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From Schwartz Media, I’m Elizabeth Kulas. This is 7am.

ELIZABETH:

The Murray-Darling Basin is being ruined by cronyism and incompetence. Entire towns are running out of water. But a new crop is exploiting the system even further. Mike Seccombe on how an almond boom is drinking the river dry.

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ELIZABETH:

Mike we don't usually start a story this way but we thought well let's start this story with almond growers.

MIKE:

Sure why not. They're delicious. They're good for you too.

Archival tape — Unidentified male tv show presenter.

“Australia is known for natural advantages in agriculture and for almond growers, a warm moderate climate and available land is producing one of the worlds most efficient almond crops…”

MIKE:

This is a story about almonds but not just about almonds obviously it's largely a story about water rights in the Murray-Darling Basin which means in turn that it's a story about big money politics and vested interests and cronyism and and also incompetence.

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ELIZABETH:

Mike Seccombe is The Saturday Paper’s national correspondent.

MIKE:

But the story starts I guess with nuts, because tree nuts are booming new agri business in the Murray-Darling Basin. That's nuts of all sorts: walnuts, pecans, pistachios...Ferrara crochet has recently made a big investment in hazelnuts.

ELIZABETH:

Really!?

MIKE:

Really. But almonds are the big one they're the biggest part of it...

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Archival tape — Unidentified male tv show presenter

“...including natural, blanched, slithered, flaked and meal…”

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MIKE:

And Australia's production of almonds grew something like 250 per cent over the five years to 2015/16 and is continuing to grow very fast.

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Archival tape — Unidentified almond farmer

“...and we’re the only company in Australia ASX listed. What does that mean? That also means that investors from overseas can also invest in a select harvest.”

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MIKE:

And the whole thing is now worth something like one billion dollars and around 80 per cent of that one billion dollars comes from a relatively small area: the tri-state region down where South Australia, New South Wales and Victoria all meet. And it's growing like topsy. There are very high return crop, you get a lot of money from growing them. The crop value is something like up to 60 times the gross value you get from growing grain. So, so they're very lucrative but they also need vast quantities of water.

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Archival tape — Unidentified male tv show presenter

“...from plant breeding and natural plant control methods to water saving irrigation systems designed to enhance sustainability, nothing is left to chance.”

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ELIZABETH:

And at the same time, Mike the government has created a market for selling water.

MIKE:

Well that's right. I mean obviously when you have a perennial crop you have to be able to guarantee water. They're not like other crops that, you know, you can let them go fallow in a dry year, you have to keep the water up to them all the time.

ELIZABETH:

Mmm.

MIKE:

And this takes us back to 2004 where at the very height of the millennium drought there were reforms passed to the regime that applied to water rights, which separated water rights from land ownership so water then could be traded as a commodity of its own across different river catchments in the basin. And that's one of the things that's put huge pressure on the whole Murray-Darling system and been a substantial contributor to the fact that it's so dry out there at the moment, it's not just the fact that it's not raining, it's also the fact that a lot of water's being pulled out of the system by these very thirsty crops: cotton in the northern basin and nuts in the south.

I spoke to Maryanne Slattery who is the senior water researcher at the Australia Institute but also was the director of environmental water policy at the Murray-Darling Basin Authority which regulates the water system in the basin. And she says that these water reforms have been a failure. She told me that what we're seeing now is big agri business, often foreign owned agri business, dominating because they can afford this water and surviving at the expense of everyone else. So, so going back to almonds they've opened up these huge new greenfield farms down in this dry area, mostly at the west of Victoria and east of South Australia and in Marion Slattery whose words they're prepared to ‘duke it out’ on the water market when things get tight for water and that's forced up the price of water on this newly established market to ridiculous levels. So the average cost of water in the Murray now is $610 a megalitre and spot prices are even higher, they're up to 800 dollars or more at the moment.

So it's no longer viable to produce lower value crops like, you know, wheat and rice and things like that because water costs are actually greater than the value of the harvested crop. But the nut growers, who are making $2000 or $3000 for each megalitres of water that's applied to their trees well they can afford it.

ELIZABETH:

But how are the nut growers feeling about this market in water trading?

MIKE:

Well the nut growers aren’t happy about it either because even above the nut growers there's sort of an apex predator now in the market which is people who don't grow any crops at all but just trade in water. So they've bought up water rights and then this is what the farmers say is forcing the water prices up. Nearly one in six water traders now are corporations or individuals who don't even own land.

