasmade more freely available for farmingand techniques of dry land farming thatwere suited to Australian conditions were

developed gradually. These techniquesrequired larger areas of land and farmerstended to enlarge their holdings wheneverpossible. As Davidson (1969) pointed out,these land-extensive methods of primaryproduction were the most efficient meansof utilising Australian resources. Bycontrast, the attempt to establish irrigatedagriculture, which required large inputs oflabour and expensive water storages, wasseen by Davidson as an economicallyinefficient use of scarce resources.

It must seem to many people in rural andregional Australia that the ultimate aim ofmodern competition policies is to recreatethe type of land-extensive pattern ofprimary production, with only largeproduction units, that economists regard asefficient. Communities of small-scaleproducers and the towns that support themsee economic rationalism – the corephilosophy of recent agricultural industryand trade policy – as something thatthreatens their way of life. As one ruralpolitician put it: ‘competition policy …acts like a giant vacuum cleaner suckingpeople out of the bush and putting them onthe shores in the seaboard’ (cited byProductivity Commission 1999a: xxiii).That a tension exists between the Australiathat has benefited from globalisation andstructural changes, and the parts of it thatremain from earlier periods of economicgrowth, was reflected in the results of the1999 Victorian state election.

A recent report by the ProductivityCommission (1999a) concluded thatstructural changes affecting rural andregional Australia were the result of long-term global forces and technologicalchanges that are beyond the control ofgovernments. The Commission foundcompetition policies had been made ascapegoat for the problems faced by ruralcommunities10. As noted previously, thepattern of small-scale farming, and thenetwork of country towns supporting it,was established during conditions of risingworld demand for primary production thatno longer apply. Small towns that grewup to provide a limited range of everydayservices and products to farmers who


travelled by horse and cart over roughroads became anachronistic in the era ofthe motor car and improved roads.Moreover, it is often overlooked thatdecline in some parts of rural and regionalAustralia has been offset to some extentby growth in others. Many country townshave experienced substantial populationgrowth in recent decades, especially alongthe coast. Other towns have grown bycreating sufficient jobs to absorb surpluspopulation from surrounding areas,especially in wheat-sheep regions wherefarm and small town employmentopportunities are declining. Examples ofthe ‘sponge cities’ in the MBD includeMildura, Horsham, Bendigo, Albury-Wodonga, Wagga Wagga, and Dubbo.Other towns are reinventing part of theireconomic base with the development ofniche production (such as Mudgee, an oldNew South Wales wool-growing town thathas developed thriving wine and foodprocessing industries, chiefly upmarketproducts such as olives, mustards, cheeses,and rabbits) or tourism (such as Echuca).In short, while land use in the MDB ischanging, the region has a diversified baseof farming, manufacturing, and serviceactivity, and is not being emptied ofpeople or jobs11. There is every reason tobelieve that the successful regions of theMDB have benefited from the removal ofthe distorting elements of the agricultural

industry and trade policies of theAustralian Settlement.

If such productivity gains are to becontinued, emphasis will need to be placedon nurturing the ability of individualregions to create jobs. Productiveinvestment will only be forthcoming ifbusinesses have access to resources thatgive them the opportunity to createlinkages and technological spillovers toother industries. Clearer, more completeinformation is needed about the strengthsand weaknesses, in terms of humancapital, physical resources, andinfrastructure, of communities andregions. It will not be possible to do thiswithout a ‘bottom-up’ decision-makingprocess involving closer consultationbetween policymakers and communities.If this does not happen there is a dangerthat reform processes will be stalled. AsWalsh points out: ‘At a time when,internationally, governments are beingforced to recognise that, in a globalisedworld, regions are increasingly moreimportant units of competition andlinkages with other national economies,Australia’s regions are feeling increasinglyisolated and remote from decisions thataffect them, and turning inwards becausethey believe central governments nolonger have the capacity or desire toaddress their needs’ (ProductivityCommission 1999b: 211-2).


5 Farm Policy

5.1 1788-1901: Settling the Land

In the earliest days of penal settlementfarming was driven by the survivalimperative; namely, the need for thecolony to feed itself. The scarcity oflabour and capital were very evident.Plant and animal species appropriate to thetasks were also in very short supply. Themost limiting factor may have been thelack of the necessary ‘human’ capital inthe form of knowledge regarding how towrest a living from the unfamiliar land andnatural resource base. The first settlerslearnt fairly quickly to identify the landtypes where agriculture and pastoralismcould be practiced with success.Modifications to technology, such as thestump jump plough and the Farrer wheatvarieties took longer to appear. Somewould say that the knowledge for a lastingrapprochement between agriculture andthe Australian environment is still far fromcomplete.

Aspects of the earliest measures toencourage land settlement that may beworthy of further attention include:

ß the granting and selling of land tomilitary officers, free settlers,emancipist convicts, emigrants and‘selectors’ under varying conditions,and with varying success (Davidson,1997; Campbell and Dumsday, 1990;Shaw, 1990; Lees, 1997);

ß the attempts to control pastoralexpansion and to promote the moreintensive use of land;

ß the attempts of policy to catch up withthe realities of prior occupation bygrazing;

ß conflicts of interest between differentclasses of settlers, and the attempts ofpolicy to deal with this;

ß the arrival of agrarianism, and itsAustralian adaptation and implications;

ß the responses to the demand for landfollowing the gold rushes; leading to

land ‘selection’ and the colonial landActs;

ß the effects of railways and on-farmtechnologies in altering the spatialpatterns of land use; and

ß the experience of major droughts,booms and slumps in land development(Shaw, 1990).

An admittedly oversimplified summary ofthis period might claim that ‘farm policy’(although not then called that) wasessentially focussed on the aim of, andproblems associated with, settling non-indigenous people on the land. Theeconomic success (albeit patchy) of theearly squatters failed to divert authoritiesfrom visions of more intensive land useand a more densely populated rurallandscape. Although there were a numberof economically devastating climatic andfinancial shocks to the farm sector in thisperiod, there were apparently few policyresponses that attempted to ameliorate theoften parlous financial and socialconditions of the sector, which was left toadapt as best it could, presumably byhistorically high rates of farm failure andexit, or by tolerating chronic poverty.

5.2 1901-1970: Agriculture’sRole in Continuing the‘Nation Building’

The particular meaning of nation buildingin the Australian context continued to havestrong pioneering and agrarian overtones.The Boer War and World War I may havehad important roles in incorporatingelements of the ‘bush’ ethos into theAustralian identity in the first quarter ofthe twentieth century. What is certain isthat the allocation of land to returnedsoldiers after World War I was seen asboth an appropriate reward for war serviceand a means of continuing the nation


building through further land settlementand farming. The inherent failings of thescheme were insufficient land, capital andknowledge (on the part of both theauthorities and the farmers themselves).

Nevertheless, agriculture continued to be amajor contributor to GDP and to exports,and growth of the sector was seen as amajor source of future national economicgrowth. This growth seemed assured inthe immediate post-war periods whencommodity prices were generallyfavourable, but these were followed bydepressed prices as world productionrecovered.

Influences on the location and condition ofthe farm sector during this periodincluded:

ß the removal of interstate tariff barriersß protection for large sections of

secondary industryß the expansion of railwaysß the continuation of closer (‘soldier’)

settlement after World War I (Campbelland Dumsday, 1990)

ß Government funded agriculturalresearch, extension and education toboost farm production

ß a variety of price support schemes forindividual industries (Mauldon, 1990)

ß the Great Depression and periodicdroughts

ß the Rural Reconstruction Commissionand the War Service Land SettlementScheme (post World War II)

ß the post-WW2 boom in large sectors ofprimary industries

ß the perceived importance of expandedprimary production and food processingto the balance of payments in times offixed exchange rates

ß the cost-price squeeze and the gradualsubstitution of capital for labour onfarms, especially since World War II.

A notable feature of this period was thewillingness of governments to intervenequite radically in land ownership, forexample by the purchase or resumption of

large estates in order to redistribute it forcloser settlement, in the pursuit of thesocial and economic objectives of thattime.

The possible role of government inintervening directly in the social conditionof farm families, and in the economic andsocial condition of rural towns, was notthe subject of much attention. The socialand economic problems of the citiesduring the years of the Great Depressionmust have seemed acute by comparison;indeed, there was significant migration ofunemployed people to the countrysideduring this period. It might be argued thatmaterial poverty was in those years lessdamaging to well-being in rural areas.

5.3 1970-2000: Adjustment in aMature Farm Economy

5.3.1 From the ‘farm’ problem toindustry adjustment

A large number of factors and eventsinfluenced the economic condition of theindustries represented in the farm sector inthe Basin during this period, and hence thechoice of enterprise, input mix andtechnology in those industries. Amongthese have been the following:

ß Policies relating to the pricing ofagricultural commodities (Mauldon,1990)

ß Input subsidies (especially finance andfertilisers)

ß The gradual disillusionment withprevious ‘development’ policies (Gruen,1990).

ß The entry of Britain to EC; and theincreasing influence of US and EC onworld markets for agriculturalcommodities;

ß The gradual reduction of favourable taxtreatment for primary producers

ß Reform of the statutory marketingarrangements for farm products, and thegradual removal of underwriting bygovernments (Piggott, 1990), in


particular, changes in the marketing ofwheat and wool.

ß Deregulation of input, financial andproduct markets for both agriculturaland non-agricultural products

ß Continuation of publicly funded R&Dfor agriculture, and extension; recentchanges in the funding and targeting ofextension by State departments

ß The continuing substitution of capitalfor labour on farms, including the use oftechnologies which allowed significantchanges in land use.

ß The ‘farm problem’ and adjustmentpolicy (Harris et al. 1974; Burdon,1993; McColl et al., 1997)

ß Drought policy (Burdon, 1995; DroughtPolicy Review Task Force, 1990)

ß Industry-specific policies, e.g., driedvine fruits, rice

ß ‘Integrated’ programs for arid zones(Western Division, mulga lands)

ß Policies relating to quarantine, animalhealth, genetically modified organisms,telecommunications and other services.

ß From farm policy to rural (and‘regional’) policy; DPIE, AFFA andDoTRS

ß Increasing focus on the integratedpursuit of economic, social andenvironmental objectives in policy (the‘three-legged stool’).

Cockfield (1993) provided a perceptivesummary of these trends.

Until roughly the 1970s, what passed forfarm policy was focused on supporting theproduction of individual commodities,reflected in a variety of pricing andmarketing arrangements for differentproducts.

By the 1960s, however, the place of arelatively mature (as distinct frompioneering) agriculture in westernindustrialised countries was being betterunderstood in terms of the frameworkdeveloped by agricultural economists suchas T.W. Schultz and Willard Cochrane, aswell as by the profession in Australia. Theresult was that instead of seeing the

chronic financial pressures on farmers interms of inadequate returns for individualcommodities, it was being characterised asa ‘farm problem’ (sometimes a small farmproblem). This problem was seen as aconsequence of the nature of the farmbusiness itself and of the economicenvironment in which it operated. Thesolution was regardes as hingeing on theefficient use of capital (especially humancapital) and the flow of resources(including people) into and out of the farmsector.

In particular, the tendency of the farmsector to experience chronic (andoccasionally acute) financial stress and itsattendant social damage started to beaddressed in a framework of the economiccharacteristics of farm businesses ingeneral, overlaid by the particularcircumstances of Australian agriculture,including its exposure to high climaticrisks and highly volatile world markets forits products.

A clear expression of this change in viewwas the Green Paper Rural Policy inAustralia (Harris et al., 1974). In thesame vein, assistance to farmersexperiencing acute financial difficultieswent from being made available underRural Reconstruction Acts - with theirpositive connotations of ‘nation building’ -to coming under Rural Adjustment Acts –which implied the need for resources (andpossibly people) to move out of the sectorand not only into it.

The approach saw the farm sector as justanother industry, with risk managementbeing the responsibility of farm‘managers’. It also emphasised theimportance of making a clear distinctionbetween policy measures aimed atimproving the efficiency of the industry inaggregate (i.e., without regard to theorganisational form of farm businesses)and measures aimed at achieving equity orwelfare objectives. By now, however, theplace of farming in the national repertoireof cultural icons was firmly established,especially the lack of distinction betweenthe business of farming and the attachment


of families to land. Consequently, the twoarms of the policy were not clearlydistinguished, and indeed operated toentrench an inefficient industry structure.The history of attempts to fully implementthis approach in regard to drought policyhas been similarly marked by confusedsignals (see Burdon, 1995).

Thus, there was a recognition of theintrinsic characteristics of a ‘mature’ farmsector in an industrialising (andsubsequently post-industrial) economy,which included the recognition that therewould always be ‘marginal’ businesses forwhich exit from the industry wasimminent, while for others there would beconstant adjustment pressure towards thesubstitution of capital (including humancapital) for labour, and the expansion offarm size in order to use capital moreefficiently. In a country where there waslittle ‘new’ land to develop, but whereagrarian values generate the perceptionthat farming is an inherited occupation andthat the children of farmers can alsoexpect to enter the industry, this set upinexorable tensions and a chronic‘adjustment’ problem. There were,however, some examples of further ‘newland’ development.

Largely, the emphasis of farm policyshifted from settling more farmers onrelatively small areas (the ‘homemaintenance area’ lived on after WorldWar II, even if not in name), to farmconsolidation (the term ‘build-up’ retainedthe pos i t ive connota t ions o f‘reconstruction’) with the assistance ofsubsidised loans. This was never a widelyused part of the RAS. Nor were theelements of the program that offeredwelfare assistance (‘household support’)as a loan which was not repayable if therecipient left the industry, and exitcompensation (‘re-establishment’ grants)to those who did leave the industry. Thefact was that farmers who had beenrefused further support by the banks (andwere prima facie candidates for exit)continued to see the RAS as a source of

‘carry-on’ finance at concessional rates ofinterest. Until the deregulation of thefinance industry, policy makers could relyon the argument that the rural creditmarket was imperfect (because of creditrationing), but the flagship components ofthe RAS continued to offer subsidisedfinance long after deregulation.

For a while the RAS was seen as aconvenient way of easing the pain of (andpolitical pressure from) the farm sectorwithout resorting to more expensive andultimately more distorting measures (interms of economic efficiency) such asprice support and input subsidies. As thevarious parts of the farm sector continuedto experience severe adjustment pressureas a result of its exposure to its endemicrisk factors, it was gradually realised thatthe RAS (and drought assistancemeasures, which suffered from the sameinternally inconsistent logic) were not onlyfar from low cost measures, but worse,seemed to be institutionalising inefficientindustry structures and behaviours.Seiper’s (1982) study of rural policy wasinfluential in drawing attention to what hetermed ‘the versatile application’ ofefficiency arguments to justify thesemeasures.

Accordingly, the 1990s saw a concertedpush towards the implementation ofpolicies that made the treatment offarming and farmers consistent with thatof other industries and occupations, and topass the responsibility for managing theinherent risks of the industry on to farmersthemselves, by withdrawing or dilutingmeasures that underwrote those risks. Thecurrent policies still have some elementsthat allow different treatment for farmersand their businesses, especially‘exceptional circumstances’ provisions.12

At the same time, policies that attempt toenhance the human capital of individualoperators, and the innovative andmarketing performance of particularindustries or segments of them, have beenexpanded.


5.3.2 From farm policy to rural policy.

From the early 1970s, the farm sectorstarted to lose its power as the sole driverand determinant of the economic andsocial condition of rural regions.Recognition of this was already evident inthe 1974 Green Paper, and was furtherdeveloped in the Ministerial statements ofKerin (1986), Hawke (1989) andAnderson in the late 1990s.

Accordingly, the relevant policyinstruments were no longer intervention inthe markets for specific farm inputs andoutputs, but instruments which encouragedthe efficient adjustment of the farmbusiness, including investment in humancapital; improved capacities of farmmanagers to manage for risk; enhancedmobility of human resources, especiallyout of the farm sector; amelioration of thesocial costs of adjustment borne by thosewho leave the industry; enhancedinnovation performance by individuals andpublic agencies serving agriculture.

To these have been added greater attentionto policies aimed at stemming or reversingthe decline in the economic and socialcondition of some regional economies.This decline is being driven by macro-economic and international forces external

to the Australian farm sector. While theprevailing economic rationalist policies ofthe late 1980s and most of the 1990spreferred to see the solutions to thisproblem in terms of ‘getting thefundamentals right’ (that is, the operationof national markets through nationalcompetition policy and generic welfaremeasures), there were also continuingattempts to find a coherent alternativepolicy rationale for deliberate andeffective promotion of regional growthand well-being. At the moment, policyand programs rest heavily on the assumedcapacities and resources of ruralcommunities to develop and implementtheir own programs of regeneration,seeded by relatively small amounts ofproject funding. These are unlikely to besufficient to alter the currently decliningtrajectories of many rural communitiesand regions — assuming it is a goal ofpolicy to ensure these communitiescontinue to exist. At the same time, asexperience with the Farmhand Appealshowed, urban Australians haveconsiderable empathy with the conditionsof rural Australians, and willinglycountenance expenditure to maintain the‘existence values’ of rural Australia. Todate, policies have paid little attention todelineating these values.


