Penny Wong

by Simons, Margaret;

  The negotiations came to a head in Adelaide in March 2008, first at a meeting of the Murray–Darling Basin ministerial council, then at meeting of the Council of Australian Governments (COAG), held at the Adelaide Convention Centre. The commentators were pessimistic about what could be achieved. Political analyst Dean Jaensch remarked that Penny Wong had no real ammunition ‘to fight what is clearly a political war … Queensland, New South Wales and Victoria will continue to raid the basin for whatever they want, and South Australia, at the end of the system, can whistle in the wind’.17

  On 27 March, in the final hours of the COAG meeting, journalists were told to gather at 1.30 pm for a media conference. It was expected a deal would be announced. They were left idle as the media conference was repeatedly delayed. Reporters texted contacts inside the meeting, only to be told there was no progress and there might be no deal to announce. Kevin Rudd was in one room with the premiers, Penny Wong in the other with federal and state water officials. Messages were run from one room to the other. Rudd needed to return to Canberra for a foreign policy announcement. Time was running out.18

  Wong was, sources told reporters, ‘amazing to watch’ as she negotiated her way through the conflicting arguments.19 It was Penny at her best – chairing a debate, bridging the gap between different positions, moving the players from intransigence towards a deal. But, in the last hours and when hope seemed lost, she effectively sidelined the bureaucrats, stepped forward and did the deal with the premiers herself. It was a hard piece of pragmatic politics, but it broke the deadlock. Today, Penny Wong credits Kevin Rudd with the breakthrough, but at the time he gave her the credit. ‘She did fantastic work, and her shuttle diplomacy between the states played a key role in reaching the outcome,’ he told reporters once the deal was done.20

  Perhaps. But the hard fact was that it was the Commonwealth chequebook that did the trick. Victoria was brought on board with a $1 billion sweetener – journalists wrote it up as a bribe21 – in funding for the second stage of the Foodbowl Modernisation Project. Stage one of this program had recently been criticised by the state’s auditor-general. It was funding to update irrigation infrastructure – sealing irrigation channels and building more-efficient methods of delivering water to crops. In theory, it would save 200 billion litres of water, of which half would be returned to the river. Even at that time – and certainly later on – it was recognised that the figures on how much water such programs would save were dubious, and that it was a very expensive way to save water.

  The deal established the Murray–Darling Basin Authority as the single body responsible for the overarching management of the basin. The Commonwealth minister would approve the basin plan, including a new cap on the amount of water to be used. Within this structure, states would continue to manage allocations in accord with the plan.

  Penny Wong was interviewed by Tony Jones on the ABC’s current-affairs program Lateline in the weeks after the deal. Why was it, he asked, that taxpayer money had been spent on the dubious Foodbowl program? She dodged the question. It was the program’s first stage that had been criticised. ‘We didn’t fund stage one. My focus is on stage two.’ Jones went on to raise rumours that water was being siphoned off through unauthorised channels in the upstream states. She told him that compliance had to be managed by the states and assured him that the Murray–Darling Basin Plan would address any such problems.

  Finally, he asked her if the deal would be enough. Her plan – a modification of what Howard had been trying to achieve – was to be implemented over ten years. Did the Murray–Darling have that long? Water scientists were calling on COAG to ditch the deal and instead approach the state of the Murray in a manner that reflected the reality: a national crisis. Much more was needed, and urgently, they warned.22

  But Penny Wong had cut a deal – the political skill with which she was familiar. And in this interview she demonstrated one of her defining political traits: the reverence for the negotiated solution and the compromise necessary to achieve progress.

  Challenged on the funding for the Foodbowl program today, Wong arcs up. ‘We got – for the first time in a hundred years – that intergovernmental agreement. That was a big achievement. I was at that COAG. We nutted that out and that was critical. And yes, you’re right. We allocated dollars to irrigation infrastructure. The difficulty with all of this is that where you want to get to requires so much agreement, and action from state governments. It’s very, very difficult. And the only thing you can use is the power of the purse.’

