The following article was first published on Larvatus Prodeo on Tuesday 1st April 2008.

The announcement of the Council of Australian Governments that an ‘historic' Murray Darling Basin agreement has been reached seemed to tickle the fancy of most people involved. Now that the fanfare has died down, it's time to look past the rhetoric and back-patting to ask what is in fact being delivered, how does this differ from Howard's previous water plan, and when will we see some change for the better in the Basin?

One glaringly obvious difference is that all the States are now on board ... which is a good thing. However, the dynamics of Federal-State collaboration may be brought into question by the methods employed to reach this agreement. We wouldn't dare call the extra $1 Billion for Victoria a bribe - it's much nicer to think about the huge strides in cooperation and consultation, with the inclusion of a few nice sounding phrases in the Memorandum of Understanding along those lines.

Just what it is that has been signed up to may well be a concern - but the far bigger worry is not so much ‘what' as - when?

It is fair to say that there is general agreement by practically everyone (although I'm sure The Australian can shake a few flat-earthers and climate deniers out of the trees) that the system is in crisis and urgent action is needed to save the Murray (and parts of the Darling). The biggest elephant in the room with this brave new deal is that the commitment to honour existing water sharing plans means that a real cap on diversions that brings extraction down to sustainable levels cannot actually be implemented until 2019!

In many ways it is true to say that we're at an historic moment for the future of the Murray Darling Basin - but it remains more a moment of historic opportunity than one of real change.

With the Commonwealth, the States and our Capital Territory now politically aligned, a high level of public concern for the future of the Basin, and $10 Billion on the table - there is a real chance to fix the problems of water sharing and over-allocation. At the same time it is also the opportune moment to save the delicate environmental balance of the Basin itself. The resilience of many of the ecosystems of the Basin is rapidly approaching an ecological threshold beyond which recovery becomes increasingly unlikely.

What we have heard so far from COAG about a new agreement and the formation of a new Murray Darling Basin Authority is an important first step - but it still a long way from a final fix. The Commonwealth finds itself in an awkward and difficult situation. These things take time to iron out all the details, ensure proper process and consultation is given, and achieve an outcome that benefits all major parties, but time is running out for the Murray. Instead, the Government seems to have unnecessarily locked itself into the previous administration's promise to honour existing State water sharing plans (which continue until 2014 in SA, NSW and Queensland and way off into 2019 in Victoria).

Perhaps we have the makings of a new verb - to COAGulate ... meaning a complex and long winded process to produce gloop.

In reforming water use within the Basin it is important that the Commonwealth strives to deliver a sustainable arrangement that delivers both fairness and certainty to all stakeholders. However, underlying this equitable aim has to be a clear understanding that all plans, old and new, need to be sustainable. In this way COAG would be better off giving a commitment to honour existing plans to the extent to which they are sustainable within the new whole-of-basin cap on diversions. Couple this with an undertaking (and laying down of principles) to honour the spirit of existing plans within the bounds of sustainability, and we might have a chance at getting it right.

We simply don't have another decade to sort this out.

If the new Basin Plan cannot be put into operation until 2019, there is a real risk that the Murray Darling system will be dead by the time these changes take effect. There are a lot more details that still need to be sorted out, and as Richard Kingsford points out in Crikey, the devil is in the detail.

There is a very real risk that the new MDBA will not have the independence and the teeth needed to deliver a sustainable cap on diversions, however with the right mindset, there is still the opportunity to put in place a strong and independent water manager that has the ability to withstand political pressure and outlast changes in government and resolve.

When push comes to shove, and individuals, regions or States take more than their allocation, the MDBA will need that political independence to enforce the cap, or the MDBA could find itself in the exact same spot as its predecessor the MDBC (well informed and with the best of intentions - but powerless). To be able to make the plan stick, the MDBA will have its hands on the purse-strings and be empowered to hit recalcitrant States where it most hurts them - by withholding funding if they don't keep their side of the deal.

According to the COAG MoU the final decisions on the Basin Plan and the cap will be made by the Commonwealth Minister (currently Penny Wong), and individual States can take any objections to the new Ministerial Council. Whether in practice these mechanisms act as a guarantee of accountability or instead end up becoming a mechanism for political interference, remains to be seen.

Not only is the Minister the final decision maker, but when the Minister rejects the Basin Plan and sends it back to the MDBA to revise to her liking, she does not actually have to report this to Parliament until the revised plan has been rejected for a second time.

While the MoU does specify that States' access to the $10 Billion in the plan will be conditional upon their achieving agreed water reform objectives, this power is one step removed from the MDBA in the hands of the Minister, which potentially makes it a political bargaining chip. Furthermore, we have to presume that at some point the $10 Billion will have been spent - what will be the carrot and stick then?

Victoria's $1 Billion deal with the Commonwealth for their Food Bowl Project raises some other questions - not the least of which is whether there is in fact some robust water accounting to back up the claim it will save an additional 200 billion litres, and return half of this to the river. It might be worth noting that hydrologists, engineers, catchment managers and the wider public have all used the language of gigalitres in referring to ongoing water issues. At some point during COAG some bright spark hit on the idea that a billion litres sounds much bigger, and therefore more impressive.

This claim of an extra 100 billion litres being returned to the river is actually a misleading one, because the water that leaks from old irrigation systems isn't lost - it becomes part of the groundwater system and ultimately finds its way back to the river (with the evaporated water ending up in the clouds). There is no magically appearing ‘new' water in the system - by delivering half of the water 'saved' by irrigation improvements to the irrigators, the net effect is more water being taken out of the system and transpired by plants. This is the same mistake made by the Howard Government - as pointed out by Mike Young - a mistake that the Rudd Government seems to be unquestioningly following.

In fact, the whole issue of using public money to fund improvements in private irrigation infrastructure is fundamentally problematic. Those leading irrigators that have done the right thing, borrowing and investing money to modernise their irrigation infrastructure, are unfairly disadvantaged when their inefficient cousins are given the same for free. Surely if we are going to be forced to reduce the amount of water going to irrigation in the Basin it would be a better idea to back the winners?

With the ACCC now being put in charge of ensuring efficient and transparent water markets and prices within the Basin, it will be interesting to see what they make of the anti-competitive nature of these investments.
While in principle we may agree it's a good idea for the planned prioritisation of ‘critical human needs' (that is, drinking water for survival) - in practice we have no real way of separating and enforcing that this water is only used for critical needs. Instead we may find ourselves squandered on the non-critical needs of rose bushes or teenagers having 3 hour showers. By including this reference to ‘critical human need' the MoU has both acknowledged the problems Adelaide in particular faces with its water supply, while at the same time getting SA off the hook of having to improve its urban water use and develop other independent supplies.

We have a narrow window of opportunity to tackle one of the most intractable issues since Federation ... and one of the most pressing. We have made a small step in the right direction, but we urgently need to pick up the pace.