6 Water Resources Policy

6.1 Phase 1 — the First Steps

6.1.1 Victorian initiatives

Water was a major cause of unhappiness,disputation and administrative action fromthe beginning of settlement in south-eastern Australia (Lloyd 1988, Powell1989, Powell 1991). Almost a centurypassed, however, before decisive andfundamental action was taken to addressthe causes of these problems, first inVictoria and subsequently other BasinStates. Smith (1998) ascribed theVictorian initiatives to an accumulation ofpressures (as described in section 4.3.2),together with the ‘climatic determinism’of the 1877-81 drought. It was takendespite an inquiry in 1882, whichconcluded that irrigation would not beprofitable on the Murray (Gordon andBlack 1882).

Water became a significant political issueand the result was the passage of a numberof pieces of legislation, starting with theWater and Conservation Act of 1880 andincluding the important Irrigation Act of1886. The latter Act is generally acceptedas the seminal piece of irrigationlegislation in Australia. It:

ß exclusively vested in the State the rightto the use of, flow and the control ofwater in any watercourse;

ß subordinated the rights of the individualin that private riparian13 rights could notcompromise the cardinal rights of thestate; and

ß highlighted the need for the rights of theState and the individual to be fullydefined (Mulligan and Pigram 1989).

The architect of the 1886 Irrigation Act,Alfred Deakin, argued that, withoutirrigation, the population of the northernplains would ‘be swept away, and the landmust go back simply to sheep-farming’(quoted by Tyrrell 1999: 127). Deakinheld that the results of Californian

experience with irrigation could berepeated in Victoria. Irrigation, heclaimed, would increase the value offarmland and make it desirable forfamilies to subdivide their farms and plantorchards and vineyards that would providea good living on intensively workedproperties of as little as 40 or even 10acres. Deakin’s proposal that the colonialgovernment play an active role in thebuilding of dams and distribution channelswas justified by the desirability of makingwater available to farmers over the entirenorthern plains, not just those close torivers and creeks.

A further arm of irrigation policy was theencouragement given by the Victoriangovernment to the Chaffey Brothers toestablish an irrigation colony on theMurray River at Mildura in 1887. TheCanadian-born Chaffeys had establishedprofitable irrigation colonies in Californiaand were keen to repeat that success on alarger scale. The Victorian governmentoffer of a land grant was matched by asimilar one in South Australia, and in 1887the Chaffeys laid out another colony atRenmark, also along the Murray. TheChaffey’s track record in California wasimpressive, but in 1894 they filed forbankruptcy.

The reasons for the early problems ofthese settlements also lay behind thedifficulties experienced in later times byirrigators across the MDB. These reasonsincluded:

ß farmers’ attitudes to irrigation,ß purchase of irrigation blocks by

speculators,ß the pricing structures,ß engineering inadequacies, andß inattention to marketing14.


By the start of the 20th century there was ageneral consensus amongst observers ofVictoria’s irrigation systems that thepolicy of making local trusts responsiblefor decisions about the availability andprice of water had been a failure. Thetrusts ran into difficulty — theirinfrastructure was not maintained and theyfailed to repay loans to the State or to payfor bulk water deliveries from State ownedreservoirs. William H. Hall, an expertemployed by the government of the CapeColony (part of modern South Africa) toreport on irrigation around the world,found that, in Australia, the policies of theDeakin era were flawed by ‘inadequategovernment supervision’, which meantthat the public sector committed funds toirrigation development ‘without assumingfinancial and technical supervisions toensure that the expenditures werejustified’ (Tyrrell 1999: 150-1).

These events failed, however, to lessen theprevailing enthusiasm, which sawirrigation as providing a way of reducingclimatic risk, and of providing a basis forcolonial wealth and settlement of thehinter land, through agricul turaldevelopment and closer settlement. Thedesirability of irrigation and its potentialfor success was almost considered to beself-evident. To deal with the criticisms,the Victorian government passed theWater Act of 1905. This abolished theirrigation trusts and paid out their debtsout of consolidated revenue. A newstatutory corporation, the State Rivers andWater Supply Commission (SRWSC) wasset up to manage the State’s waterresources. In 1907, an American, ElwoodMead, who was ‘probably the country’sleading authority on irrigation’ (Reisner1993: 109), was appointed head of thecommission. Mead argued that whileDeakin had seen the main task for thepublic sector as that of making wateravailable, insufficient attention had beengive to educating farmers and convertingthem to small-scale intensive cultivation.

Under Mead's leadership, the SRWSCcame to be perceived as having a remit for

the construction of storages, infrastructure,and ultimately, irrigation schemesthemselves. Despite the failure of theTrusts, the desirability of such activity wasnot questioned and the task was seen asbeing essentially technical and calling forthe skills of engineers. Not surprisingly,the relevant public authorities weretherefore dominated by an engineering anddevelopmental culture.

6.1.2 Emulation by other States

The other States of the Basin followed thelead set by Victoria. That is, they allvested control of water in the state andcreated bureaucracies to manage ruralwater development15.

New South Wales

The experiences with water in New SouthWales during the 19th century were similarto those of Victoria (Lloyd 1988)16. Socialattitudes toward irrigation development inthe last two decades of the 19th centurywere similar to those in Victoria, and thedroughts toward the end of the centurystimulated a similar urge for legislativeaction. The pace of change was, however,somewhat slower. In 1896, the WaterRights Act was passed with the intentionof legitimising private irrigation initiativesalong the Murray and Murrumbidgee. Itgave control of water to the State andprovided for the licensing of the extractionof water for irrigation.

The construction of the Burrinjuck dam onthe Murrumbidgee, and distribution canalsfor irrigation started in 1906. TheMurrumbidgee Resumption Act and theMurrumbidgee Irrigation Act of 1910authorised the purchase of 1.6 millionacres of land on the north side of the river,below Narrandera17. Elwood Mead wasemployed by the New South WalesGovernment to help plan the scheme. Theland was subdivided into irrigableholdings of between two and fifty acres,and roads, distribution channels, anddrains were surveyed and constructed.


The Water Act 1912, provided acomprehensive base for the irrigationdevelopment of the rest of the 20th century.This Act cemented the demise of thecommon law principles of water use and‘... inaugurated a system of private waterexploitation under public licence whoseessentials still apply today’ (Lloyd 1988,p.124).

South Australia

South Australia provides a somewhatsimilar history. (Hammerton 1986,Williams 1974). It shared with Victoria anexperience with Trusts and other ventures,also with some unhappiness. Initially, theState was reluctant to encourage irrigationalong the Murray because of the threat itmight pose to navigability, the lack ofguaranteed flows from the up-streamStates and some fiscal stringency. Thesedifficulties were lessened by the decline inthe significance of navigation towards theend of the century.

Queensland

Interest in larger scale irrigation schemesgained momentum in Queensland in the1880s. Following the failed passage of aWater Bill in 1886, Dr Elswood Chaffey,brother of William Benjamin and Georgeof southern Australian fame, approachedthe Queensland Government aboutestablishing irrigation colonies in thatState (Powell, 1991). Subsequently, theQueensland Minister for Lands visited theChaffey irrigation schemes on the Murray,and the Government’s own engineersundertook a comprehensive study of theirrigation potential of the State’s Rivers.The Irrigation Act of 1891 was, inPowell’s words “an embarassing jumble ...litteredwith amendments reflectingparochial point scoring and outrightconfusion”. It failed to deal with theunsuitability of the riparian doctrine underAustralian conditions and appears to havehad little subsequent impact on policy. Acompanion Act of the same year, the

Water Authorities Act, was moreinfluential. It empowered local authoritiesto provide water supply works andremained in force until 1942 (Powell,1991).

6.1.3 The River Murray Commission

Institutional arrangements for themanagement of the Murray were amongthe contentious issues during thenegotiations over federation. The reasonfor this was that the river was an importantwatercourse impinging on three of theBasin jurisdictions. Initially, debate wasabout navigation but, before it wasresolved, management for extractivepurposes became more important.

By the time of the federation conventions,there was conflict between the upstreamStates of New South Wales and Victoriawishing to use Murray water for irrigationpurposes, and South Australia wishing topreserve in-stream flows for navigation.The resulting compromise was provisionin the constitution for the Commonwealthto control navigation and shipping, and theinclusion of a guarantee to the reasonableuse of water by the states for conservationand water supply.

It took a further 14 years before the RiverMurray Waters Agreement was concludedbetween the three States and theCommonwealth (Doyle and Kellow 1995).By this time, as mentioned above, SouthAustralia was more concerned withguarantees of supplies for extractive usesthan in flows for navigation.

The Agreement was enacted in 1915. Itprovided for equal sharing between NewSouth Wales and Victoria of the flow atAlbury, with each State retaining controlof its tributaries below that point. It alsoguaranteed a minimum entitlement forSouth Australia. The River MurrayCommission was established in 1917 tosupervise the construction and operationof the regulatory facilities specified in theAgreement.


6.1.4 Overview of Phase 1

The important features of the reforms ofthe late 19th and early 20th century werethe substitution of control by the State forriparianism, the institution of the right touse water under licence, the authorizationof loans by the State to failed irrigationentities and the establishment ofbureaucracies through which the Statescould exert their control over the resource.Thus rights to water were ‘nationalized’and r ipar ian ism swept as ide .Unfortunately, as will be seen below,while this represented an important step inthe attack on the difficulties created byriparianism, and a repudiation ofalternatives, such as the priorappropriation doctrine of the west of theUnited States18, it was only a start on whatwas needed if water was to be managed ina sustainable way. However, it did lay afoundation for the enhancement ofagricultural output, and the acceleratedsettlement of the hinterland through theexpansion of state-controlled irrigation.

6.2 Phase 2 — the March ofIrrigation

6.2.1 Irrigation Expansion

Having vested control of water inthemselves, created the necessarybureaucratic agencies, and having thenecessary political will to proceed, theBasin States were ready to construct thestorages and infrastructure to enable theestablishment of substantial areas ofgovernment-sponsored irrigation farming.

There followed for most of the 20thcentury a period of unquestioned irrigationdevelopment dominated by engineeringobjectives that were, as Ward (2000)notes, of large scale but narrow scope.19

As Table 6.120 shows, this activitycontinued at a generally increasing rate,for most of the 20th century, with a moresubstantial level of development in thesecond period shown in the table.

Having rejected the possibility of allowingthe establishment of private monopolies inthe supply of bulk water, the Statesestablished public monopolies instead.The remit of these bodies was thepromotion and development of irrigation.Smith (1998) refers to the steadfast andresolute pursuit of this mission by theseagencies, and to the considerable powerand influence they wielded. They wereaided in these respects by the considerablepolitical and community support forirrigation and closer settlement21, and analmost boundless optimism in the future ofAustralia’s agricultural industries22.

Throughout Australia, confidence indairying and wheat growing was alsobuoyant, and was supported by railwaybuilding that opened up new areas forsettlement. Stuart Murray, the first headof the SRWSC, predicted in 1908 that withirrigation and closer settlement Australiawould eventually support a population of180 million (Argus (Melbourne), 18 April1908). World War I did not diminish thebelief that Australia’s future wouldrevolve around primary production.Irrigation development. Closer settlementcontinued, and new areas of land were

Table 6.1. Capacities of major dams (over 100GL capacity) in Australian States – 1900.1940, 1990 (’000 Gigalitres)

Year Victoria New SouthWales

SouthAustralia

Queensland Totals

1900 0.13 0.08 0.02 0.01 0.251940 4.50 3.63 0.12 0.07 8.731990 12.22 25.41 0.26 9.80 87.26

Source: Smith 1998.


opened up for wheat growing, the latterbeing inspired by the belief that with‘modern’ methods of cultivation,settlement could take place in areashitherto considered too dry for successfulfarming. Land was made available forreturned soldiers and for a scheme ofEmpire Settlement, under which theCommonwealth and British governmentsshared the costs of placing Britishmigrants on the land. The new land thatwas made available was generally snappedup by people who wanted to farm.

Not surprisingly, close relationshipsbetween the irrigators and the relevantirrigation authority were established. Theresulting partnerships came to function aspotent political forces, which exertedconsiderable influence over the directionof irrigation policy. When widespreadfinancial problems emerged in irrigationdistricts, concessions were readily made toirrigators. Hindsight shows that thisinfluence was to produce results notalways in the interest of society at large.

Problems with these schemes soon beganto appear. Small blocks encouragedsettlers to irrigate every patch of ground,even those that were subject to salinity.Many of the settlers on closer settlementblocks lacked capital and knew little ornothing of irrigation (Royal Commissionon Closer Settlement 1916). Soldiersettlement failed disastrously for similarreasons. British settlers took up land thatthey were told would grow wheat, butturned out to be vulnerable to drought andwind erosion. ‘By the end of the ‘twentiesCommonwealth and state governmentshad found that the mixture of closersettlement and diversification was costlyand largely unproductive’ (Schedvin 1970:64).23

In the case of the Murrumbidgee IrrigationArea, the New South Wales Governmenthoped to avoid the early problemsexperienced in Victoria and SouthAustralia by selling the land resumed forirrigation to the settlers, at prices enhancedby the prospect of irrigation. Theproceeds from these sales were intended to

pay the costs of the Governmentinvestment in the scheme. In the event,collection of payment for either land orwater rates was not possible and, in 1914and 1916, legislation was passedsuspending payments. This experiencewas repeated in 1919 when soldiersettlement occurred in the Areas.

The persistence with irrigationdevelopment, in the face of accumulatingevidence of its fundamental economicnon-viability was remarkable. At sometime the tide could be expected to turn.And turn it did; but not for several decadesafter World War II. In the meantime therewere two developments which played animportant role in maintaining the politicalcommitment to irrigation development inthe face the accumulating evidence of itsmarginal economic viability. Firstly, ricebecame an important and profitable cropin the south western irrigation districts ofNew South Wales24. The seconddevelopment was the construction of theSnowy Mountains Scheme25.

Apart from its considerable engineeringvirtues, the process whereby the Schemecame into being was, as with the RiverMurray Waters Agreement, an example ofthe potential for the Commonwealth toprovide leadership in the resolution ofconflict between the States over boundaryand trans-boundary rivers. Not only did ituse its powers of persuasion, it alsoemployed its coercive ability, byemployment of its defence powers underthe constitution, to declare that theelectricity to be produced by the schemewas essential to the Nation in time of war(Lloyd 1988). It also used its financial‘muscle’ by financing the construction ofthe Scheme. The States were to repay theloan from the proceeds of the sale ofelectricity produced by the Scheme; anarrangement amounting to the provision ofa subsidy for the irrigation water from theScheme.

The Scheme was not without controversyduring its development26 and immediatelyafter its completion. Davidson (1974)commented on the unsatisfactory results of


the Scheme. He also reported an estimateby McColl that the same quantity ofelectricity could have been produced morecheaply from alternative sources. Inaddition, he refers to his own calculationsthat showed a meagre return from Snowyirrigation water after allowing for allcosts27.

6.2.2 The Ebb of the Irrigation Tide

Investment in storages and irrigationinfrastructure continued at even higherlevels after World War II. Importantchanges in community attitudes were,however, appearing. These, first, changedthe nature of government involvement andthen, second, led to questioning of thedesirability of continued irrigationdevelopment. The latter resulted in thevirtual cessation of the construction ofpublicly funded storages in the Basin. Itdid not, however, prevent the continuedexpansion of irrigated acreage andprivately funded storages.

The 1960s saw a decline in support forcloser settlement, as realisation spread thatAustralia’s comparative advantage lay inbroad acre farming, not the establishmentof a small farm yeomanry as envisaged inthe late 19th and early 20th centuries. Thisrealisation applied to irrigation as well asto dryland production. Further, there wasa growing appreciation that closersettlement was also an inefficient tool forthe redistribution of wealth and the pursuitof social justice.

This change in attitude reinforcedconcerns about the fiscal burden ofcontinued public sector development ofirrigation schemes. As a result,government involvement in such schemesceased, though government involvementin the construction of storages did not. Inaddition there was a burst of smaller-scale,private dam construction in northern NewSouth Wales in the mid-1960s to late1970s to support expansion of the cottonindustry. This expansion of storage ran inthe face of the emerging sentiment against

the provision of irrigation works, withinthe Basin and in Australia generally.

Within the space of a few years, cottonhad become a major irrigated crop in theBasin. While many cotton farms werefamily businesses, a number were ownedby corporate entities. So the tradition ofsmallholder, irrigated agriculture gaveway to large scale farming, in whichincorporated entities played a major part,at least in New South Wales andQueensland.

From the outset, development of irrigationin Australia had its detractors. But it wasnot until the late 20th century that theirarguments were able to blunt theenthusiasm of the wider community forthe romance of ‘making the desert bloom’,and the belief that the development itrepresented was in the overall nationalinterest. The State water agencies andtheir senior engineers had provided theexpertise needed to attempt the realisationof the romantic visions. That irrigationwas in the overall national interest wasaxiomatic; and the need for critical,including economic, analysis was notconsidered necessary. As economiccritiques of irrigation over-developmentemerged in the 1960s, the arguments putforward initially made little impact on thepro-irrigation forces.

