30 April, 2018

Murray Darling Basin Plan-Malcolm Turnbull


I follow Malcolm Turnbull on Twitter. Why? Because I have found him intelligent and interesting. When he was John Howard's Parliamentary Secretary for Water we had him out to Bourke to discuss irrigation issues and I was very impressed how quickly he got his mind around them. I was surprised by his commitment to the ETS and to global warming in general, but was inclined to write it off as the ex-merchant bankers enthusiasm for another trading instrument.
So when his Tweet alerted me to his written declaration on the MDB Plan I quickly looked it up. My reaction is best summarised in my two comments on his website:
David Boyd says:
December 12, 2010 at 9:33 pm
You can do better than serve up some of this conventional wisdom! Have a look at the ABS statistics of actual diversions compared with the meaningless averages referred to in the Plan. The water sharing plans appear to be working rather well. Get your mind around the sheer quantum of the current flows. The last decade of drought and now these massive floods, highlight the natural variability of the Basin. We need more conservation (read dams), which in current circumstances would amount to holding back a miniscule percentage of the flow. We need to be careful not to confuse the natural results of dryness with bad river health. Where is this “ill health” today?? Nature is all powerful!
David Boyd says:
December 13, 2010 at 4:48 am
Malcolm said ” at the core of so many of our problems is trying to europeanise our australian landscape and hydrology.”
Wow! That is classic dark green dogma. He has come out of the closet and revealed himself as an ideological dark greenie! What an insulting comment to all of those world class Australian agricultural scientists who have led the world in sustainable, arid land agriculture. It is a fact that the Murray Darling Basin has never been more sustainably productive. Yes, it has always been subject to huge variability, and there is no better example than the last ten years of record low rain (and run-off) and now massive floods. We must stop claiming that the natural results of dryness amount to river “ill health” and blaming that on extractions, when low availability has meant very low allocations/extractions (if any). Our forebears did a much better job than they are being given credit for. A significant exception is the acid sulphate soils of the Lower Lakes. Not allowing salt water in, as happened naturally in dry times, has been a gross error and the evaporation losses of fresh water are indefensible. Certainly we can manage the system better, but let ’s concentrate on making the cake bigger and stop all of this self flagellation and accept the dominance of Nature. Examine the numbers!

Murray Darling Basin Plan

In a great article in the SMH on 4th December, 2010 Paul Myers wrote (extract):-
"Despite recent claims to the contrary, the authority had, at best, a vague responsibility to consider the economic and social impacts of its recommendations. Its priorities, put in place by Malcolm Turnbull as water minister, were environmental.

So it was little wonder that when, in early October, the authority suggested 27 to 37 per cent cuts in irrigation water entitlements - all for the environment - there was such a savage response. Previous cuts in groundwater use and surface irrigation in the past several years had already bitten hard.

Coupled with severely reduced allocations during the drought, it has slashed basin irrigation water use well below the authority's new recommended cap: to just 3492 gigalitres in 2008-09. It was 3141 gigalitres in 2007-08 and 4458 gigalitres in 2006-07.

This seems to prove that the current, much-maligned allocation system - whereby state water authorities decide how much of a licensee's entitlement can be used - is an effective self-correcting mechanism. This, however, is not the public perception, nor does it hold water with the authority, environmentalists, scientists and the former water minister, Wong, all of whom have been determined to slash irrigation entitlements."

Why are the MDBA,the scientists,environmentalists and politicians so set on this misguided path??

29 April, 2018

Murray Darling Basin Plan

As I listen with interest to the media debate and the reporting of the meetings with irrigators, I am increasingly alarmed at misunderstandings and perhaps deliberate falsehoods. I am provoked to write the following because I am passionate about building an ever stronger Australia with a strong, sustainable agricultural sector. I take two things as a given. First, farmers above all others have a vested interest in not debasing the physical assets (environment) on which their long term future depends. Those who fail to do this inevitably fail economically and successful farmers repair the damage. Australian land is renowned for its recuperative capacity. Second, in a global context, Australia has a moral responsibility to maximise its food and fibre production, always providing this can be done sustainably.

More specifically, we need to recognise that the most significant feature of Australia's weather is massive variability. All of our Murray Darling Basin rivers on occasions stop flowing, entirely as a consequence of lack of rain. As Henry Lawson wrote, "they can be either muddy gutters or second Mississippi's". The "big wets" are surprisingly frequent, but totally irregular. It has been forever thus.