  Wong’s compromise was significant because every independent inquiry that has examined spending on irrigation infrastructure, including those conducted by the Productivity Commission, state auditor-generals and the Australian National Audit Office, has concluded that it is largely a waste of taxpayer money – an expensive and ineffectual way to save the river.23 When water is used inefficiently, it seeps back into the river system, meaning not all of it is lost to the environment. A ‘saving’ by preventing that seepage is not necessarily a saving at all. The maps of the basin represent it like a bathtub – as though all flows can be precisely measured. The reality is very different. As well, spending on more-efficient irrigation infrastructure benefits individual irrigators at taxpayer expense, and the figures on the water savings they achieve are sometimes proclaimed with great confidence but in fact are highly dubious. Some ‘efficiency’ schemes have worked, largely by helping communities make their own assessments of sustainability. But, for the most part, money would be better spent in simply buying back water for the environment.24

  Doling out federal money to irrigation communities is a short-term political fix. Wong secured the deal with the states largely by opening the chequebook for spending that, she says today, she knew was probably not the best way to help the river but was politically necessary.

  In April 2008 she announced $12.9 billion of spending over ten years, including $5.8 billion on ‘efficiency’ measures and $3.1 billion for water buybacks. The remainder was to be spent on urban water, including desalination, rainwater and greywater initiatives.25

  Wong says today that she tried to resist allocating too much funding to the so-called efficiency measures. She attempted to ensure that strict criteria were set before money was handed out – but reviews since then suggest they were not strict enough. The Murray–Darling Basin Royal Commission found that the various ‘efficiency’ schemes involved a lack of disclosure on who had received funding, for what purpose and how much water had been returned to the Commonwealth as a result. The most reliable and effective way to help the river, the royal commission report stated, was water buybacks.26 Figures from the Parliamentary Library and from Wong herself tend to support her account. They show that the theoretical savings from infrastructure spending didn’t really begin until 2010 – when she was nearly at the end of her tenure as minister.27

  Penny Wong did buy water. It is the first thing she says when asked about her time as portfolio minister: ‘I bought a lot of water.’ She pushed ahead with a program of buybacks from willing sellers, inviting tenders despite vehement opposition. The administration of this was complex – working through, with the public servants, the catchment areas, valleys and plains where buybacks would be most effective and where the increased environmental flows would be of most use. They were working with inadequate information. The Basin Plan, intended to inform such decisions in the long term, had not yet been developed. Penny Wong was moving fast, with urgency, not prepared to wait. In September 2008 – less than a year after the election – it was announced that the Commonwealth and New South Wales would buy the vast Toorale cotton station at a cost of $24 million, with up to 20 billion litres of water to be returned to the Darling River. It was a colossal figure at the time, and remains one of the largest single water buybacks in dollar terms. The local farmers claimed it would devastate the Bourke region. It was ‘anti-rural’, they felt, and a ‘sop to the green movement’. They feared the hollowing out of their commun
ities. Toorale Station was a significant local employer. Another reason for controversy was that there was a heritage-listed dam that stopped the water getting into the Darling River.28

  Right across the basin states, the water buybacks were enormously controversial. Rural communities blamed them for what they said was a Swiss-cheese effect, creating holes in the system of irrigation. Wong was accused of hastening the collapse of rural communities, ending whole industries. She was burned in effigy at demonstrations in Griffith. But every inquiry since has concluded that buying back water was the right thing to do to work towards the sustainable management of the river.