In September 1963, Professor KeithCampbell sounded a call for thequest ioning of the previouslyunquestionable, and pleaded for a greaterinput from economics in the assessment ofirrigation projects. Further questioning ofirrigation policy by academic economistsfollowed, chiefly from Dr. BruceDavidson. He mounted a trenchant attackon the development of irrigation in hisbook Australia Wet or Dry? The Physicaland Economic Limits to the Expansion ofIrrigation.

Davidson and others argued that thepromotion of intensive irrigatedhorticulture was fundamentally ill-founded, given that Australianagriculture’s competitive advantage lay


with extensive production of durablecommodities. As a consequence, intensiveirrigated production would remainuneconomic without substant ialgovernment subsidy28.

With the passage of time, the logic of theeconomists’ case became accepted and thewider community came to doubt the valueof further dam building and subsidisationof irrigation water supply. This view wasstrengthened by the suggestion thatAustralia had become a mature watereconomy (Watson and Rose 1980, Randall1981). This suggestion arose from theobservation that the provision of newstorages and infrastructure was becomingincreasingly expensive, that the low costsources of supply had, by now, beenutilized, at the same time that theopportunity cost of development wasbecoming higher.

To these arguments were added a numberof emerging concerns about theenvironmental consequences of past, letalone future, irrigation development.These concerns relate to the degradationand sustainability of existing levels ofwater use, along with questions of waterquality. Watson (1990) argued that thesetwo strands of concern over irrigation,economic and environmental, called for ashift away from a single dimensional

concern for water as a resource fordevelopment and extractive use, to anintegrated view of the resource as part ofan ecological, economic and socialsystem. Such a view, if adopted, wouldrequire fundamental reform of the waywater was managed. Clearly theinstitutions created in the 19th century forthe purpose of development would nolonger be appropriate. Fundamentalreform would be necessary. Some steps inthis direction had already been taken, butthe 1990s saw the commencement ofexplicit and formal action to achieve theintegrated approach Watson advocated.


The first six decades of the 20th centurysaw the spread of irrigation, mainly in theBasin, in a burst of ‘nation building’,which had the virtually unquestioningsupport of the whole community. Thepublic irrigation schemes, whichdominated this development, were majorengineer ing and adminis t ra t iveachievements. They also representedconsiderable struggle and sacrifice on thepart of the settlers of the predominantlysmall farms established as a result of theprevalent closer settlement philosophy. Inthe 1960s, enthusiasm for this type ofirrigation development waned, due to

Figure 6.1 Diversions for consumptive uses in the Murray-Darling Basin

0

2500

5000

7500

10000

12500

15000

1920 1930 1940 1950 1960 1970 1980 1990

Annual Diversion (GL/y r )

Source: State of the Environment Advisory Council (1996)


shifting political priorities and theabandonment of closer settlement, fiscalstringency, and mounting questioning ofthe economic desirability of suchendeavours. Government involvement inthe construction of storages continued andthe additional water was used to intensifyirrigation in existing irrigation areas anddistricts, or to enable the growth of privateirrigation, mainly for cotton in northernNew South Wales and southernQueensland. As figure 6.1 shows, thelevel of diversion of water forconsumptive uses in the Basin continuedto grow despite the passing of governmentinvolvement in irrigations schemes andstorage construction. At the end of thecentury, the Basin had been bequeathed asubstantial irrigation industry, a largeinventory of storages and a widespread,but somewhat decayed, infrastructure. Italso inherited an alarming level of landand water degradation, the nature of whichwas only dimly perceived, prior to 1990.

6.3 Phase 3 — the Late 20thCentury Reforms

6.3.1 The 1980s

While there was concern about risingwatertables, water logging andsalinisation, which led, in part, to theMurray-Darling Basin Agreement, reform,in the 30 years from 1960 to 1990, wasdriven by economic and fiscal, rather thanenvironmental or other considerations.Over the period, there was an increasingreluctance on the part of the States tocommit themselves to further expenditureon major works, while on the other hand,irrigators were anxious to have more watercommitted to irrigation or to make existingcapacity go further. The construction anddevelopment role of the rural wateragencies received less emphasis, whilethat as water planners, managers and‘conservers’ was increased (Lloyd 1988,Powell 1989). Increasingly water becameregarded as an economic commodity andpressure was placed on water agencies totreat it as such. This was exemplified, inVictoria, by the separation of water

planning from operations in two separateagencies in 1984, and, in New SouthWales by the passage of the WaterAdministration Act 1 9 8 6 one of thepurposes of which was to ‘ensure theprovision of water . . . in a commercialmanner’. In anticipation of the need forsuch action, the New South WalesGovernment, in 1977 issued a moratoriumon the issue of new water licences on thegrounds that all dams were fullycommitted.

Two important developments were theintroduction of benefit cost evaluations ofnew storage proposals from the mid-1960s, and the approval, in the early1970s, of transferability of waterentitlements.

Benefit-cost analysis

The requirement of the Commonwealth,that the States should accompanyproposals for financial support for theconstruction of storages with anacceptable benefit-cost analysis, was asignificant departure from past practice.This initiative attracted wider attention tothe economic arguments for and againstirrigation development and raised thestatus, in the wider community, ofeconomic evaluation. It also represented amore active role on the part of theCommonwealth in the assessment of theworth of irrigation proposals. Despite itssignificance, political and otherconsiderations meant that the newrequirement did not immediately stem thetide of construction. In the longer run,however, it contributed to the emergingopinion that further irrigation developmentwas questionable on economic groundsand, so to the effective cessation ofpublicly funded dam construction from thelate 1980s on.

Transferable entitlements

In 1967, in response to drought, temporarytransfers of water between familymembers, within and between Districts in


the Murray Valley were permitted. At thesame time volumetric allocation of waterbegan to emerge, also in the MurrayValley. The subsequent elaboration ofthese developments meant that the laterintroduction of tradable water entitlementswould be possible.

Transferability of entitlements, at least ona temporary basis, became establishedpractice, at least in New South Wales andSouth Australia, from the early 1970s on.It was encouraged, both by the exhortationof economists and by the attraction toirrigators of the resultant greater flexibilityof water use it made possible, particularlyin dry times. Queensland and Victoriawere slower to adopt the practice, whilepermanent transfers were embraced onlyin the 1990s.

Economists argued, then as now, that tradein entitlements would result in water beingtransferred to its highest value use. Inreality, the extent to which this has beenpossible has been restricted by concernover possible economic and environmentalthird party effects29 and, in the case ofpermanent transfers, the high transactioncosts involved.

Price reform

The 1980s also saw the initiation of pricereform. Most States indicated that theyintended to recover more of the costs ofsupply from users. Some of them set thegoal of recovering all operating andmaintenance costs. In the event, variableprogress was made with mostly minor andgradual price increases. Most progresswas made by Victoria, which reported thatthe deficit from the operation of irrigationsystems dropped by 80 percent from 1984to 1994 (Langford at al 1999)30. Apartfrom Victoria, significant progress withprice reform was not to occur until the1990s.

6.3.2 The Murray-Darling BasinMinisterial Council

Despite the unavoidable tensions betweenthe States over the allocation of theMurray waters, the River Murray WatersAgreement endured for over 70 years.While receiving its share of criticism(Doyle and Kellow 1995, Paterson, 1987),it must be regarded as having been asuccessful instrument of co-operativefederalism, and of inter-governmentalriver basin management. Paterson (1987)in offering some reasons for this, points tothe successful culture of cooperationbetween the States’ personnel, whichdeveloped. He attributed this, at least inpart, to the relevant agencies being left totheir own devices to pursue theirresponsibilities under the Agreement, andthe way in which the invasion of theirterritory was consequently minimized.

Eventually, however, as concern over thesalinisation of the Murray increased, therestriction of the River MurrayCommission to the management of waterquantity came to be seen as a problem.Following over a decade of inter-governmental wrangling, the Murray-Darling Basin Ministerial Council wasestablished in 1985 and the Murray-Darling Basin Commission (MDBC)replaced the River Murray Commission.The Murray-Darling Basin Agreementreplaced the River Murray WatersAgreement.

The new Commission inherited thestatutory duties of the River MurrayCommission and was also directed toprovide advice to the Ministerial Councilon land use and environmental issues –matters not included in the old Agreement.Doyle and Kellow (1995), in discussingthe establishment of the Council andCommission, point to the importance ofpolitical will in overcoming the inertia ofbureaucracies when the latter areconfronted by possible destabilization oftheir powers and threats to theirjurisdictional boundaries. They claim that,in the absence of such commitment, the


new Agreement, and its associatedinstitutions, may not have been possible.

Committed political leadership was alsoimportant in the establishment of theSalinity and Drainage Strategy. This is aninspired policy, which, as Doyle andKellow (1995) put it, converted theBasin’s salinity problem from a zero sumgame into a positive sum game, in whichall States stood to gain.

6.3.3 The 1990s

Reform continued into the 1990s withimportant developments in price reform,the water bureaucracy and, at least in NewSouth Wales, the ownership structure ofirrigation areas themselves. A particularlyimportant development was theformulation of the Council of AustralianGovernments (COAG) framework forwater reform, and the embedding of theframework in the National CompetitionPolicy.

Organisational reform

The commercialisation of the provision ofwater services was maintained andentrenched in the three main Basin Statesduring the 1990s.

South Australia: South Australiareplaced its specialist water department,Engineering and Water Supply, with theSouth Australia Water Corporation (SAWater), a state-owned corporation, in1995. This initiative had a number oforiginal features for the Australian waterindustry. These included the adoption offranchising for the operation of watersupply services to metropolitan Adelaide.

Victoria: In 1993, the policy andregulatory responsibilities of the VictorianRural Water Corporation were transferredto the Department of Conservation andNatural Resources. Provision of ruralsupply was transferred to five new rural

water authorities (RWAs). This reformrequired major modification of the waterallocation system, which had evolvedunder the old centralized order. TheRWAs were given bulk entitlements towater, which they then retailed to theirvarious farm and urban customers. In thisway, the Victorians, like the SouthAustralians, achieved separation of theoperators from the regulator, and a highlevel of commercialisation of the former.The RWAs are required to charge full costrecovery prices, including a renewalsannuity to finance future capitalexpenditure, and to pay a dividend,reflecting a return on new investment, togovernment.

New South Wales: In 1995, the NewSouth Wales Department of WaterResources was merged with a number ofother resource management agencies(particularly the Soil ConservationService) to form the Department of Landand Water Conservation. This initiativemeant the demise of a specialist wateragency, which, despite moves towardscommercialisation, retained a substantialelement of the old engineeringdevelopment culture. Operations, policyand regulation were, however, still withinthe one body. A move towardsrectification of this situation was made in1998 when a specialist water serviceprovider, State Water, was established.The move did not, however, constitute agenuine separation of responsibilities asState Water, though ‘ring-fenced’,remained part of the Department.

More adventurously, in the 1990s, NewSouth Wales moved to privatise its publicirrigation schemes. By 1999 all irrigationareas and districts were privatecorporations, with the exception of theColeambally Irrigation Area, whichbecame a cooperative. In all cases, theirrigators within the areas and districtsbecame the shareholders of theincorporated entity. The privatised bodyholds a bulk water licence and distributeswater to irrigators on a contractual basis.


Price reform and regulation

As indicated above, the move towards costrecovery continued in the 1990s. Asignificant new development was theestablishment of a price regulator in mostjurisdictions. Most significant of these hasbeen the Independent Pricing andRegulatory Tribunal (IPART) in NewSouth Wales. It determines the maximumprices that government monopolies,referred to it, can charge. In December1995, determination of bulk water priceswas referred to the Tribunal.

As at the beginning of 1999, the otherBasin jurisdictions, with the exception ofthe Australian Capital Territory, haveexperienced difficulty in emulating NewSouth Wales in determining water pricesthrough an open and independent inquiryprocess. South Australia appointed acompetition commission to investigatewater prices in 1997, though ultimately theGovernment did not accept thecommissioner’s recommendation. InVictoria, a plan to have the Office of theRegulator General determine water priceswas put on hold in late 1995 because of anumber of government concerns.Queensland has not referred bulk waterprices to the Queensland CompetitionAuthority. The Australian CapitalTerritory Independent and RegulatoryCommission sets prices for the AustralianCapital Territory Electricity and WaterAuthority.

Enter the environment

The above reforms reflected shiftingcommunity priorities and perceptions,government fiscal pressures and aderegulationist, market oriented thrust inpublic policy. To these drivers of policywere now added concern over the impactof extractive water use on the health of therivers and the landscape generally, andover the continuing growth in water use,particularly for irrigation. These concernswere driven by improved understanding ofthe status of the environment and thecauses of its degradation, a wish to

improve that status and to attack thecauses of degradation. This was reflected,nationally, and in a broad sense, by theadoption of the National Strategy forEcologically Sustainable Development in1992. As already noted, the COAG waterreform framework is notable for itsconsistency with the principles ofsustainable development.

In late 1995 the Murray Darling BasinMinisterial Council imposed a ‘cap’, ormoratorium, on extractive use of water inthe Basin. This reflected a feeling thatsuch use was close to or above itssustainable maximum. Extractions underthe cap, in any year, are limited to thosecompatible with what would haveoccurred given the level of development in1993-94.

The entry of environmental considerationsinto water resource management marks aconvergence between environmentalpolicy and natural resource managementpolicy. The former has largely beenconcerned with the restoration ofenvironmental quality, while the latter hasbeen concerned with allocation amongcompeting uses. The tensions inherent inthis convergence are still being workedthrough, and are evident in the contestedrepresentations of the inland rivers —‘working rivers’ in which ecologicalfunction is maintained sufficient only toprotect water quality for consumptiveuses, or ‘riverine reserves’ in whichbiodiversity and ecological function haveprimacy.

COAG and the National CompetitionPolicy

Despite the progress to the early 1990s,the potential benefits of further reformwere recognized first by the IndustriesCommission (1992) and then by COAG in1993. The COAG framework followed in1995 and was subsequently incorporatedin National Competition Policy. Ifnothing else, the framework codified thewater reform process and providedincentives for the pursuit of reform on a


coordinated and national basis. This, ofcourse is important for the Basin becauseof its inter-jurisdictional nature.

The framework was, and remains, notablefor its comprehensiveness, for its inclusionof environmental considerations, and forits recognition of the need for generatingcommunity awareness and education. Itfirst called for pricing reform based on theprinciples of full cost recovery, and theremoval of cross-subsidies. Remainingsubsidies were to be made transparent.Second, jurisdictions were to adoptcomprehensive systems of water allocationor entitlements, including allocations forthe environment as a legitimate user.Water property rights were to be separatedfrom land titles, so entitlements could betransferred between land title-holders.Third, structural separation of waterservice provision from water resourcemanagement, standard setting andregulatory enforcement, was to beachieved by 1998. Fourth, two parttariffs31 were to be adopted for urban watersystems when such an approach was cost-effective. Fifth, arrangements were to beintroduced for trading in water systems orentitlements. Sixth, by 2001, rural watercharges were to recover all costs withtransparent subsidies. Seventh, futureinvestment in new irrigation projects orextension to existing works was to beundertaken only after they weredemonstrated to be economically viableand ecologically sustainable.

In a further achievement of co-operativefederalism, the States and theCommonwealth have developed a non-coercive process, incorporating a set ofprinciples, targets and incentives. TheStates could determine their own bestcourse of action within a highlyconsultative national framework. Further,the embedding of the COAG framework inthe National Competition Policy meantthat the States had agreed to anarrangement whereby the Commonwealthcould spur reform despite the diversity andcomplexity of the federation.

The Commonwealth provides financialassistance to the States that implement theagreed reforms upon. It determines whichstates are eligible on the advice of theNational Competition Council. There arethree tranches of payments with the lastdue in July 2001. There was agreementthat, because of the magnitude of the task,progress with water reform would not be acondition for payment of the first tranche.Consequently, the first review of progressby the National Competition Council wasprior to payment of the second tranche in1999. Rural water pricing was not to bereviewed till 2001.

In its June 1999 review the Councilreported substantial progress onimplementation of the framework. TheAustralian Capital Territory, the MurrayDarling Basin Commission and Victoriawere said to have largely met theirobligations. New South Wales had madesubstantial progress but still needed toreform property rights and water trading.Queensland had a number of outstandingissues and the Council recommendedsuspending 25 percent of States paymentspending resolution of concerns over anumber of rural schemes. Improvedunderstanding of the complexity of watertrading, and of achieving ecologicalsustainability, led to implementation ofreforms in those areas being extended forthree years to 2001.


Irrigation development in the Basincontinued at an increased rate after WorldWar II. Forces to retard it were more thanbalanced by the continued advocacy ofexpansion. The former included theabandonment of closer settlement, fiscalpressures on the state governments andincreasing questioning of the economicefficiency of irrigation. The continuedadvocacy of irrigation came from theirrigation lobby, including existing andpotential irrigators (particularly cottongrowers) and the water managementbureaucracy. This advocacy resonatedfavourably with a community reluctant to


abandon its yearning to see the ‘desertbloom’.

Eventually, however, the retarding forcesstarted to prevail. Initially, policies suchas volumetric allocation and transferablewater entitlements, which encouragedgreater flexibility and more productivewater-use were put in place. At the sametime, the insistence of the Commonwealthon requests for financial assistance to beaccompanied by benefit-cost studieshelped the spread of informed questioningof the economic merits of irrigationdevelopment. These developments wereaccompanied by changes in the charter ofthe water agencies from development tothe commercial delivery of water services.