ELIZABETH:

Mike, as your reporting is did you have a look at the Murray-Darling Basin and wonder how it had all gone so wrong?

MIKE:

Well it certainly, it certainly seems to have gone terribly wrong. The Darling now is putting nothing into the Murray effectively because so much water has been taken out of the northern basin. I spoke to a farmer by the name of Chris Brooks who's at a place called Barooga, west of Albany which is on the New South Wales side of the Murray River and it's a long way from the confluence of the Darling River and the way he summarised it, and he's not a man to mince words, he said the Murray-Darling Basin Authority was quote ‘absolutely inept and grossly negligent.’ He sees the politicians who oversee the MDBA as a, quote, ‘mob of morons’ and the party belong to, the National Party, he says is ‘in the pocket of big agri business mates’ who are in turn, and I'm quoting him again, ‘stupid, greedy, hungry, selfish bastards.’

ELIZABETH:

Okay.

MIKE:

So anyway, the reason I was talking to Brooks was because he's begun a class action. He is suing the Murray-Darling Basin Authority and so they are seeking $750 million in damages over this alleged mismanagement of water entitlements in the Murray-Darling Basin.

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Archival tape — Unidentified farmer participating in class action

“...and it’s just not possible to survive. And we’re feeling a little aggrieved when we see 100% of our water being wasted; wasted by what be claim MDBA management decisions but not for anyone’s benefit.”

ELIZABETH:

We’ll be right back.

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ELIZABETH:

Mike you spoke to Chris Brooks recently. He's a farmer but he's also part of this class action against the Murray-Darling Basin Authority. What is his experience of the river?

MIKE:

Well he, and I might add, there's now roughly another thousand farmers, smaller irrigators in the Murray, are taking this class action because over the past two seasons, last year and this they have got zero water entitlement, they can't irrigate at all. And as a result their crops have died and they've taken huge financial losses. The irony here is that his farm is on the Murray River and as the river flows past his place it is in flood, effectively.

ELIZABETH:

So he can see the river and it's flowing?

MIKE:

It's not only flowing, it's flowing in some places over its banks. It's really flowing it's, it's effectively flooding.

And in some places it's flowing into high value conservation forests which can't handle the amount of water they're getting and as a result are dying essentially because they've been flooded for a protracted period of time.

ELIZABETH:

Even though there's a drought.

MIKE:

Even though there's a drought. And the reason for that is that because there's a guaranteed amount of water that has to go to South Australia and because the Darling River is not contributing it's part of that amount of water ,they have to pump more down the Murray to try and make up the shortfall. But the farmers along the way, like Chris Brooks, are unable to take any of it. So it can get down to where the almond growers are.

ELIZABETH:

They can see it but they can't access it.

MIKE:

Water, water everywhere and not a drop for their plants to drink.

ELIZABETH:

Hmm. And what is the class action argument about what the Basin Authority's responsibility is?

MIKE:

Well, essentially they're saying that if the authority had managed the flows in the Darling properly, you know hadn't let the Menindee Lakes dry out, hadn't misallocated vast amounts of water for extraction, hadn't generally mismanaged the supply, then the irrigators to the Murray wouldn't have lost their crops.

So um it's a big action but it's part of an even bigger story which goes to elements of cronyism and corporatization and also climate change that threaten essentially to irrevocably alter life in rural Australia. The current drought is a natural disaster for sure but there's a political disaster here too in that we've mismanaged the water that we actually have.

ELIZABETH:

Mike obvious question but still, what is the place of climate change in this, before we get to the political disaster.

MIKE:

Already the rainfall across south eastern Australia which covers most of the Murray-Darling has declined by about 11 per cent according to the Bureau of Meteorology and the CSIRO. That's, that's in this century so far compared with the average over the past century. So the whole area is drying out. It's got less water than it used to. And we'll have less water still in the future and of course at the same time as temperature rises evaporation rates increase. So, so there's a lot less there to go around.

ELIZABETH:

And then you're saying that the political aspect of this exacerbates that. What is Chris Brookes believe that the Nationals for example have done or have failed to do?

