29 September, 2010

Conservation v's Preservation

I have long had problems with the "dark green" philosophy in respect to land management. I am indebted to a favourite branch of my own Church for putting some very clear words around what I have often struggled to express.

The Brisbane Diocese of the Anglican Church has commissioned a report on the Queensalnd Government's Wild Rivers Act. That report concludes that the Queensald Government has-

 "mistakenly replaced sensible conservation values with harmful preservation values. In trying to keep the environment as it is now (preservation) they have compromised opportunities for development and wealth creation. They have ignored other more rational approaches which recognise the dynamic nature of the environment and the fact that with sensible management and monitoring, the land can be both protected and productive." (My emphasis).

I literally couldn't have said it better myself! This argument can be applied very widely to many situations.

27 September, 2010

Climate Change

I have just been watching the Labor/Greens Coalition press conference on the Climate Change Committee. Julia Gillard talks of believing in the science of global warming, as if there was a scientific consensus. Bob Brown talks of the economic benefits of having a price on carbon as if it doesn't matter what the rest of the world does. He waxes eloquently about the great benefits to Australia of fixing our climate by reducing carbon emissions. Carbon, an essential part of life and plant growth, continues to be demonised.
These people really are in cloud cuckoo land.

22 September, 2010

Irrigation

The following letter was published in today's The Australian:-

"There is water everywhere in the Murray-Darling Basin. Perhaps the answer isn't the federal government's big master plan, but rain!
David Boyd, St Ives, NSW"

The Lower Lakes

This IS worth reading-http://www.quadrant.org.au/blogs/doomed-planet/2010/09/the-murray-a-fresh-perspective

19 September, 2010

Irrigation

The Victorian floods and big rainfall in NSW, after ten years of the lowest run-off we have seen in our short recorded history, greatly assists my central argument that water shortages in our rivers were not caused by extractions. By believing the fallacy that 'we are taking too much water out of our rivers' the whole approach of our bureaucrats, dark green scientists and  and politicians is deeply flawed. 

I note a tone of alarm in the MDBA spokespeople of having to release their report when there is water all over the place. The MDBA CEO was saying the other day that we must not be influenced by the immediate situation of water everywhere, but need to deal with the "averages"-fair enough. He then added that our current rules don't allow for the variability. What nonsense-they do, but the recent approach doesn't. Fancy asking CSIRO to estimate 'sustainable yield' of our rivers. If 'sustainable' means 'regular' or 'every year' the only 'sustainable yield' would be NIL. Even the mighty Murray River went dry under natural low rainfall conditions before we built our major storages. It is the wrong question from people who have no appreciation of the massive variability. Our water managers of old understood the variability and have dealt with it most effectively by differentiating between Licenses/Entitlements on the one hand and Seasonal Allocations on the the other.

I once heard John Howard describe a "conservative" as someone who does not believe that everything his grandfather said was necessarily wrong! Modern water managers are certainly not conservatives. They seem to believe that the water managers of old got everything wrong. They didn't! They really understood the nature of our rivers and struck a very good balance between socio-economic and environmental needs. Perhaps they worked in an era when 'production' was given more weight than the 'environment'. But, the pendulum has certainly swung to an environmental extreme. That thinking then takes us  to the fundamental "green" debate about man's place in the environment and what the right balance between conflicing objectives should be. We could be here for hours! Let's not 'go there' at the moment!

17 September, 2010

Water and Irrigation

The recent flooding in Victoria and consistent rain in NSW has seen a great boost to storage levels in most of the major dams feeding the Murray Darling Basin. It is a timely reminder of the key feature of the Australian climate-massive rainfall variability. After some ten years of drought (on and off) and the lowest water run-off in our short recorded history, we are reminded just how fast things can turn around. It also reinforces how our philosophically green "water managers" have got it so wrong. I fear that we are going to see a graphic example of this when the long awaited Murray Darling Basin Plan is released on 8th. October.

How many times have we heard that our rivers have been "mismanaged and over allocated"? How many times have we heard that the problem is that "we are taking too much water out of our rivers"? When all the time the major problem has been simply lack of run-off creating rainfall.

Let's face it, water is dynamic and doesn't wait for you to use it. Rivers run to the sea, if they make it, and water in storage evaporates. Whilst we must keep a proper balance between environmental and socio-economic needs, in rugby parlance it really is a "use it or lose it" situation. Sure it would help if we could reduce evaporation from shallow storages and if we had more dams in the headwaters of our catchments. Consider that the Murray River would have stopped flowing altogether some four years ago, as it always did under very dry natural conditions, if it were not for the headwater dams (Dartmouth and Hume in particular), the Snowy diversions and restrictions on irrigation extractions. Yet we managed to keep water in the system and to our shame sent water down to the Lower Lakes, Australia's most inefficient water storage, to largely evaporate.