In the 1980s, fiscal pressures sawgovernments trying to recover a greaterproportion of the costs of water supplyfrom users. Finally, in the 1980s, and

particularly in the 1990s, environmentalissues, and concerns over the sustainableuse of the waters of the Basin, joinedcriticism of the efficiency of irrigation,and of the equity of new, subsidizeddevelopment.

By the mid-1990s there had beensubstantial irrigation reform, but it wasuneven across the states and, generally,much remained to be done. Consequently,the development of the COAG frameworkand its incorporation in the NationalCompetition Policy were importantcodifiers and facilitators of reform.Without these developments, one wondersif coherent progress towards sustainabilityacross the Basin as a whole would havebeen possible. Even so, the results are stillfar from in and while indications are thatthis exercise in co-operative federalismhas, so far, been successful, the finalaccounting has yet to occur.


7 Land Resources Policy

7.1 The 19th Century Legacy32While a number of 19th centuryscientists had developed someappreciation for the special qualities ofAustralian flora and fauna, the dominantcolonial view was that Antipodean naturewas a topsy-turvy world of strangereversals of the natural ‘normality’ ofEurope. Acclimatisation societies wereformed by eminent citizens in the latterhalf of the 19th century with a view toreplacing the freakish flora and fauna ofAustralia with the creatures of ‘home’ thatwould delight the ears and eyes of thetraveller in wastes of the interior. Deer,hares, sparrows, starlings, redfin, carp,tench, roach, and trout were successfullyintroduced by these societies. Fortunately,plans to introduce monkeys, agoutis andboa constrictors did not come to fruition.By the time of Federation, theintroductions and the practice ofagriculture had made considerable impacton the rural environment — impacts thathad not gone un-noticed by colonialscientists and professionals.

Soil fertility and wheat yields declinedover the latter half of the 19th century, aRoyal Commission into cereal diseases inSouth Australia in 1868 concluding thatvast areas of wheat country were beingrobbed of their phosphorus and othernutrients due to the lack of manuring. Asubsequent commission of inquiry inSouth Australia was told by witnesses thatit was far cheaper for farmers to take upnew land than to attempt to restore thefertility of lands exhausted by continuouswheat cropping.

In the forested eastern and southern partsof the Murray-Darling Basin, growingconcern was expressed by foresters andother professionals that large scaleclearing would lead to the diminution ofrainfall. In New South Wales, theassertions of those opposing ring barkingwere dismissed by prominent landholders

in the legislature who could recount fromtheir own experience how ring barking hadincreased the availability of water, withsprings appearing where there had beennone before. Ironically, these landholderswere describing the early symptoms ofwater table rise and salinisation.

In the infant irrigation areas, it was knownto scientists that much of inland Australiawas underlain by saline groundwater, andit was known to government engineers thatlarge quantities of water could be lost byseepage from channels. However, no 19thcentury professional seemed to connectthe two. In the twenty years to 1900, thewater table in the Kerang District rosefrom about 7.5 metres below the surface towithin 2.5 metres of the surface.

By the turn of the century, and in the wakeof the collapse of the pastoral industry,there was already widespread recognitionof the special nature of the semi-aridrangelands (Holmes, 2000). A number ofscientists and perceptive pastoralists (suchas George Ranken, Fred Turner and E.G,Millen) had drawn attention to the role ofdrought, rabbits, overgrazing, exoticweeds and the withdrawal of Aboriginalburning in the deterioration of rangecondition. These processes wereacknowledged again in the RoyalCommission that led to the Western LandsAct (1901). Drought was accepted as thenormal condition for the semi-aridrangelands and it was accepted that mostof the region was unsuitable for closersettlement.

The colonial governments of the 19thcentury responded in various ways to theseemerging problems. By 1900, all theStates had established departments ofagriculture, in some cases with associatedagricultural colleges. The goals of thedepartments of agriculture were, however,as much about expanding agriculture as


about preventing the worst excesses of19th century ignorance and agriculturalmismanagement.

The march of settlement and clearing ledto the speculation that one day there wouldbe no natural areas left for recreation.New South Wales gazetted the RoyalNational Park Act in 1879. The slopesand plains of the Murray-Darling Basin,far removed from the growingmetropolises of the State capitals,exhibited little similarity to 19th centuryromantic ideals of nature for recreationalpurposes and excited no conservationinterest. However, the delineation of theWestern Division in NSW in the CrownLands Act of 1884, and the retention ofleasehold as the dominant form of tenure,reflected the recognition by the New SouthWales Government that the semi-aridrangelands would continue to requiresubstantial state intervention in theirsettlement.

Apart from providing for possiblegovernment inf luence on landmanagement through leasehold tenure,some governments passed legislation toimpose obligations on landholders whosefailure to control weeds or vertebrate pestswas constituting a nuisance to otherlandholders (for example, the Thistle andBurr Act of 1862 and the RabbitDestruction Act of 1875 in SouthAustralia).

7.2 Expanding Agriculture andErosion — 1900-1930

One consequence of the application ofscience to the problems of agricultureabout the turn of the century was that thetechnological innovations of new wheatvarieties, inorganic fertilisers andfallowing for weed control and moistureretention made possible a huge increase inthe area of land under cultivation — fromslightly over two million hectares in 1890to just under nine million hectares in 1930.Fallowing was particularly damaging, witherosion gullies two metres deep and threemetres wide forming on cultivation land in

some areas within a period of only tenyears.

Not only did the technological innovationsreverse the 19th century decline in wheatyields, but they also made possible thecultivation of lighter, infertile and erosion-prone soils. As the States continued tosupport closer settlement, agriculturespread into marginal areas such as theMallee in Victoria and the Pilliga in NewSouth Wales.

The farming of land on the margins of thesemi-arid rangelands inevitably resulted inserious wind erosion problems. SouthAustralia passed a Sand Drift Act in 1923,which provided for penalties notexceeding the value of the land oflandholders who failed in their statutoryobligation to control wind erosion andcaused a nuisance to the public or otherlandholders. During the first few decadesof the 20th century, South Australia alsoreformed legislation that placedobligations on landholders with respect toweeds and pests — the Vermin Act of1914 and the Noxious Weeds Act of 1931.

In contrast, New South Wales during thisperiod did not take any substantiallegislative initiatives aimed specifically atwind and water erosion, although theWestern Lands Act of 1901 attempted toameliorate these problems throughconditions on leasehold tenure. This wasnot successful, with a Royal Commissionin the early 1930s covering much of theground that had been covered in the RoyalCommission that preceded the WesternLands Act.

In Victoria, a Sand Drift Committee wasformed in 1933 to look into the problem ofwind erosion in the Mallee. Whilelegislation was enacted in 1938 thatprohibited cultivation within a certaindistance of water channels, other eventsbrought all forms of soil erosion onto thepolitical agenda, subsuming the Malleewind erosion problem.

The lack of concerted action in the firstthree decades of the 20th century to do


anything about the ongoing landdegradation set in train in the 19th centurywas partly due to the nationalist fervourfollowing Federation and the onset ofWorld War I, together with the popularityof the United States as a model for howAustralia might develop. The UnderSecretary for Colonies in 1923 observedthat:

If the United States has grown in the lastcentury from five million people to a hundredmillions, there is no reason why, in thecoming century, we should not grow to apopulation of two or three hundred millionsof white people in the Empire...

(cited by Flannery,1994)

One voice that attempted to correct thejingoistic visions of a mighty nation downunder to rival the United States in size wasthat of Griffith Taylor, a professor ofgeography at Sydney University. At atime when White Australia policy waslargely unquestioned, Taylor was vilifiedfor his views that the population ofAustralia would be limited byenvironmental constraints and that Asianemigration might be beneficial indeveloping the north of Australia. Taylorwas eventually forced to leave SydneyUniversity in 1928 and further his careerat the University of Chicago. Clearly, anyattempts during this period to suggest thatthe expansion of agricultural settlementwas destroying the nation’s land resourceswould have received scant politicalattention.

7.3 The Soil Conservation Acts— 1938-1951

Ironically, though, it was events in theUnited States that provided part of theimpetus which initiated a period ofwidespread concern about soil erosion inthe late 1930s and the 1940s. A series ofdroughts from 1929 to 1932 resulted indust storms that reached Melbourne andSydney and brought the wind erosionproblem to urban and political notice. The1920s and 1930s were also the period ofrapid expansion in cultural production inthe USA with the advent of commercial

radio and cinema. Australian radiostations and cinema presented a substantialamount of material from the USA, suchthat the stories of the Kansas Dustbowland the community mobilisation againstsoil erosion were well known in Australia.The 1930s and 1940s also saw thepublication of a number of books aboutsoil conservation aimed at a lay audience(see, for example, Jacks and Whyte, 1939)— The Rape of the Earth.)

In 1936, a conference of State andCommonwealth Ministers recommendedthat the States set up soil erosioncommittees to examine the problem. TheNew South Wales committee, which hadalready been set up in 1933, recommendedthat a senior member of the staff of theAgriculture Department, Sam Clayton, besent to the USA to investigate action beingtaken there. Bradsen (1988, 2000) arguesthat Clayton’s enthusiasm for the USAapproach resulted in a significant changeof direction in soil conservation policy inAustralia. State legislation in the USAwas based on education and extensionmeasures, together with financial support,in contrast to Australian soil conservationlegislation to that time which had beenbased on establishing a statutoryobligation on landholders to take measuresto prevent soil erosion.

The New South Wales Soil ConservationAct of 1938 established a SoilConservation Service whose function wasto carry out research into soil erosionproblems and educate and adviselandholders. The Act empowered theMinister to declare areas as soil erosionhazards and require landholders toundertake soil conservation works. TheAct also established the Catchment AreasProtection Board to exercise greatercontrol over Crown land lessees in areasimportant for water supply. Consistentwith the USA model, the Act did notestablish a statutory obligation onlandholders to prevent soil erosion.

The South Australian Soil ErosionCommittee was formed in 1937 andreported to the government in 1938. The


Soil Conservation Act of 1939 constitutedan Advisory Committee on SoilConservation to advise the Minister, whocould make grants or loans for soilconservation purposes and direct thatlandholders undertake soil conservationworks. In contrast to New South Wales,the Act did not constitute a new authority,but was to be administered by theDepartment of Agriculture.

Victoria formed a Soil Erosion Committeein 1937, which reported to the governmentin 1938. Premier Albert Dunstan haddismissed the findings of the earlier SandDrift Committee and again took no actionon the findings of the Soil ErosionCommittee. In 1939, the Victorianbranches of the Institution of Engineers,the Australian Institute of AgriculturalScience and the Institute of Forestersformed a Joint Committee after asymposium on soil erosion. TheCommittee submitted a memorandum tothe Victorian Government describing theaction being taken in New South Walesand South Australia and arguing thatsimilar action needed to be taken inVictoria. Again no action wasforthcoming from the DunstanGovernment. Finally, it was the actions ofHarold Hanslow, a commissioner of theState Rivers and Water SupplyCommission, that forced the Governmentinto action. Hanslow, also a staunchsupporter of the Country Party submitted aletter criticising the Government’s positionon soil erosion for publication in theofficial journal of the Party, arranging forits publication to be delayed while a copywas sent to Dunstan. Dunstan threatenedto sack Hanslow, who delivered anultimatum to Dunstan that unless soilconservation legislation was introduced,the letter would be published.

The Victoria Soil Conservation Act waspassed in 1940. The Act constituted a SoilConservation Board which wouldundertake research and education oflandholders. Regional AdvisoryCommittees were to advise the Board andundertake extension activities in theirregions.

Queensland also formed a Soil ErosionCommittee in the 1930s, but this appearsto have been largely inactive. However,erosion problems did not completelyescape attention during the 1940s. TheBurdekin River Trust Act of 1940 was aresponse to the need to control rivererosion on the Burdekin, and in 1941,Department of Agriculture and Stock sentone of its officers to New South Wales toexamine the soil conservation methodsbeing used by the Soil ConservationService. The Department of Agricultureand Stock established a soil conservationbranch of its own volition in 1947. Thisdrew attention to the serious soil erosionon the Darling Downs, where some16!000ha of cultivation had becomeunusable due to erosion. The QueenslandSoil Conservation Act of 1951 created anAdvisory Committee reporting to theDepartmental Secretary. The Committeewas to undertake education activities,coordinate the activities of otherdepartments and report on action toprevent or ameliorate soil erosion. As inNew South Wales, the Minister coulddeclare areas to be soil erosion hazardsand require landholders to undertake soilconservation works.

The outcome of the 1930s and 1940speriod of concern about soil erosion wasthe establishment of a largely voluntaristapproach to soil conservation, withcoercion or punitive measures only beingapplied to landholders as a last resort.This departure from earlier approacheswhich involved statutory obligations forlandholders may have been theconsequence of the influence of events inthe USA as Bradsen suggests, or of therecognition that soil conservationmeasures were more difficult and morecostly than weed or pest control.Certainly, the approach of education andassistance was consistent with that whichhad been used with good effect by thedepartments of agriculture since theirestablishment. With the exception of NewSouth Wales, the soil conservation acts setup mainly advisory structures with anycoercive or punitive powers lying largelyin the hands of Ministers. The experience


in Queensland shows that at least one ofthe departments of agriculture was capableof responding to the soil erosion problemwithout political and legislative direction.However, it is likely that in many casesthere were conflicts of interest withinagriculture departments that preventedthem responding to soil erosion problems.In New South Wales, for example, theDepartment of Agriculture continued topromote the production benefits of barefallowing, despite being aware that thiswas encouraging soil erosion.

7.4 Assessment and Extension— 1951-1975

7.4.1 Erosion Surveys

One of the first actions taken after theestablishment of instrumentalities with aresponsibility for soil conservation was tosurvey the extent of soil erosion. InVictoria, the legislation had provided for asurvey to be carried out by the officers ofthe Lands Department, the State Riversand Water Supply Commission and theForests Commission during their travelsround the State. This was not accepted bythe departments involved and surveys inVictoria were confined to small areasexamined by staff of the University ofMelbourne and the Council for Scientificand Industrial Research (CSIR). Thelatter, reporting in 1948, found that almosthalf of the 1500 square kilometressurveyed in the Dookie region wasaffected by sheet and gully erosion.

The New South Wales Soil ConservationService undertook a survey of the Easternand Central Divisions between 1941 and1943, discovering that over 2000 squarekilometres of land was beyond economicreclamation due to gully erosion, and thatalmost half of the land area was affectedby erosion to some extent.

In South Australia, the surveys of soilresources that had been commenced by theCSIR in the early 1920s continued in thepastoral and farming areas of the State.

This work drew attention to the fact thatsoil erosion was just a symptom of themore fundamental problem of thealteration of the hydrological balance byagricultural exploitation of the landscape.

Professor J. MacDonald Holmes ofSydney University also carried out asurvey of soil erosion in Australia andNew Zealand in the early 1940s. Thisrecorded that, up until the time ofpublication in 1946, no soil erosionsurveys had been carried out by Stateagencies in Queensland.

7.4.2 Amendments to the soilconservation acts

In the period of the post-war boom, soilerosion tended to lose its politicalvisibility. As the newly formedinstrumentalities got on with the job ofresearch and extension, a number ofproblems were encountered that resultedin legislative responses with the aim ofmaking the research and extensionapproach more effective.

New South Wales

By the mid-1940s, it was clear that theinability of landholders to invest in soilconservation works was an obstacle to thewider adoption of soil conservationpractices. The Soil Conservation Act wasamended in 1947 to allow for theAdvances Scheme and the Plant HireScheme. The former made loans atconcessionary rates available tolandholders undertaking soil conservationworks, and the latter set up a pool ofmachinery operated by the SoilConservation Service and available forhire by landholders. These initiativescame to be a major part of the work of theService in the post-war period and into the1970s, with annual reports of the Servicetending to measure its performance interms of hours of bulldozer hire, thequantity of banks and waterways installedand the areas of gully erosion treated.


Further amendments were made in 1952,this time in response to concerns thatforeshore erosion and overstocking werenot being dealt with effectively, and thatthe methods of managing land that hadbeen declared an erosion hazard wereinadequate. This amendment made itpossible for the Service to enter intoagreements with, or serve notices on,landholders to undertake soil conservationworks, or to change their managementpractices, including reducing stockingrates where overstocking was occurring.The setting of appropriate stocking rateswas to be carried out by AssessmentBoards.

While there had been legislativerecognition of the need to deal witherosion on a catchment basis since theamendments of 1952, the first groupscheme did not occur until 1965 in theGoorianawa Valley. Further amendmentsto the Soil Conservation Act in 1972introduced the concept of protected landswith slopes greater than 18 degrees, onwhich the destruction of trees wasprohibited. The amendment gave theCatchment Areas Protection Board thepower to prepare maps defining protectedlands and to issue orders requiringlandholders to prevent or repair damage.