MIKE:

Back in 2012 the water sharing plan for what they call the Barwon Darling which is the northern part of the basin was reset such that water access rules for extraction changed. There was no community consultation in this and it allowed certain irrigators, mostly big cotton growers, to pump bigger volumes of water than they had previously and to do so at times a very low flow. And for a few years no one really noticed this because the rains were good, the rivers had plenty of water in them but then about 2015 when the drought started water extractions went up dramatically. They went up as much as six times over.

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So there was this massive drain on the system at a time of low flows and the outcome of that of course we've seen has been disastrous not not only for farmers but for entire communities and for the environment.

Archival tape — Unidentified male farmer 1:

“...the reality is, I’ve had to let....instead of 14 hectares of prime table grapes, I have 2 hectares of prime table grapes for no other reason than I don’t have the water for it…”

Archival tape — Unidentified female farmer 1

“...we keep getting told that the Basin plan is going to offset any negative impact but we’re wearing the brunt of them here, today, now with no recognition of that at all…”

Archival tape — Unidentified male farmer 2:

“...youse’d have to be disgusted with yourself.

Archival tape — Unidentified male farmer 3:

This fish is 100 years old; it’s never coming back. This is bloody disgraceful.”

Archival tape — Unidentified male farmer 2:

“Absolutely.”

MIKE:

At the moment in New South Wales there are some 80 towns, according to evidence given before a New South Wales estimates committee a week or so ago, 80 towns some of them quite big ones that are at risk of running out of water. So it's not just the farmers, it's also whole rural communities are finding that they're severely water constrained and looking at a very desperate future.

Archival tape — Unidentified male local:

“Easiest way to probably describe the river now is it’s a dry, dead creek bed; exactly what it is. If this river doesn’t get fixed...then a lot of people are gonna be up in arms somewhere.”

ELIZABETH:

Is there anything the government can do to reset the system?

MIKE:

Well, we'll find out in about a year or year and a half from now I guess when the ACCC completes its inquiry. I've got to say having looked into this it's incredibly complicated. The whole regime of water rights, you can mortgage water, you can do all sorts of things, you can trade it. I don't envy the ACCC their task because it’s a very difficult omelet to unscramble.

ELIZABETH:

And Mike what do you think is likely to happen now?

MIKE:

Well for a start climate change means less water to go around. Water trading means more water for higher value crops and for corporate agriculture which in turn means less for smaller farmers both dry land farmers and irrigators and for towns. It means accelerated drift of people out of rural Australia. So, I guess we can look at this essentially as we're seeing the start of climate refugees, I guess, as people drift into the cities. Victims of a combination of climate change and crony capitalism.

ELIZABETH:

And what's likely to happen with that class action. What's the timeline on it?

MIKE:

Class actions can be very time consuming so it may well be a couple of years before the class action progresses to its conclusion. And of course in the meantime a bunch of farmers could have gone broke.

ELIZABETH:

And what about the almond growers?

MIKE:

Their expansion plans have sort of hit a bit of a roadblock too because essentially all the water that they can get they're getting now, they can't push anymore down the Murray, the Darling still dry but into the future you would have to think that their prospects are pretty bright; they're making big money out of it. Australia is now the second biggest almond producer in the world.

Ironically enough, part of the reason for that is that the first biggest producer in the world California is winding back its almond production because they have dried up a lot of the water in California, which is a similarly dry environment. Almonds are seen as the devil's nut because of their effects on water supply there. So they've just exported it. Now it's become the same problem here.

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ELIZABETH:

Mike thank you so much.

MIKE:

My pleasure.

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ELIZABETH:

Elsewhere in the news:

The RBA has cut official interest rates to 0.75 per cent, bringing the cash rate below 1% for the first time ever. This is the RBA's third cut since June. Its Governor, Philip Lowe, has said that the board will continue to monitor developments in the economy and is prepared to ease monetary policy further if necessary.

And the government has confirmed that on a recent phone call, Donald Trump requested Scott Morrison’s help in an investigation aimed at discrediting the Mueller inquiry and that the Prime Minister agreed to assist. Trump is questioning how information relayed to Alexander Downer, who was then Australia's High Commissioner to the UK, fuelled the Russia probe. In an interview on the ABC’s RN Breakfast, Downer said he had no idea what was discussed on the phone call between the leaders.

This is 7am. I’m Elizabeth Kulas. See you Thursday.

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