  In 2011, the Australian National Audit Office examined the water buybacks Penny Wong oversaw. The report commented that the water buybacks had begun four years before the Basin Plan that was intended to establish how much water was needed for the environment. The information needed to decide what water was to be purchased, how much to pay and how to allocate the water to the environment was far from perfect. This was the largest water entitlement purchasing initiative ever undertaken in Australia, and unique in the world, and it was being done in a hurry. Nevertheless, the audit office gave Wong’s initiative a fairly clean bill of health. Decisions had been made on the best available information. Procedures and guidelines had been developed on the run, but were mainly fit for purpose. There was room for improvement in the procedures, but no reason to think the decision-making process lacked integrity.29

  Meanwhile, the Productivity Commission, the government’s main independent research and advisory body, has determined that irrigators’ fears about water buybacks are largely unfounded. Farmers adjust to lower water allocations. There is no proportional relationship between reductions in water and farm production. If more water had been recovered through buybacks and the proceeds used to support the affected communities, spending on health, education and aged care could have generated more than twice the number of permanent jobs as the same amount spent on irrigation infrastructure.30 So much for the evidence – but water politics is irresolvable for a good reason. It reflects a world of pain. Across the Murray–Darling Basin, the pace of change for farmers and rural communities is hard for the city-based to understand – out of proportion to anything urban Australians have had to endure. The irrigation system is under strain. Increasingly, family farms are disappearing. Towns have faded as mechanisation replaces rural labourers. Mixed crops – rice and dairy – are giving way to corporate-owned industrial cotton and nut farms. With the advent of the drought of 2018–19, the dairy industry in the basin collapsed and is unlikely to survive. Fourth-generation farms are unable to keep going after just one year of drought.

  It is all to easy for the affected communities to blame all these problems on water buybacks – and Penny Wong copped much of that blame. But the issue goes deeper. It is about rural Australia, and the failure of politics and political processes over a couple of generations to meet the needs of these Australian communities. Wong was the first and is so far the only federal water minister to buy such large amounts of water for the environment. From 2007 until 2010, when she lost the portfolio, the federal government purchased 770 gigalitres of water allocations for the environment. Another 311 gigalitres were bought in 2011, and, given that the process was established on her watch, that can also be counted as her legacy.31

  When the Abbott government came to power in 2013, water buybacks all but halted and infrastructure spending took off. Just 3 gigalitres were bought in the 2014–15 period. In 2015 Minister for Water Barnaby Joyce introduced a 1500-gigalitre cap on water buybacks – a figure that was already more than halfway reached due to water purchased under Penny Wong. The cap meant that the emphasis would shift to doling out money for infrastructure and ‘efficiency’ measures. In the years since then, the highest level of buybacks was in 2016–17, when just 32 gigalitres was purchased. The shift to ‘efficiency measures’ rather than water buybacks was pure politics – and not supported by the evidence. But the politics were just too hard.

  At the time of writing, there are calls for Joyce’s buybacks to be investigated. The Greens, Centre Alliance and the Shooters, Fishers and Farmers Party are agitating for a royal commission.32

  In late 2018 and early 2019, in the teeth of the drought and the eve of the election, water politics once again went feral. Allegations were raised in the media that Barnaby Joyce during his time as minister had paid $200 million – well above market price – in 2017 including to a company that had been associated with the minister for energy, Angus Taylor, without a proper tender and when there was good reason to doubt the water purchased would actually reach the river, because banks that trap it had not been removed. (There was no implication that Taylor improperly influenced the purchase.) Faced with calls for a royal commission, Joyce insisted that Labor’s period in office also be examined. After all, he stated, it was Penny Wong who had begun water buybacks.33 At one stage, in a bizarre interview on ABC Radio, he responded to questions by simply shouting ‘Labor, Labor Labor, Labor’.34

  Behind the scenes, Wong’s office organised for the record to be scoured to see if there was any vulnerability for her. The conclusion was that Wong’s work would stand up to scrutiny and political attack.

  Penny Wong is quick to talk about Barnaby Joyce’s shortcomings but avoids speaking directly about another hard truth. The problems around plummeting buybacks and dubious infrastructure spending set in under the Gillard minority government, after Wong had left the portfolio. The Gillard government depended on rural independents Tony Windsor and Rob Oakeshott for its hold on power. On water buybacks, Windsor was a sceptic.