Victoria

One of the tasks set the Soil ConservationBoard by the 1940 Soil Conservation Actwas that it should, after a survey of soilerosion in Victoria, prepare a report onwhat further legislation was required. Asmentioned above, there was only a numberof fragmentary surveys undertaken. TheBoard reported to the Government in1943, but its recommendations weregenerally ignored or only partially actedupon. Following pressure from the Boardin 1946 and a Royal Commission intoforest grazing in the same year whichrecommended the setting up of a LandUtilisation Authority, the LaborGovernment introduced the SoilConservation and Land Utilisation Bill in

1947. The Bill, which contained somepunitive provisions against landholderswho failed to carry out worksrecommended by a Regional AdvisoryCommittee, was vigorously opposed in thelegislature, and passed but not proclaimeddue to the defeat of the LaborGovernment. It was not until 1949 that aBill of the same name and some similaritywas introduced by the new government.The Soil Conservation and LandUtilisation Act of 1949 provided for thesetting up of a Soil ConservationAuthority, which replaced the SoilConservation Board. The extension roleof the Regional Advisory Committees wasregarded as impracticable and wasdropped from the Act.

In the late 1950s and early 1960s, theAuthority pioneered a new approachwhich combined group extension withcatchment planning in successfullybringing widespread erosion under controlon the catchment of the proposedEppalock Reservoir. Subsequentlegislative amendments made it possiblefor the Minister to establish similar groupconservation areas upon request bylandholders.

In 1971, the Act was further amended toallow for an advances scheme similar tothat in New South Wales.

South Australia

USA events were again to have aninfluence on Australian land resourcemanagement policy when, in 1945, theSoil Conservation Act of 1939 wasamended to set up district soilconservation boards along the lines ofthose in the USA which had been reportedas being an effective means of extensionof the soil conservation message. Thedistrict soil conservation boards were toundertake investigations and educatelandholders. In addition, the Minister’spower to make orders to undertake soilconservation works was transferred to thedistrict soil conservation boards.


The amendment also contained provisionsthat required landholders to give threemonths notice before undertaking clearing,and the Minister had the power to prohibitclearing if it was thought that it wouldcause soil erosion.

The Soil Conservation Act was amendedagain in 1960 to make it possible topartition soil conservation districts and toattempt to prevent wind erosion problemsbefore they occurred. In this latter respect,the amendment used the approach of the1923 Sand Drift Act, by makinglandholders responsible for any damagecaused by inappropriate managementpractices on lands susceptible to winderosion.

Queensland

The Soil Conservation Act of 1951 wasrepealed and replaced by an Act of thesame name in 1965. The 1965 Act carriedover some of the features of the 1951 Actthat had been considered a success, suchas the Advisory Committee. However, thenew Act represented a fundamental shift inthinking towards local involvement in soilconservation. The Act allowed for theformation of soil conservation trusts thatwould be the administrative body for soilconservation districts declared by theMinister in areas of erosion hazard afterapplication by local authorities andlandholders. The trust would have thepower to borrow money, undertake works,plan large scale soil conservation schemesand issue erosion correction notices tolandholders.

7.4.3 Trends in the post-war period

A number of trends can be identified insoil conservation policy in the period fromthe passing of the soil conservation actsuntil the mid-1970s.

Firstly, the New South Wales SoilConservation Service and the VictorianSoil Conservation Authority took onadvisory and participatory roles in soil

conservation matters outside ofagriculture. This was probably easier todo for the instrumentalities in New SouthWales and Victoria where they wereseparate from the agriculture departments.The Service and the Authority providedadvice to lands departments, forestryagencies, local government, and for majordevelopment projects such as the SnowyMountains scheme.

Secondly, there was a slow progressionthrough a number of different ways ofseeing and responding to soil erosionproblems. First there was a transition fromseeing soil erosion problems as problemson individual farms to be treated on anindividual basis after they occurred, to theview that it was possible to plan land useon the farm to avoid soil erosion in thefirst place. From this, the next step was toexpand planning to a number ofcontiguous properties and coordinate anysoil conservation works across theseproperties. Finally, there was therealisation that planning of land use andsoil conservation works should ideallytake place across whole sub-catchments.

Thirdly, the voluntarist approach wasmaintained throughout the period, withfarm planning, finance and plant hirebeing made available at concessionaryrates, with the establishment ofdemonstration farms, and with minimaluse of the regulatory and punitiveprovisions that did exist in the legislation.The voluntarist approach of the period isremarkable for the differential applicationof economic assessment to policy choices.On the one hand, it was universallyrecognised that economic analysis of thecosts and benefits of remedial works wasan important part of determining whetherindividual farms would be able affordthese works. On the other, the sameanalysis was never applied to the questionas to whether the long term benefits ofsubstantial public subsidy of remedialworks would exceed the costs of thissubsidy. In this respect, the experiencewith land resource management parallelsthat with water resource management.


While the post-war period was one ofmodest success in terms of the installationof soil conservation works, the rate ofagricultural expansion and the potentialfor further land degradation problemsoverwhelmed the achievements of theState agencies. In New South Wales, thearea under cropping expanded on theNorth West Slopes and South and CentralWestern Plains. The area subject tomoderate gully erosion increased by 7700square kilometres in the period from 1947to 1967 — an increase attributed to theexpansion of wheat growing. InQueensland for much of the post-warperiod, new land requiring soilconservation works was being broughtinto cultivation at twice the areal rate atwhich works were being completed on theexisting stock of erosion affected lands. InSouth Australia, with a large program ofsoldier settlement in the south east, landwas being cleared at three times the arealrate at which existing cropping lands werebeing treated with graded banks. Victoria,in contrast, did not experience theagricultural expansion in the other threeStates. However, for much of the period,the hidden water table rises in drylandareas were threatening large areas of theState, to come to political and publicattention after a series of wet years in the1970s.

7.5 Enter the Commonwealth

The Collaborative Study, commenced bythe Commonwealth Government in 1974(Department of Environment Housing andCommunity Development, 1978) markedthe commencement of substantiveCommonwealth involvement in landresource management policy. This is notto say that the Commonwealth had noinvolvement prior to this time. Ifcontinuted government inaction in the faceof pressure for action counts as policy,then it can be said that Commonwealthpolicy resulted in significant landdegradation from the time of Federation.

A National Soil Erosion Bureau wasdiscussed in the 1930s, but never

eventuated. Similar proposals emerged inthe 1940s, and the Standing Committee onSoil Conservation dates from that time.However, i ts appeals for theCommonwealth to provide funds to theStates for soil conservation measures wereignored for some 25 years.

However, and as Bradsen (1988) notes,because agricultural expansion wasinevitably associated with landdegradation, it can be said that virtuallyany Commonwealth policy that supportedthis expansion was also a policy thatcontributed to the magnitude of the landdegradation problem identified by theCollaborative Study in 1978. Suchsupport included taxation measures thatfavoured land clearing, support for soldiersettlement and other large landdevelopment projects, and drought reliefmeasures that provided an incentive forovergrazing. To these acts of commissioncan be added those of omission, largelythe Government’s failure to act upon therecommendations of a chain of inquiries,Royal Commissions and CSIR/CSIROstudies since the 1930s which madeexplicit the link between agriculturalexpansion into less favourable areas andland degradation problems.

The finding of the Collaborative Studythat had a significant impact was theestimate that one half of the land areaunder agricultural use required treatmentfor land degradation, at a cost of $675million33.

Some Commonwealth funds were madeavailable to the States in the 1970s, andthis was formalised with the establishmentof the National Soil Conservation Programin the early 1980s. The goals of thisProgram were that:

ß all lands be used within their capability,ß land use decisions be based on whole

catchment planning concepts,ß all land users and levels of government

meet their respective responsibilities,ß cooperation and coordination should

occur between all sectors of thecommunity involved, and


ß the whole community should adopt aland conservation ethic.

7.6 State Policies in the 1980s

The Collaborative Study, and the morepopular subsequent summary publicationby Woods (1984), placed the StateGovernments under some pressure toimprove their soil conservationperformance. In New South Wales, theprotected lands provisions were widenedand strengthened in amendments to theSoil Conservation Act in 1978. In SouthAustralia, amendments to that State’s SoilConservation Act made it easier for theGovernment to create soil conservationdistricts and increased the penalties forcontravention of vegetation preservationorders. There appears to have been lesslegislative activity in Queensland andVictoria around the time of theCollaborative Study, although Queenslandbrought in substantial changes to its 1965Act in 1986. These included the removalof the provisions for soil conservationdistricts and the associated trusts — these1965 initiatives having received relativelyminor use. The 1986 Act proposed thatprimary responsibil i ty for soilconservation rested with landholders,while the role of the Government wasleadership, coordination, extension andresearch.

An important feature of the 1980s was therise of the concept of integrated catchmentmanagement. The concept was not a newone. As mentioned above, the soilconservation agencies had moved towardsthe concept of planning soil conservationworks on a catchment basis during thepost-war period. The concept was, in fact,embodied in Queensland legislationpassed in 1943 — the Land and WaterResources Development Act — althoughthe intent of this act was more directed toorderly closer set t lement thanenvironmental protection.

The First National Workshop onIntegrated Catchment Management in1985 did much to advance the cause of

integrated catchment management, with itsrecommendations being fully endorsed bythe Australian Water Resources Council.In Victoria, where salinity had becomepolitically visible during the 1980s, theCain Government’s salinity strategy ‘SaltAction: Joint Action’ included regionalsalinity planning based on integratedcatchment management principles. NewSouth Wales was the first State toinstitutionalise the concept, with thepassing of the Total CatchmentManagement Act in 1989. This providedfor Catchment Management Committeescoordinated by a State CatchmentCommittee. As described below,integrated catchment went on to become amajor focus of land resource managementpolicy in the 1990s.

The second significant developmentduring the 1980s was the growing interestin group extension in Victoria. From thelate 1970s and through the 1980s anincreasing number of farmer groupsoriented to improved land managementwere established. These had varyingdegrees of government assistance — theVictorian LandCare groups of the mid-1980s, for example, received 10-50 percent of their project costs from thegovernment.

7.7 The 1990s

In the late 1980s and the early 1990s, thepolitical visibility of rural environmentalissues increased to levels commensuratewith those in the 1930s and 1940s that hadresulted in the passage of the soilconservation acts. A number of factorswere involved:

ß the media interest in the graphicimagery of the salt affected regions ofVictoria that projected salinity,

ß the Hawke Government’s willingness tobecome involved in the resolution ofenvironmental issues and its realisationthat the environmental vote would makea significant difference to electionoutcomes, and


ß the world-wide increase inenvironmental concern, partly caused bythe publicity afforded the recentlydiscovered ozone hole and theGreenhouse Effect.

The most significant outcome from thisperiod was the joint proposal for a nationallandcare program put to the HawkeGovernment by the Austral ianConservation Foundation and the NationalFarmers’ Federation. This was to result inthe announcement of the Decade ofLandcare Program, together with a widerange of complementary initiatives,including the One Billion Trees and Savethe Bush Programs, a NationalReafforestation Program, the creation ofthe Land and Water Resources Researchand Development Corporation andadditional funding for the NaturalResources Management Strategy of theMurray-Darling Basin Commission.Landcare has continued to enjoy bipartisanpolitical support throughout the 1990s,with apparently substantial increases34 inthe funding made available by theCommonwealth Government as aconsequence of the sale of Telstra and theestablishment of the National HeritageTrust (NHT) by the Howard Government.This brought a range of land managementprograms under its rubric, and movedtowards a more interventionistCommonwealth role in the disbursementof funds by the States, achieved throughpartnership arrangements.

Landcare has become the most politicallyand publicly visible aspect of landresource management in the Basin in the1990s. While the rapid growth in landcaregroups to over 4000 groups by the end ofthe decade is one of the often mentionedconsequences of landcare, there were anumber of other consequences, most ofwhich have been described in detail in theedited volume by Lockie and Vanclay(1997). These include:

ß the re-alignment of State agencyprograms to take advantage of the NHTfunding and the withdrawal of State

funding from land resourcemanagement,

ß the incorporation of landcare into Statecatchment planning initiatives,

ß the bureaucratisation of landcare thathas led to disaffection among those whosaw it as a community-based program,

ß the formation of interest groups with apolitical agenda framed around landcareideas and ideals.

Inevitably, this diversification of theconcept has lead to claims that landcarehas lost its way and that the funding is notreaching the landholders that need it, norachieving the environmental objectives ofthe program. Some support to these viewshas been provided by reviews andevaluations, such as the AustralianNational Audit Office review in 1997. Bythe end of the 20th century, with landcaremembership rates of increase slowingdown or reversing, it could be said thatsome of the early 1990s gloss has wornoff, with no obvious harbingers of whatmight replace it in the first decade of the21st century.

The second significant feature of the1990s has been the growth of planningactivities based around the concept ofintegrated catchment management.Following the Total CatchmentManagement Act in New South Wales in1989, the Catchment and Land ProtectionAct in Victoria in 1994 replaced its SoilConservation Act, and the CatchmentWater Management Act was passed inSouth Australia in 1995. Queensland hashad a catchment planning strategy since1991. In addition to the State planningactivities, there have been a number ofCommonwealth-State planning initiativesrelating to such things as rangelandsmanagement, biodiversity and the controlof nutrient pollution and eutrophication inthe Basin.

As Conacher and Conacher (2000) note,there has been a certain degree ofconvergence between catchment planningand traditional urban and regionalplanning. Catchment planning has cometo give greater recognition to economic


development objectives and urban andregional planning is giving greaterconsideration to land management. Animportant difference, however, betweenthe many land management-related plansand strategies of the 1990s and urban andregional planning is that the latter has asubstantial regulatory basis to give effectto the plans that are produced. It is amatter of some concern that so mucheffort has been put into catchmentplanning and various land management-related strategies with so little regulatorypotential for giving effect to these plansand strategies. A further concern is thatintegrated catchment management hasreceived relatively little economicassessment as to the worth of itsachievements compared to the notinconsiderable public funds it consumes.According to some (see, for example,Wilkinson and Barr, 1993; Marshall,1998), the achievement of the changes inland use promulgated in catchment plansleaves much to be desired.

From a historical perspective, both the soilconservation acts of the mid-20th centuryand the upsurge in catchment planning inthe late 20th century have followed upon

periods of popular and political concernabout the environment. Both have alsobeen underpinned by a voluntaristapproach to obtaining the needed changesin land use — this being the onlypolitically feasible approach in the face ofthe power of absolutist property rightsrhetoric35.

It remains to be seen whether the planningproliferation of the 1990s will be any moresuccessful than the mid-20th century soilconservation acts in halting theagricultural damage to land resources inthe Basin. The experience from the earlysalinity planning efforts in Victoria wouldsuggest that, even if the planned land usechanges fail to eventuate, the planningprocess itself and the associatedcommunity participation do raisecommunity awareness to a degree thatmakes land degradation problemspolitically visible. This visibility canresult in the allocation of public funding,often with little economic assessment as towhether the returns justify the expenditure,or as to which of the many candidates forexpenditure will be the most costeffective.


8 Overview and Issues for Consideration

8.1 Overview

The main phases in the history ofagriculture and natural resourcemanagement in the Murray-Darling Basinare depicted in figure 8.1, together with aselection of the key events that shaped, orwere the outcome of, policy. The figureclearly shows the importance of the late1960s and early 1970s as a policywatershed for agriculture in the Basin.During this period tariff protection beganto be dismantled, Australia lost itspreferential treatment in British markets,and industry efficiency replacednation-building as the rationale for bothwater and farm policy. Interestingly, theone policy domain that did not experiencesuch a sea change in policy-making wasland resource policy. In fact, some trendsin this area of policy since the late 1960sand early 1970s appear to be the oppositeof those in farm and water policy. Duringthe 1980s and 1990s farm and waterpolicy, and public policy more generally,were characterised by the withdrawal ofthe involvement of the state in theprovision of services to agriculture. Inland resource policy, on the other hand,there appears to have been a growinginvolvement of the state in areas such ascatchment planning and the administrationof landcare.

The policy watershed of the late 1960s andearly 1970s also marks the beginning of aperiod of greater diversity andexperimentation in agricultural andresource management policy in the Basin.As Dovers(1999) has argued, there is littleprospect for overcoming the policy a dhocery and amnesia of much of the 20thcentury unless this experimentation isbacked up with the monitoring andevaluation of policy outcomes.

A pervasive influence on agriculture andnatural resource management policy in theperiod prior to the watershed of the late1960s and early 1970s was the conviction

held by those involved in policy-makingthat the expansion of agriculture and thepopulating of the interior could build amighty nation like the USA. Misdirectedas such a conviction might seem now, itwas an understandable policy goal at thebeginning of the 20th century, givenAustralia’s proximity to a denselypopulated Asia, the apparent abundance ofagricultural land and the importance ofagriculture in national economies at thattime. Furthermore, it was not obvious toearly 20th century policy-makers thatagriculture would make a decliningcontribution to the national economy inthe future.

The nation-building rationale was,however, more than just a good idea at aparticular time in history. Australianfederalism has ensured its survival, albeitsomewhat muted, to the present day. Withthe Commonwealth raising the bulk oftaxation revenue, the States have been, andwill continue to be, susceptible tosupporting large speculative infrastructureprojects which hold out the prospect ofincreasing revenues through the State taxbase.