We also need to bear in mind that water is dynamic. It doesn't hang around and wait to be used. It either runs to the sea or to some wonderful inland wetlands, evaporates, or is used to grow things. There is no shortage of water in the world and Nature has given us a wonderful recycling system whereby salt water is continually converted to fresh water. There is, however, in many countries a limited supply of fresh water and in Australia in particular, we need to conserve water from the big wet events to even out the abovementioned variability. I see evaporation of fresh water as very wasteful. Some 70% of the Earth's surface is covered by (salty) oceans-plenty of water for cloud formation.

Where you have massive variability it seems to me to make little sense to debate using absolute numbers in respect to the aggregate level of desirable extraction limits or in stating flows. Averages can be very misleading. When absolute statistics are used they need to be be related to the highly variable flows.

The Plan
The Plan effectively blames extractions ("over allocated") for the extremely low river flows of recent years.  Farmers are being blamed for the drought. No wonder they are upset.

The Prime Minister has said "we cannot go on as we are". The Opposition Leader has said that "we are taking too much water out of our rivers". I do not accept these statements and believe they reveal a lack of understanding of how our system of managing irrigation actually works.

The two key terms are "Licenses/Entitlements" on the one hand and "Allocations" on the other. They are constantly confused in the current debate.

State Governments have issued "Licenses/Entitlements" to farmers, but the usage of these has to be triggered by the granting of "Allocations". Allocations are granted seasonally by Governments in accordance with available water. This is how variability is dealt with. When water is short, allocations are low or non-existent.

The Governments action in granting, or not granting, allocations is governed by a "water sharing plan" for each irrigation river in the basin. These water sharing plans take account of water availability, environmental, livestock and domestic needs before irrigation extractions are allowed. Whilst water sharing plans are hotly debated by people pushing the various competitive needs, it is a most sensible and effective approach.

However, of recent times there has simply not been enough water to go around and quite correctly it is irrigation extractions which have been severely constrained. Few realise that if it were not for the headwater storages, the Snowy Scheme diversions and severe restrictions on irrigation extractions, the Murray River would have actually stopped flowing altogether, as it has done under very dry conditions several times in recorded history. Through this drought we were able to keep it flowing and to maintain at least some water in the Lower Lakes at the mouth of the river as a result of these factors.

In my time with Clyde Agriculture I had the experience of being an irrigator and a flood plain grazier. For example, the Clyde property Oxley Station downstream from Warren is the largest property in the famous Macquarie Marshes. Properties such as this receive great benefit from what graziers term "beneficial flooding". Shallow flood water acting as natural irrigation with resultant prolific growth of natural grasses. It is great cattle breeding and fattening country. When water is short the "marsh graziers" invariably blame the upstream irrigators even when they also have no water. At Bourke, Clyde is an irrigator and when water is short downstream graziers invariably blamed the irrigators for taking it, even if they had been unable to extract water for months. It seems to be a quirk of human nature to blame other people rather than accept the power of Nature to dominate us all.

The Lower Lakes
One of the main arguments put forward to demonstrate that the Murray in unhealthy is the presence of acid sulphate soils as the fresh water in Lakes Alexandrina and Albert (the Lower Lakes) dries back. In discussing the Murray Darling Basin I often say "beware the South Australians", where the "blame factor" is most apparent. If you live in the driest State in the world's second driest continent (I understand Antarctica is the driest), and you only have one major river in your state (the Murray) and you live at the end of the stream, you are going to have a "hang-up"! From the time young South Australians are in short pants they are told that those awful farmers in Queensland, NSW and Victoria "take all our water". It is not an unfamiliar story around the world. It led Mark Twain to his famous comment "whisky is for drinking and water is for fighting over"!

The facts are that the South Australians have played the "victim's card" very well over the years and in terms of water sharing appear to get the best deal of any of the States in the basin. Furthermore, largely to support a small irrigation industry, which can be catered for in other ways, they converted the Lower Lakes into a permanent, highly inefficient, fresh water storage. Under natural conditions the Lower Lakes formed the natural estuary of the Murray River and depending on river flows, were sometimes fresh and sometimes salty. (See lakesneedwater.org).

Evaporation of fresh water from these lakes is enormous and it is truly outrageous that under dry conditions, upstream users are deprived of water so as to send large quantities of fresh water down to the Lower Lakes to mostly evaporate.  Under natural conditions salt water would have flowed in, but this is blocked by "The Barrages", as the series of weirs are called.

The problem of the Lower Lakes is, in my view, more a downstream problem than an upstream problem. However, the South Australians refuse to address anything other than what they term a "fresh water solution".

In dry times, before The Barrages were built,salt water has been known to come quite a long way up the main stem of the Murray.The Barrages, for much of the time, also prevent fresh water from entering the northern end of The Coorong.