  In September 2010, three weeks after the election, Tony Burke replaced Penny Wong as the minister for water. A month later, in October 2010, a guide to the proposed draft Murray–Darling Basin Plan – a document that was brewing throughout Penny Wong’s time as water minister – was released. The research that lay behind it had been internationally peer-reviewed. It was comprehensive, scientifically based, transparent. Today, it remains the best available document for determining how to sustain the river system.

  The figures should not have come as a shock. The previous May, Wong had warned that there would be ‘very tough’ cuts in water usage. ‘Everyone is going to feel some pain. We are undergoing a major change,’ she said.35 In fact, communities were ill-prepared for the nature of the report’s findings. There were near-hysterical reactions at community consultation meetings. Copies of the plan were burned among signs asking, ‘Is Hitler reborn?’. The president of the Victorian Farmers Federation said the plan proposed a ‘legislated drought’.36 The report recommended cuts of between 27 and 37 per cent of the water drawn for irrigation, with some rivers targeted for cuts up to 45 per cent. This would return an extra 3000 to 4000 gigalitres to the environment.

  The government apparently had no strategy to deal with the political consequences and the controversy.

  Under the plan, the figures for water returns were conservative – towards the lower end of what the scientists thought could be supported. Yet, almost immediately, Burke backed away from the guide and the detailed scientific data it represented. He told parliament he had sought legal advice on the meaning of the Water Act and whether more attention should be paid to social and economic factors in addition to environmental ones – even though the constitutional basis for the Act rested on caring for the environment. In December 2010 the chair of the Murray–Darling Basin Authority, Mike Taylor, resigned, under pressure from Burke to compromise environmental outcomes for social and economic objectives. Taylor was replaced by Craig Knowles, Penny Wong’s old acquaintance from her union days in New South Wales. He continued the process of backpedalling and became actively hostile to the proposed plan. At a community meeting in Narrabri, Knowles said it was ‘no secret’ he had a ‘poor opinion’ of the plan, that he did not have a ‘high degree of ownership’ of it and that it was ‘time to move on’.37

  Within a year, the guide and the pl
an it outlined had become politically irrelevant. By April 2011 a process of negotiation had begun, focused on determining a new, lower amount to be recovered for the environment. The figure arrived at – 2750 gigalitres a year to be returned to the environment – was not scientifically backed, but it was judged to be politically saleable.

  The Basin Plan, as the revised plan became known, was legislated by Labor in 2012. None of the scientists who reviewed the figures regarded it as consistent with the evidence of what was needed, even if the likely impact of climate change was ignored. The Wentworth Group of Concerned Scientists, an independent action and lobby group on the Murray–Darling Basin, described the plan as a document that ‘manipulates science in an attempt to engineer a pre-determined political outcome’.38

  Later, when Craig Knowles left the Murray–Darling Basin Authority in 2015, he criticised the focus on water buybacks and the scepticism about spending on water efficiency under Wong’s tenure as minister. Knowles claimed the ‘singular focus’ on buybacks had been ‘a flawed solution that missed the point’ – the ‘early reform agenda’ had failed to ‘properly consider’ the value of water ‘efficiency’ projects. Even then, he was speaking in the face of the evidence.39 And later still, in 2018, Penny Wong’s water buyback program was being described as a disastrous ‘unguided missile’ by an irrigation representative. Tony Burke, he claimed, had recognised the ‘devastation’ she had caused.40 This was in the context of upstream states threatening to walk away from the Murray–Darling Basin Plan entirely unless water allocated to the environment was clawed back for use by their irrigators. As Senate leader, Wong said that unless the government addressed allegations made about water theft and corruption, Labor would not support such changes. Trust in the plan had to be rebuilt, she said.41