The nation-building rationale and thepolicies it spawned were responsible bothfor the successful agricultural innovationsand adaptations that have enabledproduction from the Basin to increase formuch of the 20th century, and for thefailures that have visited considerablesocial costs upon the farming populationand enormous damage to the environment.As Barr and Cary (1994) note, theagricultural settlement of the Australianinterior, seen in retrospect, has been agrand national experiment. Bothagriculture and policy have had to beadapted to the conditions of the Basin.The current land use in the Basin, and theattendant land degradation, reflect thesuccesses and failures of experimentation.


The current situation in the Basin is notonly a reflection of past policy — it is alsowhere future policy must seekopportunities for innovation. In thisrespect, as Barr et al. (2000) note, theaging irrigation infrastructure, the agingfarm population and the sub-viability of asubstantial proportion of farms all point toan approaching period of rapid adjustmentin the Basin. This will provideopportunities for policy innovation and forintegrated regional development policythat aims to achieve simultaneouslyeconomic, social and environmentalgoals36.

In looking to future policy directions, it isinevitable that the light of policy inquirymay have to illuminate those sensitive anddifficult issues that have mostly receivedlittle attention to date — issues thatchallenge both the policy norms of the20th century and the special positionagriculture has occupied. The followingsections briefly discuss some of theseissues, to the extent permitted by thenecessarily brief overview in the previouschapters.

8.2 Farm Policy

The 20th century history of farm policy inthe Basin points to two policy issues thatare worthy of further consideration: therecognition of the central importance ofhuman and social capital, and the need fora coherent rationale and a comprehensiveframework for regional development.

8.2.1 Human and social capital

Changes in technology and social normscontinually places new demands on theskills required by people in their chosenoccupations. While conventional marketprocesses can be relied upon to rewardoccupational competence, there are somesituations where the social andenvironmental costs of incompetence aresufficiently high to warrant governmentintervention. Strict conditions on theeducational qualifications of medical

practitioners is one example where thesocial costs of incompetent practice aretoo high to rely on financial failure as ameans of weeding out incompetentpractitioners. With the increasingrecognition of the environmental costs ofpoor farming practice and of the crucialrole of human capital in the growth andadaptability of farm businesses andindustries, the occupational competence ofthose entering agriculture will become animportant issue. Particular farmingactivities, such as the use of agriculturalchemicals and explosives are alreadybeing regulated by accreditationprocedures. Agriculture will need tocontinue its progression from a craft-basedvocation to a modern profession in whichparticipants have the skills to dealeffectively with the increasing complexityof the several dimensions of itsenvironment. These might include theneed for people to be involved in non-farmoccupations from time to time. The policyinstruments for encouraging the flow ofhigh quality human capital into theindustry might include placing certainhuman capital hurdles on entry to theindustry.

The recognition that industry adaptationand growth can be inhibited not only byfailures of individual action but,increasingly, by failures of collectiveaction, places greater focus on the need tobuild, maintain, and use the ‘social capital’(groups, networks, and other relationships)amongst farmers, and between the farmsector and other relevant actors. Thepolicy instruments for enhancing thebuilding of the relevant social capital needto be examined more closely than has beenthe case in the past.

8.2.2 Regional development

In relation to the second of the two issuesintroduced above, there has in recent yearsbeen a growing understanding that theeconomic and social condition of ruralregions depends on more than theprosperity of the farm sector. There hasalso been increasing recognition of the


declining contribution of the farm sector toregional economies. Rural regions are nolonger seen as having value merely as thesite for industries which exploit or extractnatural resources, and their ancillaryvalue-adding industries.

There is increasing recognition thatagriculture will have a reduced (but stillimportant) role in regional economicdevelopment, and that there is a need forgovernments to take a more active role inensuring the flow of resources to regionaleconomies. Recognition of the lattermarks a transition from purely ‘rationalist’policies which stressed the reform ofnational markets (product, finance, labour,etc.) via means such as competition policy.These policies assumed that improvedregional economic well-being wouldfollow from the reforms. While doubtshave arisen about this assumption of‘rationalist’ policies, rationality is stillneeded in regional development policy.

There needs to be a clearly stated andcoherent rationale for governments’ role inregional development, and the current mixof policies and programs, with theiremphasis on the resources that ruralcommunities themselves can contribute,may need to be augmented. In thiscontext, it will be important not to allowthe ‘tail’ of farm policy to wag the ‘dog’of regional development policy.

8.3 Water Resources Policy

From the review of the history of waterpolicy relating to the Basin, threeobservations suggest themselves. First,the water doctrine which replaced theriparian doctrine, while having itsdesirable features, is still an institutioncalculated to facilitate extractive wateruse. The arrangements replacing it need toprovide a robust framework for arriving atthe best mix of the range of jointlydependent services of the Basin’s rivers,of which extractive use is but one.Further, they should be able toaccommodate the uncer ta in t iesconfronting the Basin’s future. A

particular uncertainty is over the actualneeds of the environment. As knowledgeimproves and the nature of these needsbecome better understood37, so we mayneed to change the way in which water isallocated to the environment. The newwater ownership arrangements should beable to accommodate future changes inenvironmental allocations. Thefacilitation of trade — the favouredapproach to greater flexibility in theCOAG framework, — will undoubtedlyneed to be supplemented with otherapproaches. In all cases, statute law willbe important in the implementation ofgreater flexibility in the allocation of waterto environmental and consumptive uses.The last decade of the 20th century hasseen much legislative reform andinnovation in water resource managementand it will be important to make periodicassessments of these legislativedevelopments.

Second, questions must be asked about thelikely future structure of irrigation in theBasin. The history of the Basin suggeststhat probable cont inuat ion ofenvironmental and economic concernsshould not be dismissed, even if the alljurisdictions satisfy third trancherequirements. Such concerns include theworrying prospect of a radically different,and smaller, irrigation industry than ispresently the case. This would havesignificant implications and should beaddressed by responsible planners.

Finally, a broad overview of the history ofwater policy relating to the Basin showsthe importance of cooperative federalismin dealing with challenges calling formajor changes in policy direction. Therehave been at least four such occasions: theoriginal River Murray Waters Agreement,the Snowy Scheme, the second Murray-Darling Basin Agreement and the COAGframework and the National CompetitionPolicy. Throughout, as well, there hasbeen an on-going history of the statesadhering to the conditions of these variousagreements and cooperating in theirimplementation. The need for suchcollaboration will continue. The history


also shows the importance of bureaucraticinertia in prolonging the resolution ofconflicts and the part played by politicalleadership in bringing them to an end.More detailed study of this history ofcollaboration, inertia and politicalleadership could lead to thegeneralisations which might help lessenthe reliance on serendipity to cope withchange; and heighten the probability ofmore expeditious resolution of conflictand charting of the direction of newpolicy.

8.4 Land Resources Policy

With the benefit of hindsight, the historyof land resource management policy in theBasin can be seen as a series of attempts— many imperfect, but some successfuland some disastrous — to cope with thefundamental mismatch between 19thcentury European agriculture and theenvironment on which it was imposed.The key mismatch is hydrological —agriculture allows more runoff andgroundwater accession than did thevegetation it replaced38. The result hasbeen erosion, degradation of the riverineenvironment and spreading salinity.

The economic adaptation of Europeanagriculture to the Australian environmenttook place relatively rapidly — agriculturewas economically viable within a fewdecades of settlement. Ecologicaladaptation has taken much longer. Whilescientific understanding of aspects of themismatch and its symptoms emerged inthe 19th century and continued through the20th century, it was not until the 1940sthat a concerted policy response occurred.Initially, the focus was on damage repairto protect the agricultural productivity ofthe Basin in the wake of unquestionedagricultural expansion into lands wherethe mismatch was even more severe.Subsequently, policy turned to damageprevention and the task of accommodatingthe increasing non-agricultural interests inthe state of the rural environment. Policyinnovation in this respect has taken placein the context of cooperative federalism

and has given rise to considerablediversity in approaches, none of whichcould claim on sober reflection to bespectacularly, or perhaps even moderately,successful in reducing land degradation39.

There are two key differences between thepaths taken by water policy and landresources policy since Europeansettlement. Firstly, water policy made onerelatively prompt adaptation to theAustralian environment when policymakers abandoned the doctrine of riparianrights. This common law doctrine was thebasic legal principle by which access towater was managed in Europe and NorthAmerica. Secondly, in the latter part ofthe 20th century, water policy alsoresponded relatively promptly to the seachange in public policy making when theKeynesianism and administrativerationalism40 that had ascendancy from the1930s to the 1960s was replaced by theeconomic rationalism of the late 20thcentury.

In contrast, land resources policy sinceEuropean settlement has been muchslower in achieving institutionaladaptation to the Australian environment.Freehold land ownership, the basicinstitution by which access to land ismanaged, underwent some modification inthe form of leasehold tenures to adapt tothe conditions of the pastoral zone in the19th century. However, as some haveargued, there may be potential for furthermodification41.

Compared to the extent to which waterpolicy has abandoned the administrativerationalism that underpinned it until the1980s, land resources policy has increasedits dependence on administrativerationalist approaches, particularly withthe emergence of integrated catchmentmanagement in the 1980s and itsexpansion into broad scale regionalresource planning during the 1990s. Thisraises the issue of whether the failure ofeconomic rationalism to make inroads onthe policy task of allocating andcoordinating land resource use is anexample of bureaucratic inertia that is


delaying market reforms, or a genuinereflection of the inappropriateness ofmarket instruments to land resourceallocation42.

Regardless of the reasons for theexpansion in natural resource managementplanning, the question needs to be askedwhether the investment of effort is welldirected. After all, the best laid plans ofagency catchment managers are frequentlyrendered ineffective by technologicalinnovation and the operation of land andcommodity markets. As future-oriented asplanning might wish to be, it is generallydifficult to predict the stresses that marketforces and technological innovation willplace on the environment. A furtherdifficulty is the generally weak powers incatchment planning legislation to obtainlandholder compliance with the plans thatare produced.

An alternative to approaches based onexpert planning by state agencies and/orregulatory compulsion is the concept ofresource governance. This concept aroseduring the 1990s, and is perhaps bestrepresented by the work of Elinor Ostrom(Ostrom, 1990). As used by Ostrom andothers, the concept refers to the process bywhich collective decisions are made aboutaccess to natural resources when there ismore than just a single government agencyinvolved — when, for example, multipleagencies, interest groups and individualstake part in decisions. Resourcegovernance involves decentralisation ofresource management functions formerly

held by state agencies, and the sharing ofthe planning and decision making powersof state agencies with resource owners orusers.

Where resource management problems arecomplex and span multiple jurisdictions,resource governance needs to be organisedin a nested hierarchy of institutions inwhich decision-making powers aredevolved to the lowest level at which theycan be effectively carried out. Broaderquestions of policy, such as regional ornational targets are resolved at the higherlevels necessary to obtain representationof all the interests involved.

Some progress has been made towards asystem of nested resource governance inAustralia. although this has been moreaccidental than deliberate. The evolvinginstitutions of resource managementthrough cooperative federalism, such asthe COAG water reforms are a possiblemodel for the upper part of a nestedresource governance hierarchy.Developments in landcare andparticipative local resource managementpoint to the possibility of a hierarchyfounded upon self-governance at thelower, district levels. The nature of themiddle, regional levels of a nestedresource governance hierarchy remainsuncertain. Further policy analysis isurgently needed to canvass thepossibilities for middle or regional levelgovernance and how these might relate tothe current concepts of integratedcatchment management.


9 Bibliography

Papers in this series

Reeve, I. Frost, L., Musgrave, W. and Stayner, R. 2002. Agricultural and Natural ResourceManagement in the Murray-Darling Basin. A Policy History and Analysis. Reportto Murray-Darling Basin Commission. Institute for Rural Futures, University ofNew England, Armidale.

Tan, P.L. 2002. Issues Paper No 1: Legal Issues Relating to Water Use. Report to Murray-Darling Basin Commission. Institute for Rural Futures, University of New England,Armidale.

Reeve, I., Marshall, G. and Musgrave, W. 2002. Issues Paper No 2: Resource Governanceand Integrated Catchment Management Report to Murray-Darling BasinCommission. Institute for Rural Futures, University of New England, Armidale.

Frost, L., Reeve, I., Stayner. R. and McNeill, J. 2002. Issues Paper No 3: Issues in RegionalDevelopment. Report to Murray-Darling Basin Commission. Institute for RuralFutures, University of New England, Armidale.

Reeve, I. and Stayner, R. 2002. Issues Paper No 4: Human Dimensions of Structural Change.Report to Murray-Darling Basin Commission. Institute for Rural Futures,University of New England, Armidale.

Anderson, T.L. and Leal, D.R. 1991. Free Market Environmentalism. Pacific ResearchInstitute for Public Policy, San Francisco and Westview Press, Boulder, USA.

Barr, N., Ridges, S., Anderson, N., Gray, I., Crockett, J., Watson, B. and Hall, N. 2000.Adjusting for Catchment Management. Structural Adjustment and Its Implicationfor Catchment Management in the Murray-Darling Basin. Report to Murray-Darling Basin Commission.

Barr, N.F. and Cary, J. 1994. Greening a Brown Land. The Australian Search forSustainable Land Use. MacMillan Education Australia Pty Ltd, Melbourne.

Bates, G. 2001. Processes and Institutional Arrangements for Resource and EnvironmentalManagement: Legal Perspectives, Chapter 11 in Dovers S., and Wildriver, S. (eds).Processes and Institutions for Resource and Environmental Management:Australian Experiences, Final Report to Land and Water Australia, Canberra, Centrefor Resources and Environmental Studies, Australian National University, CD-ROM.

Blackstone, W. 1783. Commentaries on the Laws of England. Book II. Strahan, Cadell andPrince, London.

Bonyhady, T. 1992. Property rights. In: Bonyhady, T. (ed.) Environmental Protection andLegal Change. Federation Press, Sydney. 41-78.

Bonyhady, T. 2001. The disappointment of the law. In: Mobbs, C. and Dovers, S. (eds)Processes and Institutions for Resource and Environmental Managment: AustralianExperiences. Final Report to Land and Water Australia. Centre for Resource andEnvironmental Studies, Australian National University, Canberra.


Bradsen, J.R. 1988. Soil Conservation Legislation in Australia. Report for the National SoilConservation Program. University of Adelaide, Adelaide.

Bradsen, J.R. 2000. Soil conservation: history, law and learning. In: Dovers, S. (ed.)Environmental History and Policy. Still Settling Australia. Oxford UniversityPress, South Melbourne. 273-298.

Burdon, A. 1993. Commonwealth Government assistance for adjustment in agriculture. In:Department of the Parliamentary Library, 1996 Australian Rural Policy Papers,1990-95. Parliamentary Research Service Subject Collection No. 5. AGPSCanberra.

Burdon, A. 1995. Dry paddocks, damp policies: Drought assistance strategies and theireffectiveness In: Department of the Parliamentary Library, 1996 Australian RuralPolicy Papers, 1990-95. Parliamentary Research Service Subject Collection No. 5.AGPS Canberra.

Butlin, N.G., Barnard, A. and Pincus, J.J. 1982. Government and Capitalism: Public andPrivate Choice in Twentieth Century Australia, Allen and Unwin, Sydney.

Campbell, K. O. and Dumsday, R. 1990. Land policy. In: Williams, D.B. (ed.) Agriculturein the Australian Economy, (3rd ed.), Sydney University Press, Sydney.

Cockfield, G. 1993.) The vision rational: Rural policy in the 1990s. In: Hede, A. and Prasser,S. (eds) Policy making in volatile times. Hale and Iremonger, Sydney.

Conacher, A. and Conacher, J. 2000. Environmental Planning and Management in Australia.Oxford University Press, Melbourne.

Cowper, W.R. 1987. The Barren Jack Scandal and Its Effect on the MIA. (privatelypublished) W.R. Cowper, Bonnells Bay NSW.

Crabb, P. 1997. Murray-Darling Basin Resources. Murray-Darling Basin Commission,Canberra.

Davidson, B. R. 1974. Irrigation economics. Chapter 13 in Frith H.J. and Sawer, G. (eds)The Murray Waters: Man Nature and the River System, Angus and Robertson,Sydney.

Davidson, B.R. 1969. Australia Wet or Dry: The Physical and Economic Limits to theExpansion of Irrigation, Melbourne, Melbourne University Press.

Davidson, B.R. 1997. An historical perspective of agricultural land ownership in Australia.In: Lees, J.W. (ed.) A legacy under threat? Family farming in Australia.University of New England Press, Armidale.

Davis, P. 1968. Australian and American water allocation systems compared. Boston CollegeIndustrial and Commercial Law Review, 9; 647.

Department of Environment Housing and Community Development, 1978. A Basis for SoilConservation Policy in Australia. Report No 1. Australian Government PublishingService, Canberra.

Development and Migration Commission 1929. Report relating to the Canned Fruits Industryof Australia, Commonwealth Parliamentary Paper, No 24.

Director of Development on the Dried Fruits Industry 1929-30-31. Report of the Director ofDevelopment on the Dried Fruits Industry. Commonwealth Parliamentary Paper,No 104. Royal Commission on Closer Settlement … in the Irrigable Districts 1916,Victorian Parliamentary Paper, No 29.