The Lower Lakes will require much less fresh water if they are maintained in their natural estuarine state. In times of low flow the sea would always be able to keep water in the lakes at sea level and the problem of acid soils would be resolved.

From the foregoing I conclude that:-
  • we need to specify just what is meant  by the statement that we need to "restore health" to the system. Are we not simply calling the natural results of the driest period in our relatively short records,"unhealthy"? Australia has always been subject to long periods of very dry conditions;
  • buying back irrigation licenses/entitlements when there are no allocations will do nothing for our rivers (this really is "phantom water") and will only constrain production when water supplies are plentiful;
  • if our rivers are "over allocated", and to claim this we need to specify under what flow conditions we make the claim, then it is the water sharing plans which should be addressed. There is no point in withdrawing licenses/entitlements which under flood conditions may well be a means of flood mitigation; 
  • our forefathers did a great job of dealing with our massive run-off variability by building deep dams and diversions (Snowy) in the mountainous headwaters of our major temperate Australia river system. We need to make the cake bigger, by doing more of it;
  • we need to address the efficiency (read evaporation) of some of our water storages, including the Menindee Lakes. The Barrages at the mouth of the Lower Lakes should be removed and the Murray given back its estuary. The proposal to service irrigation by building a weir above the entrance to the lakes should be pursued.
  • the Water Act 2007 (Commonwealth) is excessively weighted towards environmental issues. It needs amendment, or at least be differently interpreted, so as to strike a proper balance.
Finally, from all of the above, one must conclude that the Murray Darling Basin Plan, as presently presented in the Guide, is deeply flawed.

David Boyd has spent over 50 years working in Australian agriculture. Prior to retirement in 2007 he was Chairman and a very "hands-on" CEO of Clyde Agriculture. Clyde was a major grazier (wool and beef), dryland grain producer (wheat) and irrigator (cotton). He has had a lifetime interest in water flows. 

28 April, 2018

Letter to The Land-15.03.2012

The following letter was given 'Letter of the week" status in The Land of March 15-
The letter from Diana Gibbs (The Land,March 1) a Board Member of the Murray Darling Basin Authority, raises some fundamental issues. We need to remember that the  Water Act was drafted at a time of extreme pressure from drought and green group agitation. We had the likes of Tim Flannery arguing it was never going to rain again which, among other reactions, saw our States undertake a scramble to build de-salination plants most of which would now appear to be white elephants. We saw a massive demonstration of the "blame factor"- a tendency to blame  stressful conditions on human actions rather than on natural causes. An examination of the statistics reveals that during the drought the water sharing plans for the Basin's individual rivers worked well. The allocation process saw irrigation extractions drop to very low levels and with the help of the upstream dams (particularly on the Murray) and the Snowy Diversions, we managed to keep the Murray river flowing through the worst drought in our recorded history - an unprecedented achievement.

Now after three years of flooding rains we have been reminded how Dorothea Mackellar and her "droughts and flooding rains" got it so right. We need to step back and calmly re-assess before we take actions which may unduly constrain our productive capacity with very negative impacts on socio-economic activity throughout the basin, yet achieve negligible environmental benefits. The Basin has probably never been in better condition than it is at the moment. No room for complacency, but time to make sure what we are planning to do is the right path for the future strength of the nation.

The Water Act is clearly deeply flawed, drafted as it was to give the Commonwealth power over the States by drawing on international environmental agreements. As a former NSW Director General of Water Resources has pointed out- (quote) "The Commonwealth Water Act is framed in such a way that it prevents integrated river basin management in a way that is consistent with international best practice." (end quote). It fails to address the contentious issue of the Lower Lakes and The Barrages and the Act precludes from consideration the optimising of water conservation objectives from the Snowy Scheme. These facts, together with former MDBA Chairman Michael Taylor's warning that the Act does not allow a properly balanced outcome, leads me to the view that the Act should be repealed.

I remain greatly concerned that as a consequence of misguided action by Government we will cause great socio-economic damage, unnecessarily limit future production, and do little or nothing for the environment.

(I make these comments from the perspective of somebody who has watched the Basin debate closely, particularly in my past role as chairman and chief executive of Clyde Agriculture which at that time was not only an irrigator but had extensive floodplain grazing.) 

I often cite the Government purchase of Toorale Station at Bourke as a microcosm of the Basin Plan. If Toorale had continued to operate it would have reduced river flows in the Darling River past Louth in 2010/11 by 0.01%! 

