The Howard government’s National Water Plan for Water Security culminated in the Commonwealth Water Act in 2007. ^[3] A key component of this approach is a focus on the formulation of water resource policy at the national level, or at least at the whole-of-basin level in the context of the Murray-Darling Basin. The justification for this approach is that a national body is best able to assess and deal with basin-wide problems and overcome the dilemmas arising from competition between differing state jurisdictions.

Consequently, the Water Act (2007) legislates for the establishment of the Murray-Darling Basin Authority which, amongst its other obligations, has responsibility for ‘ensur[ing] that Basin water resources are managed in an integrated and sustainable way’ (Department of Environment, Heritage, Water and the Arts 2008). Gaining universal agreement for the Murray-Darling Basin Authority at the Council of Australian Governments (CoAG) meeting in July 2008 was proclaimed as one of the most significant accomplishments of CoAG.

The rationale for superordinate management of water resources in an interconnected basin resonates with many in the electorate. The extant degradation of the Murray-Darling Basin’s riverine environment has been used to illustrate the urgent need for national intervention. For example, in the context of over-allocated water resources the Federal Minister for Climate Change and the Environment observed that ‘like many areas of public policy involving multiple levels of government, water policy has been derailed by bickering and blame’ (Wong 2008a: 2). Similarly, the Minister argued that Commonwealth action was required to ensure that the nation as a whole ‘make[s] better use of our available water resources’ (p.3). Hopefully, and perhaps naïvely, the Minister also contends that ‘this means improved efficiency and productivity of water use, and better use of water markets to optimise the economic benefits that water brings’.

Notwithstanding the political appeal of national control of water resources in connected systems (such as the Murray-Darling Basin) and the mileage from proclaiming the benefits of water-use efficiency, the most recent episode of national intervention does not augur particularly well. A superficial understanding of core concepts such as ‘irrigation efficiency’ and the pervasive influence this can have over the allocation of funding, provide grounds for questioning the efficacy of the national control of water resources. Put simply, the benefits of a system-wide approach to decision-making are quickly eroded when the criteria upon which decisions are predicated are themselves seriously flawed.

Of particular concern in this context is the resolution by the Federal government to co-sponsor the modernisation of irrigation in Victoria to the tune of $1 billion. We contend that this stands to significantly reduce the quantum and reliability of water supplied to those who extract water downstream of the Goulburn Valley, and also seems likely to weaken existing environmental claims in the River Murray. The assertion by some that national decision-making is a sufficient condition for achieving improved environmental outcomes in the Murray-Darling (see, for instance, ABC On-Line 2007) is thus both overly-optimistic and unhelpful.

The circumstances that have led to these events are traced in this paper. We argue that downstream states such as South Australia, which ironically has been amongst the most vociferous supporters for increased national intervention, will be a significant loser as a result of upstream ‘renovation’ of irrigation. We also aim to shed light on the flawed use of concepts such as ‘water-use efficiency’ particularly when it is portrayed as an environmental saviour and thus deserving of support from the public purse.

The paper comprises four parts. In the next section we briefly outline the political and policy background that gave rise to the decision by the Federal government to play a greater part in water policy. This is followed by a review of the various concepts of water-related efficiency. Importantly, this section illustrates the critical issue of scale when measuring and accounting for water use. The Food Bowl Modernisation Project (FMP) in northern Victoria and the Federal government’s decision to support this project with a $1 billion injection from its own coffers are reviewed in the fourth section. The final section comprises some brief concluding remarks.