Dovers, S. 1999. Antidotes and correctives to ad hocery and amnesia: some thoughts for theMurray-Darling Basin policy community. Paper commissioned by the Murray-Darling Basin Commission, June 1999.

Dovers, S. 2001. Processes and institutions for resource and environmental management:why and how to analyse. In: Mobbs, C. and Dovers, S. (eds) Processes andInstitutions for Resource and Environmental Managment: Australian Experiences.Final Report to Land and Water Australia. Centre for Resource and EnvironmentalStudies, Australian National University, Canberra.

Doyle, T., and Kellow, A. 1995. Environmental Politics and Policy Making in Australia,MacMillan, Melbourne.

Drought Policy Review Task Force, 1990. Managing for Drought; Final Report (3 vols.)AGPS Canberra.

Drucker, P.F. 1986. The changed world economy, Foreign Affairs, 64:768-91.

Dumsday, R. 1987. Contributions from the social sciences. In: Chisholm, A. and Dumsday,R. (eds) Land Degradation: Problems and Policies, Cambridge University Press,Cambridge, 315-334.

Dumsday, R.G. and Uren, N.C. 1995. European farming methods and associated landdegradation have destroyed the sustainability of Australian agriculture. In: Bennett,J. (ed.). Tall Green Tales, Institute of Public Affairs, Melbourne, 77-86.

Eckersley, R. 1995. Markets, the state and the environment. An overview. In: Eckersley, R.(ed.) Markets, the State and the Environment. Towards Integration. MacMillanEducation Australia, South Melbourne. 7-45.

Economou, N. 1999. Backwards into the future: national policy making, devolution and therise and fall of the environment. In: Walker, K.J. and Crowley, K. (eds) AustralianEnvironmental Policy 2. Studies in Decline and Devolution. University of NewSouth Wales Press, Sydney. 65-80.

Edwards, G. 1992. Microeconomic reform in Australian agriculture. In: Forsyth, P. (ed.)Microeconomic Reform in Australia. Allen and Unwin, Sydney.

Fenna, A. 1998. Introduction to Australian Public Policy. Addison Lesley Longman, SouthMelbourne.

Fenna, A. and Economou, N. 1998. Green politics and environmental policy in Australia. In:Fenna, A. (ed.) Introduction to Australian Public Policy. Addison LesleyLongman, South Melbourne. 331-357.

Flannery, T.F. 1994. The Future Eaters. An Ecological History of the Australasian Landsand People. Reed, Sydney.

Fowler, R.J. 1984. Property Rights of Farmers. In: Cooper, I. (ed.) Proceedings of the 11thNational Conference of the Australian Farm Management Society. 14-18 Feb 1984,Roseworthy Agricultural College, South Australia. 179-205

Frost, L. 1992. Government and economic development: the case of irrigation in Victoria,Australian Economic History Review, 32:47-65.

Gordon, G. A. and Black, A. 1882-3. Supply of Water to the Northern Plains. Irrigation,Parliamentary Papers (Victoria), 3(74):1229-40.

Grey, T.C. 1980. The disintegration of property. In: Pennock, J.R. and Chapman, J.W. (eds)Property. Nomos XII. New York University Press, New York, 69-85.

Gunningham, N. and Grabosky, P. 1998. Smart Regulation. Designing Environmental Policy.Clarendon Press, Oxford.


Harris, S. et al. 1974. Rural Policy in Australia: A discussion Paper. Report to the PrimeMinister by a Working Group. AGPS Canberra.

Hawke, R. 1989. Rural and regional Australia. A statement on Federal Government policyfor rural and regional communities. AGPS, Canberra.

Hawke, R. and Kerin, J. 1986. Economic and Rural Policy: A Government Policy StatementAGPS, Canberra.

Hobsbawm, E. 1994. Age of Extremes: The Short Twentieth Century 1914-1991, Penguin,London.

Holmes, J. 2000. Pastoral lease tenures as policy instruments, 1847-1997. In: Dovers, S.(ed.) Environmental History and Policy. Still Settling Australia. MelbourneUniversity Press, Melbourne, 212-242.

Holmes, J.M. 1946. Soil Erosion in Australia and New Zealand. Angus and Robertson,Sydney.

Independent Pricing and Regulatory Tribunal of New South Wales 1996. Bulk Water Prices:an Interim Report, Sydney, Independent Pricing and Regulatory Tribunal of NewSouth Wales.

Industry Commission, 1992. Water Resources and Waste Water Disposal, Report No. 26,Australian Government Publishing Service, Canberra

Jacks, G.V. and Whyte, R.O. 1939. The Rape of the Earth: a World Survey of Soil Erosion.Faber, London.

Jacobs, M. 1991. The Green Economy: Environment, Sustainable Development and thePolitics of the Future. Pluto Press, London.

James, D. 2000. Federal-State Financial Relations: The Deakin Prophecy. CommonwealthParliamentary Library Research Paper 17 1999-2000.http://www.aph.gov.au/library/pubs/rp/1999-2000/2000rp17.htm.

Johnson, S. 1993. The Great Central Valley : California's Heartland. University ofCalifornia Press, Berkeley and Los Angeles.

Kelly, P. 1994. The End of Certainty: Power, Politics and Business in Australia, Allen andUnwin, Sydney.

Kingdon, J.W. 1995. Agendas, Alternatives and Public Policies. (2nd ed). Harper Collins,New York.

Langford, K. J. C., Foster C. L. and Malcolm, D. L. 1999. Towards a Financially SustainableIrrigation System: Lessons from the State of Victoria, Australia, 1984 1994,Technical Paper No. 413, World Bank., Washington.

Lester, J.P. 1995. Introduction. In: Lester, J.P. (ed.) Environmental Politics and Policy.Duke University Press, Durham and London. 1-11.

Lewis, J.N. 1967. Agricultural price policy. In: D.B. Williams (ed.) Agriculture in theAustralian Economy, Sydney University Press, Sydney.

Lloyd, C. J. 1988. Either Drought or Plenty: Water Development and Management in NewSouth Wales, Department of Water Resources, Sydney.

Lockie, S. 1997. Beyond a good thing: political interests and the meaning of Landcare. In:Lockie, S. and Vanclay, F. (eds) Critical Landcare. Centre for Rural Research,Charles Sturt University, Wagga Wagga. 29-44.

Lockie, S. and Vanclay, F. 1997. Critical Landcare. Centre for Rural Research, CharlesSturt University, Wagga Wagga.


Lowi, T. 1964. American business, public policy, case studies and political theory. WorldPolitics XVI: 677-715.

MacLaren, D. 1992. The political economy of agricultural policy reform in the EuropeanCommunity and Australia, Journal of Agricultural Economics, 43:424-39.

Macpherson, C.B. 1975. Capitalism and the changing concept of property. In: Kamenka, E.and Neale, R.S. (eds) Feudalism, Capitalism and Beyond. Australian NationalUniversity Press, Canberra, 104-124.

Marshall, G. 1998. Literature Review of Total Catchment Management and its Antecedents.Unpublished discussion paper. Department of Economics, University of NewEngland, Armidale.

Martin, P. 1997. The constitution of power in Landcare: a poststructuralist perspective withmodernist undertones. In: Lockie, S. and Vanclay, F. (eds) Critical Landcare.Centre for Rural Research, Charles Sturt University, Wagga Wagga, 45-56.

Mauldon, R. 1990. Price policy. In: Williams, D.B. (ed.) Agriculture in the AustralianEconomy, (3rd ed), Sydney University Press, Sydney.

McColl, J. et al. 1997. Rural adjustment: Managing change. Mid-term review of the RuralAdjustment Scheme. DPIE, Canberra.

McMahon, T., Finlayson, B., Haines A. and Srikanthan, R. 1992. Global Runoff –Continental Comparisons of Annual Flows and Peak Discharge, CatensCremlingen-Destedt, Germany.

Mead, E. 1909. Problems in irrigation development, Journal of the Department ofAgriculture of Victoria, 7:490-4.

Meinig, D.W. 1962. On the Margins of the Good Earth, Rand McNally, Chicago.

New South Wales Environment Protection Authority, 2000. Who Cares About theEnvironment 2000. Environmental Attitudes, Knowledge and Behaviour in NewSouth Wales. Sydney, New South Wales Environment Protection Authority.

New South Wales Parliament 1885. Royal Commission on the Conservation of Water, FirstReport of the Commissioners, New South Wales Government, Sydney.

Ostrom, E. 1990. Governing the Commons. Cambridge University Press, New York.

Paterson, J. 1987(a). Law and Water Rights for Improved Water Resource Management,Department of Water Resources Staff Paper, 01/87, Victorian Department of WaterResources, Melbourne.

Paterson, J. 1987(b). The privatisation issue: water utilities. In: Abelson, P. (ed.)Privatisation in Australia, Australian Professional Publications, Sydney,. 181-204.

Paterson, J. 1987. The River Murray and Murray Darling Basin Agreements: Political,Economic and Technical Foundations, DWR Staff Paper, Department of WaterResources, Victoria.

Piggott, R. 1990. Agricultural Marketing In: Williams, D.B. (ed.) Agriculture in theAustralian Economy, (3rd ed.) Sydney University Press, Sydney.

Powell, J. M. 1991. Plains of Promise Rivers of Destiny: Water Management and theDevelopment of Queensland, 1824 – 1990, Boolarong Publications, Brisbane.

Powell, J.M. 1989. Watering the Garden State: Water, Land, and Community in Victoria1834-1988, Sydney.

Powell, J.M. 1993. The Emergence of Bioregionalism in the Murray-Darling Basin. Murray-Darling Basin Commission, Canberra.


Productivity Commission 1999(a). Impact of Competition Policy Reforms on Rural andRegional Australia, Productivity Commission, Melbourne.

Productivity Commission 1999(b). Structural Adjustment – Exploring the Policy Issues,Canberra.

Randall, A. 1981. Property entitlements and pricing policies for a mature water economy,Australian Journal of Agricultural Economics, 25:195-220.

Reeve, I.J. 1988. A Squandered Land: 200 years of land degradation in Australia. TRDCPublication No. 159, The Rural Development Centre, University of New England,Armidale.

Reisner, M. 1993. Cadillac Desert: The American West and its Disappearing Water, PenguinBooks, New York.

Rural Reconstruction Commission 1944. Fourth Report, Rural Reconstruction Commission,Canberra.

Rushefsky, M. 1995. Elites and environmental policy. In: Lester, J.P. (ed.) EnvironmentalPolitics and Policy. Duke University Press, Durham and London, 273-299.

Rutherford, J. 1964. Interplay of American and Australian ideas for development of waterprojects in Northern Victoria, Annals of the Association of American Geographers,54:88-106.

Schedvin, C.B. 1970. Australian and the Great Depression, Sydney University Press,Sydney.

Shaw, A.G.L. 1990. Colonial settlement 1788-1945 In: Williams, D.B. (ed.) Agriculture inthe Australian Economy, (3rd ed), Sydney University Press.

Shiel, M.K. 1981. The Goulburn Valley Canned Fruits Industry 1917-1939, BEc (Hons)thesis, Monash University.

Sieper, E. 1982. Rationalising Rustic Regulation. Centre for Independent Studies, Sydney.

Sinclair, W.A. 1970. Capital formation. In: C. Forster (ed.) Australian EconomicDevelopment in the Twentieth Century, Allen and Unwin, London.

Smith, D. I. 1998. Water in Australia; Resources and Management, Oxford University Press,Melbourne.

Smith, D.F. 2000. Natural Gain: in the Grazing Lands of Southern Australia, University ofNSW Press, Sydney

State of the Environment Advisory Council 1996. State of the Environment 1996, Australia,CSIRO Publishing, Collingwood.

Tisdell, J., Ward, J. and Grudzinski, T. 2000. The Development of Water Reform in Australia,CRC for Catchment Hydrology, Milestone Report, December.

Tyrrell, I. 1999. True Gardens of the Gods: Californian-Australian Environmental Reform,1860-1930, University of California Press, Berkeley and Los Angeles.

Viswanathan, K. 1985. The Impact of Water Distribution rules on Farm Production andIncomes, unpublished M.Ec. dissertation, University of New England, Armidale.

Voyce, M. 1996. Ideas of rural property in Australia. In: Lawrence, G., Lyons, K. andMomtaz, S. (eds) Social Change in Rural Australia. Rural Social and EconomicResearch Centre, Central Queensland University, Rockhampton, 95-105.

Wadham, S., Wilson, R. and Wood, J. 1957. Land Utilization in Australia, (3rd ed.),University of Melbourne Press, Melbourne.


Walker, K.J. 1999. Statist developmentalism in Australia. In: Walker, K.J. and Crowley, K.(eds) Australian Environmental Policy 2. Studies in Decline and Devolution.University of New South Wales Press, Sydney. 22-44.

Wanna, J. and Withers,G. 2000. Creating capability: combining economic and politicalrationalities in industry and regional policy In: G. Davis and M. Keating (eds). TheFuture of Governance. Allen and Unwin, Sydney.

Ward J. 2000. The evolution of water management in Australia, Chapter 2 in Tisdell, J.,Ward, J., and Grudzinski, T. (eds) The Development of Water Reform in Australia,CRC for Catchment Hydrology, Milestone Report, December.

Watson A. 1996. Conceptual issues in the pricing of water for irrigation. In: Pigram J. (ed.).Security and Sustainability in a Mature Water Economy: a Global Perspective,Centre for Water Policy Research, Armidale, 213-227.

Watson, W. 1990. An overview of water sector issues and initiatives in Australia. In: PigramJ. and Hooper, B. (eds). Transferability of Water Entitlements: an InternationalSeminar, Centre for Water Policy Research, Armidale, pp.213-227.

Watson, W. and Rose, R. 1980. Irrigation issues for the eighties: focusing on efficiency andequity in the management of agricultural water supplies, Adelaide, paper presentedto the Annual Conference of the Australian Agricultural Society.

Wilkinson, J. 1997. Water for Rural Production in NSW: Grand Design and ChangingRealities, Briefing Paper No. 26/97, NSW Parliamentary Library Service, Sydney.

Wilkinson, R. and Barr, N. 1993. Community Involvement in Catchment Management. AnEvaluation of Community Planning and Consultation in the Victorian SalinityProgram. Department of Agriculture, Victoria.

Williams, M. 1974. The Making of the South Australian Landscape: a Study in the HistoricalGeography of Australia, Academic Press, London.

Woods, L. 1984. Land Degradation in Australia. Australian Government PublishingService, Canberra.


10 End Notes

1 This is not to say that party policy platforms are not important in understanding the evolution ofpublic policy. To the contrary, party policy documents provide important insights into how politicalideologies are adapted to accommodate emerging issues of public concern. However, for this overviewstudy, it is only feasible to sketch the changes in actual actions taken by governments in the Basin.

2 For a more comprehensive listing of policy instruments, see Dovers (2001) or Gunningham andGrabosky (1998).

3 The diagram below draws upon the accounts of policy processes in Lester (1995), Rushefsky (1995)and Kingdon (1995).

4 Some care has to be taken in assessing the landscape changes and readjustments resulting from theEuropean settlement of Australia. On the one hand, some of the changes have undoubtedly beenbeneficial, particularly to agricultural production (see, for example, Dumsday and Uren, 1995 andSmith, 2000). On the other hand, many of the changes that are characterised as land degradation, suchas dryland salinity, have the potential to seriously reduce the productivity of agriculture, as well asclosing off profitable future options for new forms of agriculture or alternative land uses.

5 This section draws extensively on the account by Fenna (1998).

6 The Mabo case in 1992 established that native title, under certain conditions, survived the reception ofBritish common law in Australia.

7 Conacher and Conacher (2000:284-286) and Bonyhady (2001), for example, document the windingback of public consultation provisions in the NSW Environmental Planning and Assessment Act of1979 and the Victorian Planning and Environment Act of 1987. The trend in the actual numbers ofpeople involved in participative activities is less clear. The ‘Who Cares about the Environment’surveys undertaken by the New South Wales Environment Protection Authority in 1994, 1997 and2000 showed that the proportion of people in New South Wales reporting that they had, in the lasttwelve months, ‘Wr[itten] a letter or signed a petition or attended a meeting or made a report orcomplaint with the aim of improving the environment’ remained constant at 36 per cent for all threesurveys (NSW EPA, 2000).

8 The rise of participative rural resource management under the banner of landcare may be moreapparent than real. A number of researchers studying the landcare phenomenon in Australia haveargued that the language and practice of participation in landcare may be little more than a screenbehind which the State resource management agencies continue to pursue their own agendas, andgovernments avoid politically difficult resource allocation issues (Lockie, 1997; Martin, 1997).

9 Irrigation and water resource management policy are dealt with in detail in chapter 6.

10 Nevertheless, the policy makers behind the competition policy reforms in Australia paid little regardto the impacts of the reforms on rural areas (Dumsday, 2001, pers comm.).

11 While the overall population of the Basin is increasing (for example, by 5.9 per cent between the1986 Census and the 1991 Census — Crabb, 1997), one change that continues to receive politicalattention is the decline in the number of farm establishments and farm families. For example, between1986 and 1996, the number of farm establishments declined by 16.2 per cent, and the number of farmfamilies by 24.4 per cent (Barr, et al., 200).

