There’s a hole in the bucket!

Sorry to interrupt the high five sessions on our world-beating economic performance, but aren’t we forgetting something? Ask an economist and they’ll say no; ask a realist and they’ll tell you that we’ve forgotten that water underpins everything.

How much food can our farmers produce without water? How many ASX listed companies currently are significantly overvalued because of their reliance on the availability of cheap water to generate current profits?

I found it ironic that last week our Deputy Prime Minister - live from Los Angeles - conceded on Lateline that “... we share a lot of things with California, I think, we’re parts of the world that have to deal with water scarcity ...”, praised actions taken by California's elected representatives and then completely failed to mention that in February this year the Governor Arnold Schwarzenegger declared a water shortage state of emergency.

It seems a strange omission when the Senior Advisor on Water to the President of the United Nations General Assembly, Senators in the Australian Parliament, Fair Water Use Australia, the Australian Water Network and others have been calling repeatedly on our Federal Government to do the same. Could it be a pre-emptive attempt to avoid flak by a government which doesn't have the political courage to take such decisive action?

Australia's poor track record is already being used overseas as a model of how not to behave: even California’s Pacific Institute seems to understand the problems facing Australia more than Australia’s famous political vegan. Its July 2009 report Saving California Agriculture from the Growing Water Crisis says:

... The Murray Darling Basin accounts for 65% of irrigated agriculture in Australia and is commonly referred to as the nation’s “food bowl,” producing over one third of Australia’s food supply ...

Impacts on irrigated agricultural production are best illustrated by rice production, which declined from more than 1 million tons in 2006 to fewer than 20,000 tons in 2008, a 98% reduction. Production of other commodities such as wine grapes, citrus, vegetables, irrigated pastures for the dairy industry and cereals production were also seriously affected. Initially, the drought was considered simply one of many in a region that is prone to these events. Today, scientists believe that these recent events in Australia are a harbinger of long-term climate change. Indeed, Australia’s Bureau of Meteorology predicts that within two to three decades, drought will occur twice as frequently and be twice as severe ...

Unfortunately, the focus on increased agricultural water conservation and efficiency came too late for many. While some have suggested that the fate of the Murray-Darling Basin could be California’s future, we have the advantage of learning several important lessons from the management mistakes that contributed to severe agricultural decline there. Key among these lessons is that massive storage capacity in a basin is no guarantee of a reliable or predictable water supply, especially when total precipitation and runoff decline ...

What our governments haven't done is now history. What our governments aren't doing now is almost criminal. They know the New South Wales government, which can hardly pay its bills, and the Queensland government, oblivious to disastrous environmental consequences, still think "massive storage capacity" is the answer, so they're pressing ahead with huge new dams against widespread public opposition.

They also know the Murray River supplies about 40 per cent of Adelaide's drinking water, and that 1.3 million people in South Australia may not be far off becoming reliant on bottled water.

They also know that Victoria needs rainfall to boost dams by about 300 billion litres by late 2011 for Melbourne to avoid running out of water.

Our politicians can't bring themselves to take decisive action but can still find time to insult our intelligence with comments from Gillard like "we're not in the business of early elections, or any of those things, we're in the business of dealing with the huge problems that face our planet and our nation and that's climate change."

Well, water scarcity is one of those "huge problems", and it's rapidly getting worse. "Commoditising" water may have created windfalls for some landowners, for water traders and for the free marketeers, but the plain fact is that none of these people can make it rain: water flows seem to have gone down as the market has ramped up. So much for true allocative efficiency: the "market" has created water magnates but can't even secure drinking water for the common citizen. At the 2009 Nobel Conference this week Dr Rajendra K Pachauri, chair of the Intergovernmental Panel on Climate Change, pointed out that "There is no more crucial issue to human society than the future of water on this planet. We must work diligently to see that the worst effects don't come to pass. We have very little time. Unless we act with a sense of urgency, there will certainly be conflict and a disruption of peace."

How shameful that our political leaders could permit, let alone encourage, Australia's "sense of urgency" to lapse behind our country's dash for the dollar and our selfish need for a six pack of beers, a pie and a flatscreen.

Our politicians know that our projected population numbers are understated at 35 million by 2050. Properly compounding our current population of 22 million at the current growth rate of 2.1 per cent yields a figure of more than 50 million people by that time. To put that into a water context, Australia has one of the highest rates of internal domestic water use per person in the world, and even back in 2006 the Federal Government's State of the Environment report revealed that many Australian cities had already exceeded sustainable water yields.

The National Water Commission's recently issued report Improving Environmental Sustainability in Water Planning confirms that we're in trouble at the most basic levels: our governments haven't even been able to even coordinate and determine a national definition of "environmentally sustainable levels of extraction" and "overallocation". What the hell is going on? Answer: very little.

Australia is in a worse state than California, but you can bet the Australian Government won't declare a water shortage state of emergency - that would be far too defeatist for a PM whose major focus seemed to be international self-aggrandisement. In fact, if history is any guide, the best bet is that the Australian Government will keep hyping itself loudly and doing little.

If you doubt that, there is yet another benchmark. Last week the National Water Commission released Australian Water Reform 2009, its two-yearly assessment of progress in implementing the National Water Initiative, which in turn is the blueprint for national water reform agreed by all Australian governments in 2004. The report's media release opened by saying that "Australia's water is still in trouble" and reports Commission chair Ken Matthews saying, "This independent report shows that, despite some progress, the pace of water reform has slowed on almost every front."

The Commission has made 68 recommendations for further action to refocus national reform efforts over the next two years. Make a note to look back in two years' time to see how many of those 68 recommendations were "properly" acted upon.