In other words, great social cost for no environmental benefit. 
David Boyd
St Ives NSW

27 April, 2018

 Murray Darling Basin "Over-allocation"

In a speech to the Practical Responses to Climate Change Conference on 2nd May the C.E. of the Murray Darling Basin Authority said the following:-
"Leaving aside the challenges of climate science uncertainty for a moment, I would like to turn to what we can be certain about.  There is more than enough information to be confident about the two key challenges in managing the water resources of the Basin:
The first – is over-allocation.  At some point, after the middle of last century, we, the collective governments, began to over allocate the water resource.  The early signals were rising salinity levels during the 1970s, the closing of the Murray Mouth in 1981, the massive blue-green algae blooms in the Darling River in the early 1990s, all well before the significant environmental deterioration we saw in the recent Millennium drought."
Let me deal with each of these claims-
Rising Salinity-it is widely acknowledged that since the introduction of the salt interception schemes salinity has been trending downwards.
Murray Mouth Closing in 1981-The Murray Mouth is a narrow and shallow inlet between sand dunes which naturally closes over.  But the problem has been made worse by the 7.6 kilometres of barrages (sea dykes) which limit natural scouring of the Murray’s mouth by the tide.
Darling River 1990's Blue Green Algae Bloom-We haven’t experienced a  bad algae bloom since 1991. Water quality is improving because of initiatives to reduce the point sources of phosphorous and fertilizers.
Millennium Drought-The allocation process, guided by existing water sharing plans, saw extractions appropriately drop like a stone during the drought.  It is wrong to categorise the natural consequences of drought   as "environmental deterioration".
This excerpt highlights the fact that the Water Act (2007) and the Murray Darling Basin Plan are based on the false assumption that there is unacceptable environmental damage being caused by excessive extractions.

11 April, 2018

Sir Michael Hinze

The Financial Review has run an interesting interview with billionaire hedge fund manager, Sir Michael Hintze, who has made his $1.98 billion fortune making calculations and betting on the fallout from major geopolitical events, and from agribusiness investments.

Hintze’s family arrived in Australia as stateless refugees from China after his grandparents fled Russia during the Bolshevik revolution. After university (degrees in physics and electrical engineering from the University of Sydney), Hintze joined the Australian Army and quickly became a captain.

The China-born Hintze (his mother spoke Russian), Australian-raised British resident (who still calls Australia home), is arguably Australia’s most successful expatriate investor. “When I was a young bloke, I used to do a lot of bushwalking. We would sit down and plan it: work out how many places you are going to, work out how long it will take, how many calories you are going to burn.

"You work it out and then you calculate it for three, four, five days. Not too many people did that", Sir Michael told BOSS magazine in an exclusive interview in Melbourne.

These analytical skills were to come in handy later in his business career, after he attended Harvard Business School in 1982, which was the path to founding the $20 billion hedge fund CQS.

The Harvard MBA led to jobs at Salomon Brothers in New York and then Goldman Sachs and Credit Suisse. He left Goldman after being passed over for a partnership – but he impressed Credit Suisse’s Brady Dougan (a future chief executive) so much that he secured $US200 million from the Swiss bank in 1999 to set up his own business, then known as Convertible and Quantitative Strategies, the hedge fund now called CQS.

When asked if he would have done anything differently, the 64-year- old singles out the importance of science and maths, which he says are the keys to many things in the world. Hintze bought Deltroit Station in 2016, in the productive Mundarlo region of the south-west slopes of NSW. He bought the Cheviot Hills property near Penshurst in Victoria's Western Districts for more than $10 million last year. Hintze has bought more than 30 cattle farms and rural properties in Australia through his MH Premium Farms and is betting heavily on the agriculture and agritech sector.

“The population is getting bigger and they are going to eat more. I’ve bought a lot of stuff, it’s diversified, I have significant holdings in sheep, meat and wool. Significant holdings in arable, obviously cotton and sugar.

“We’re well positioned to benefit from growing demand, as the world’s population grows from 7 billion to 9 billion, with exciting developments in agritech. I’m personally convinced of this and have invested heavily.

“In today’s world, the biggest challenge is that knowledge has become a commodity,” he says. “You start with noise – a plethora of prices, news and events – you have to structure that into data sets to create information and do more work on it to create knowledge. The problem is that because of education and data services, many can get to that knowledge.

“True Alpha [active return on investment] lies in insight and the only way to create insight from knowledge is through imagination.” Right now, a lot of brain power is being consumed by a potential global trade war triggered by US President Donald Trump’s steel tariffs.

“China is the biggest trader globally and if they don’t have to trade with the US it won’t be happy days but they will be OK,” Hintze says. “If the US becomes protectionist then the biggest winner of that will be China. China is the biggest trader and the point is they are not just trading with the US, they are trading with the rest of the world.”