12 This latter provision is likely to remain a contested concept, with governments attempting to restrictthe scope of events regarded as ‘exceptional’, and farmer interest groups attempting to expand it.While ever the iconic status of ‘the bush’ and Australia’s climatic variability persists, governments willfind it difficult to resist the calls for support at times of climatic extreme.


13 The riparian doctrine gives landholders conditional rights to access and rights to water contiguouswith and adjoining their land (Tisdell at al, 2000). The doctrine, in effect, allows landholders to dowhat they wish with their (riparian) water, as long as they do not unreasonably interfere with otherlandholders by such use (Bates 2001). Experience has shown it to be more applicable to a situation ofrelatively more stable and plentiful supply than to situations such as those of Australia and the west ofthe United States (Davis 1968).

More generally, riparianism is inadequate, not just as a basis for the management of competitionbetween productive users of water, it also falls far short of the provision of a sound basis for themanagement of the multiple and joint uses (including environmental services) of the resource. Whilethe initiatives of the first phase of policy development addressed the former problem, the best part of acentury was to elapse before a start was made on grappling with these wider issues.

14 Most farmers wanted irrigation water to be available as an insurance against drought and wanted tocontinue the land-extensive methods of wheat-sheep farming that they knew best. In addition, manychose not to build their farming routines around the regular use of irrigation water because they fearedthat heavy charges would be levied for the use of water. The 1896 Victorian Royal Commission onWater Supply found that many farmers were only enthusiastic about irrigation because they believed itwould increase land values and enable them to sell out at higher prices and move on to new land. TheChaffeys, and the other Victorian irrigation trusts, were victims of this lukewarm enthusiasm forintensive farming: most of the land subdivided at Mildura was purchased by speculators or remainedvacant. Farmers were not obliged to use and pay for the water that passed through their properties. Inany case, engineering problems discouraged the regular use of irrigation water: the Chaffey’s pumpswere expensive to run and burrowing yabbies resulted in seepage from the ditches. In other irrigationareas the poor quality of dams made supplies unreliable. Finally, the Chaffeys did not pay muchattention to the issue of the potential market for irrigated produce in Victoria, which was much smallerthan in California. Neglect of this problem was a common fault amongst irrigation pioneers.

15 There is still some uncertainty about the nature of the first agency in New South Wales withresponsibility for irrigation matters. Smith (1998) refers to the formation of a Water Conservation andIrrigation Board in 1896. However, research in progress by Katrina Proust at Australian NationalUniversity suggests that a small section with responsibility for water conservation was establishedunder the control of engineer Hugh McKinney in May 1887. This section was located at various timeseither within the Mines Department or the Public Works Department. It did not enjoy the same supportas did its equivalent in Victoria, and McKinney devoted considerable effort to promoting irrigation. Heleft government employment in 1900 to promote irrigation development on the Murrumbidgee withRobert Gibson.

16 There were some successful private irrigation ventures, notably those of McCaughey who used waterfrom the Murrumbidgee for irrigation purposes. By the end of the 19th century, McCaughey had about60 miles of irrigation channels on his properties (Wilkinson 1997). N.A. Gatenby also conductedsuccessful irrigation experiments on his property Jemalong on the Lachlan River from the 1890s (NSWAgriculture Gazette,1903: 385-399).

17 A detailed account of the development of the Murrumbidgee Irrigation Scheme is given in Cowper(1987).

18 Alfred Deakin was particularly concerned, on the basis of his study of the Californian experience, bythe potential the prior appropriation doctrine provided for the monopolization, by private interests, ofbulk water services.

19 Ward (2000, p.27) describes this extensive involvement of the State Governments — ‘... developersof water supply infrastructure such as dams, and developers and owners of large-scale urban and ruralsupply schemes (including irrigation)’ — in the following way.

The deployment of this grand scheme received broad political and commensuratefinancial support and was facilitated by a well-established engineering hierarchy,responsible for the conceptualisation, planning and construction of dams andreticulated supply, drainage and sewerage systems. Additionally, the statutory


authorities responsible for supplying rural water progressively controlled the pattern ofrural settlement, inclusive of farm size and crop types. The agency objectives and tasks,whilst large in magnitude and scale, were narrow in scope and comprehensivelyspecified. With minimum political distraction, the achievement of specific hydraulicand engineering objectives was vigorously executed with high levels of technicalexpertise and utility. . . .there was no legislated obligation to consider externalconsequences, and the subsequent metric of rural water development was couched inengineering terms and measured accordingly. Although punctuated by the Depressionand two World Wars, the pace of water development, particularly rural irrigationschemes, has continued unabated over the 100-year period initiated by Deakin’sIrrigation Act of 1886

20 While the data in Table 6.1 relate to the states as a whole, and therefore include dams constructed forurban supply, the conclusion that it reflects the rate of development in the Basin seems reasonable. Inthe 1990s, about 80 percent of water in Australia was used for rural purposes, and most of the irrigationin Basin States is located in the Basin.

21 Research in progress by Katrina Proust at the Australian National University suggests that thepolitical support for irrigation in New South Wales may have lagged behind that in Victoria, at least inthe last decade of the 19th century.

22 For example, the Victorian State Rivers and Water Supply Commission played a key role inimplementing the policy of closer settlement, buying up properties, subdividing them into smallholdings, and providing them with needed infrastructure (Powell 1989: 144-64). This was done toprovide opportunities for the existing population to obtain farms of their own, although the head of theCommission, Elwood Mead, also saw the need to recruit immigrants from America and Europe whowere experienced at farming on small holdings and could demonstrate the value of intensive cultivationto Australians. Mead also sought to encourage farmers to prepare their land for intensive cultivation byintroducing a compulsory charge for irrigation water, levied as a rate on the value of the land,regardless of whether the water was used or not.

Mead argued that it was feasible for around one million acres in Northern Victoria to be irrigated, andthat ‘settled as it should be to secure the full benefits of irrigation this areas will support 200,000 morepeople than now live on it. … To grade and improve this land, to build the houses, stables and fencesrequired by the area, to equip the farms and handle the products from them would do more to increasetrade and give added employment to labour than anything which has occurred since the discovery ofgold’ (Mead 1909: 490).

23 The attempts to promote the canned and dried fruits industries in the MDB were a case in point. Thecompletion of the Hume and Lake Victoria storages made a further 700,000 acres of irrigable landavailable and in the interwar period many growers had succeeded in laying out sound and productiveorchards and vineyards. The Victorian government provided financial assistance for the establishmentof canneries to assist overseas marketing and avoid seasonal gluts (Shiel 1981). The Shepparton FruitPreserving Co. was established in 1918 and co-operatives were established at Mooroopna in 1921 andKyabram in 1922. These firms struggled to compete in overseas markets because of high productioncosts and ‘the world over-production of canning varieties of fruit’ (Development and MigrationCommission 1929). The Australian Dried Fruits Association, formed in 1907 after a merger of variouspacking and marketing co-operatives, was at first a success story, but by 1925 world markets for theproduct had become glutted and it was reported that only growers with high yielding blocks werecovering production costs (Director of Development 1929-30-31).

24 Following successful trials in the MIA in 1922-23, rice was rapidly accepted in the economicallystressed region. In 1940, it was reported to be the most profitable crop in the Area (Wilkinson 1997).Cultivation of the crop expanded to other areas in the south of the State, particularly during World WarII. By 1984, the Minister for Agriculture declared that, in the south-west of the State, rice had become‘the backbone of the system of irrigation areas and districts’ (Wilkinson 1997). In 1981/82, 64 percentof irrigation water in southern New South Wales Irrigation Districts was used on rice (Wilkinson1997).


Lloyd (1988 p.214) refers to the importance of this new, profitable crop to the larger farms resultingfrom the consolidations and rationalizations following the economic difficulties of the early days in theMIA. He also refers to the problems arising from the spread of the crop to the irrigation districts whichlacked drainage (Lloyd 1988 p.248). Indeed, this was also a problem in the drained irrigation areas.Rice was cause for concern, as waterlogging and salinisation problems started to manifest themselvesthroughout the irrigation areas and districts, though Lloyd does point out that the crop was not solely toblame for these emerging environmental problems. He states that some waterlogging and salinisationwere to be expected, even if the crop was not grown (Lloyd 1988 p.288).

25 Diversion of the waters of the Snowy River had been suggested since the mid-1800s (Lloyd 1988).The idea gained fresh momentum, in the 1940s when New South Wales and Victoria proposedconflicting schemes. The Commonwealth became actively involved when, in 1948, it established atechnical committee, the Commonwealth and States Snowy River Committee, to look further into thematter. With Prime Minister Chifley showing enthusiasm for the Scheme, the Committeerecommended a compromise plan for a diversion scheme which could generate 2,820,000 KW ofelectricity and provide an average of 2,300,000 acre feet of water each year for irrigation. The waterwas to be divided between the two States. The recommendation was accepted and, after 25 years, theScheme was completed in 1974, at an estimated cost of $819 million in 1974 dollars, or around $5billion in 1990s dollars (Wikinson 1997).

26 As an example, Powell (1989 p236) provides a quote from a 1963 issue of the Current AffairsBulletin, as follows:

. . .there are few uses to which this water can be put that will yield anything of a satisfactory return on thenecessary capital investment needed for reticulation and farm establishment, let alone the great capital worksrequired for headwater storages. In most possible avenues, the increased production from the irrigated areas,which would lead to greater volume of material entering the markets, is likely to diminish returns received byfarmers already established either locally or elsewhere in Australia. This is the fundamental reason whyexpected gross returns from irrigation expansion provide no adequate measure of the benefits likely to accruefrom such an operation. By over-supplying the markets they could bring depression to broad areas ofagricultural Australia. Local gain, at present debatable enough, could add up to major national loss.

27 In the event, the Coleambally Irrigation Area, which was established in the 1960s to use the Snowywater in New South Wales, was never completed. Further, in order to enable them to becomeestablished, the new farmers were permitted to grow rice, but on an interim basis. Today, over 30years later, the Coleambally continues to be a major rice producer.

28 Ward (2000) summarizes the argument of Davidson and others as follows:

Davidson . . . criticised the level of government expenditures on irrigation schemes, based on a thesisthat drought proofing and the irrigation solution were fundamentally ill-founded and misconceived.The extant competitive advantage for Australian agriculture is founded on a high ratio of naturallywell-watered land per capita. Successful agricultural enterprise was predicated on the utilisation oflarge tracts of cheap land, the use of low levels of labour and the production of a relatively durableexport commodity. Irrigation as posited by Davidson was the antithesis of a successful Australianfarming system predicated on that natural advantage. Irrigation required smaller parcels of land andwas labour intensive. Davidson’s examination of the accounting detail of irrigated farming budgetsindicated a bleak picture for individual operators and that extensive irrigation development waseconomically irresponsible

(Ward 2000 p.28).

Davidson argued that these fundamentally ill-founded policies were the root cause of the inability ofirrigators to pay the full cost of the supply of water. The arguments of Davidson were expanded byothers. For example, Paterson (1987) estimated that, based on economic criteria, only 12 percent ofirrigation land in 1987 would have been developed and only 30 percent of the infrastructureconstructed. Others produced a range of estimates of the size of the subsidy to the irrigation industry.Such estimates added to concern over the efficiency of irrigation, the further concern that, now that the‘national development’ bubble was burst, the provision of such subsidies to new developments wasinequitable.


29 It can be argued that these concerns are not well-founded. However, only when these social andenvironmental impacts emerge (or fail to emerge) in the years following the reforms, will it be possibleto make an assessment as to whether the concerns were justified.

30 Langford et al (1999) refer to the influence of unsustainable public sector debt on irrigation reform inVictoria. This could be some explanation for Victoria becoming a leader in water reform.

31 Two-part tariffs are used by utilities to charge for the supply of services such as water, gas orelectricity. A two-part tariff comprises an access component which is fixed independently of thequantity supplied, and a consumption component which is based on the quantity supplied.

32 This and subsequent sections draw heavily upon the accounts of Reeve (1988), Bradsen (1988) andConacher and Conacher (2000).

33 The estimate of one half was subsequently questioned — see, for example, Dumsday (1987:318).

34 The actual extent of increase of funding is very difficult to determine, given the reorganisation and‘rebadging’ of Commonwealth programs, and the withdrawal of State funding.

35 Absolutist property rights rhetoric refers to the claims made by owners of freehold land to anunfettered right to use their land as they see fit, despite the fact that the state has historically imposedlimits on these rights. Over time, the nature and concept of property has varied from an hierarchicalsystem of social obligation of feudalism, to the absolutist possession as described by Blackstone (1783)that underpinned the rise of market capitalism and the industrial revolution, to the modernfragmentation of the bundle of property rights inhering in land ownership and increasing restriction onsome parts of the bundle (Macpherson, 1975, Grey, 1980). The absolutist view of land ownership hassurvived in rural Australia well beyond its origins in the circumstances of Australia's settlement byEuropeans (Bradsen, 1988:3; Voyce, 1996). It emerges from time to time in rural Australia when ruralland owners feel threatened by the actions of the state or other claimants. Absolutist rhetoric has beenin some instances backed up pre-emptive threats or actions to thwart legislative intentions, as occurredin South Australia when the State Government attempted to restrict the rights of land owners to removenative vegetation (Bonyhady, 1992:57). Bonyhady further pointed to a range of environmentallegislation in which the land owner's consent was required before restrictions on the owners' propertyrights could be imposed in the public interest. Despite such factors that might prevent restrictions onproperty rights, the property rights associated with land ownership in rural Australia have neverthelessexperienced considerable restriction by statute law, such as the removal of rights of land owners tominerals and wildlife (Bradsen, 1988; Bonyhady, 1992). Fowler (1984 :196) in his review of the SouthAustralian legislation that impacted on land ownership, concluded that freehold land ownership in thatState had always been subject to regulation and that the amount of regulation was likely to increase inthe future.

36 The Rural Partnership Program in the mid-1990s made some advances in integrating regionaldevelopment policy. The lessons from this program may be worth revisiting in the context ofadjustment policy for the Murray-Darling Basin.

37 An example is the recent improvement of our understanding of the impact of cold water dischargesfrom dams on downstream fish populations.

38 Australian agriculture is also ‘leaky’ with respect to its use of nutrients, although nutrient pollution isjust as much a problem in European and North American agricultural environments.

39 From a historical perspective, the question has to be asked as to whether the landscape transitionsthat have been labelled as land degradation are inevitable if agriculture is to be practiced in the suitableparts of the continent. It is certainly unrealistic to expect that the widespread practice of agriculture,with its different hydrological characteristics, will not result in some adjustments in the landscape.There is little doubt that these adjustments may reduce the longer term productivity of agriculture, ornon-agricultural values such as biodiversity and urban water supply. The key question is how muchremedial and preventative expenditure is justified by actual pass losses and potential future losses.


40 The administrative rationalist approach assumes that good natural resource decision-making is doneby the application of science. Modelling and planning is expected to uncover the best way ofallocating natural resources. Administrative rationalism also assumes that facts and values can beseparated, and that only the former, and never the latter, should enter into decision-making. Thescientific values of objectivity, precision and repeatability are important in administrative rationalism.Also important are the administrative values of clear specification of objectives, evaluation ofperformance and accountability. Integrated catchment management without its participative dimensionis a fine example of administrative rationalism in action.

41 The view that leasehold tenures provide a useful means of allowing governments to ensure privateland use decisions accord with public interest goals is by no means universally accepted. The freemarket environmentalist position (see, for example, Anderson and Leal, 1991), has a pessimisticassessment of the ability of bureaucracies to identify and act for the public interest, and an optimisticassessment of the ability of markets and absolute freehold land ownership to deliver environmentallydesirable outcomes. This optimism is not necessarily always well-founded for, as Jacobs (1991) andEckersley (1995) have pointed out, the weak political commitment, inadequate resourcing and weakmonitoring and enforcement that are claimed as causing the failure of direct environmental regulationby bureaucracies, may equally well cause the failure of the regulatory framework that is necessary tosupport the functioning of markets so that they behave in a way that approximates theoretical ideals.

42 The balance to be struck in any resource allocation problem between allocation by planning andadministration (often labelled with the perjorative term ‘command and control’) and allocation bymarkets will inevitably remain a contentious issue. The allocation of land resources among themembers of society who wish to use those resources for their benefit is no exception. On the one hand,the free market environmentalist position sees no role for planning and administration, holding thatmarket forces will bring about desirable environmental outcomes. On the other hand, Walker (1999),building on an argument of Lowi (1964) suggests that increased planning and administration isinevitable as land resources are fully developed. In the frontier economy of the past, agricultural landuse occupied a smaller fraction of the land area. This and the simpler technologies meant that thepotential for the activities of one land owner to impact on another was very limited. Consequently,there was little need for the state to intervene in the activities of land owners. In a mature and modernagricultural economy, agricultural land uses dominate the landscape and modern technologies increasethe potential for the activities on land owners to impact on each other (the growth of spray driftproblems is an example). As a result, the amount of regulation by the state to maintain social order hasto increase.

OVERVIEW REPORT Agriculture and Natural Resource ... · Queensland, New South Wales, Victoria and...

Documents

Transcript of OVERVIEW REPORT Agriculture and Natural Resource ... · Queensland, New South Wales, Victoria and...