When are those upstream going to wake-up to the perpetual victim's attitude of most South Australians and insist that those wretched barrages at the Murray mouth are removed? They keep fresh water out of  The Coorong, stop the impact of tidal pulses keeping the Murray mouth open, and deprive the Murray of a natural fresh/salt water estuary.

When are we going to clearly explain to our well meaning city cousins (we failed with Penny Wong), the difference between a Water License/Entitlement and a Water Allocation? The former without the latter really is "phantom water". The  failure of the purchase of the Toorale Station water licenses to trigger any meaningful amount of additional water in 2010, is a wonderful case study demonstrating what little impact purchasing licenses, only triggered by big flows, actually has in a good flow year. Yet the negative socio-economic impact is very meaningful.

We need to explain that  we deal with the variability of river flows by way of seasonal allocations-no (or limited) water-no allocation. It's that simple. If we really are "over allocating" then we should reduce allocations, but why cancel licenses which in big flows may well contribute to flood mitigation. The residents of Shepparton would have liked to have seen more extractions (and/or more storage) upstream last week and a huge amount could have been stored whilst only being a very small percentage of the total flow!

10 September, 2010

Australian Agriculture

I recently wrote a paper on investment in Australian agriculture. This what I wrote:-

"Australian Agriculture Investment
Background

  • ·         To the nations considerable advantage farming and grazing production of Australia’s major bulk commodities is dominated by family farmers.
  • ·         These family farmers bid the price of land to levels where returns on funds invested are very low. In these circumstances it is extremely difficult for conventionally funded, publically listed companies to compete.
  • ·         An important element of ‘wealth creation’ comes in the form of capital gain on land and more recently water licenses.
  • ·         As the best land is tightly held, successful operators seldom realise the capital gains in cash terms, but they are nevertheless “real”.
  • ·         A key feature of Australia’s climate is massive rainfall variability.
  • ·         The major commodities most suited to Australia’s production base are dependent on very price volatile international markets.
  • ·         This volatility largely stems from supply side factors, particularly weather.
  • ·         There has recently been significant international recognition of the probability of demand increases for food and some large international players have been positioning themselves accordingly. However, there is little evidence of Australian institutions so acting.
  • ·         Given all these features of the industry, if significant capital is to be raised it needs to come from “institutions” who have a long term focus from a wealth creation perspective and are able to withstand rainfall and price volatility.
  • ·         This price and rainfall volatility can be cushioned by a commodity and geographical spread and the judicious use of pricing mechanisms-derivatives and forward physical sales.
Sources of Capital

  • ·         Recent investment in Australian agriculture has come largely from overseas sources-Macquarie Fund, Terra Firma, Eastern Australian Agriculture, etc. An exception has been the recent WA super fund Westscheme investment in RM Williams Agricultural Holdings.
  • ·          From a narrow nationalism point of view it would seem unfortunate if something as quintessentially Australian as broad acre agriculture was not seen as an area for investment by our local institutions.
  • ·         A significant proportion of Australian savings are now in superannuation funds. These funds have very little exposure to Australian Agriculture.
  • ·         These type of investment vehicle funds are better able to take a long term earnings perspective and accept ‘wealth creation’ in the form of unrealised capital gains. The AMP’s long term investment in Stanbroke Pastoral Company is a good example of the returns to be earned.
Management

  • ·         A serious deterrent to institutional investment in Australian Agriculture has been concern with securing competent management.
  • ·         The industry’s appeal as an investment area has been tarnished by “too-clever-by-half” tax driven ventures often proposed by entrepreneurs of dubious repute.
  • ·         Thus, it would seem that any investment proposals chances of success would be enhanced if assets and management (including a prospective C.E.O., Chairman and independent Directors) could be “packaged” with an investment offering."








08 September, 2010

Politics

I am deeply disappointed that two of the  "Rural Independents" have failed to support the Coalition in forming a minority Government. My perspective is that a Government shown to be incompetent, to the point they removed their own leader, has been returned to power, notwithstanding the fact that to all intents and purposes the Coalition "won" the election. They won the primary vote, are leading the two party preferred vote and won the most seats of any party in their own right. The Labor party won ten seats on Green preferences, where they failed to win the Primary vote.

The action of Tony Windsor and Rob Oakbridge (Rural Independents) is a betrayal of the broad Australian electorate and of the voting preferences of their individual electorates. I console myself in recalling the old proverb-"it's a long road without a turning".