Water is the blind spot on our environmental balance sheet

Miriam Lyons talks about how Australia needs to find a way to balance our environmental budget, in the Sydney Morning Herald.

Published in the Sydney Morning Herald online on 2 March 2010
Quick fact: Australia’s government debt is remarkably low. I find it necessary to point this out every time I see Coalition members impersonating Isla Fisher’s debt-collecting stalker in Confessions of a Shopaholic. Our federal government could go on another couple of hundred-billion-dollar nation-building sprees and we’d still be well below the average ratio of public debt in the developed world – before the global financial crisis.

The Coalition line on debt follows a fairly predictable formula. First take the Big Figure and paint it on the side of a truck.

Then, when asked what level of debt would be preferable, calculate the answer using the equation D minus X, where D is debt under the current government and X is anything that makes you sound more economically responsible than Labor.

Andrew Robb now has the chance to demonstrate his mastery of this formula as the opposition spokesman for finance and debt reduction. Given that the budget could return to surplus as early as next year, Robb may soon find that the second half of his job title becomes obsolete. But he is likely to keep talking about it anyway. Now that the Coalition has lost even the prize position of ”better at handling the economy” to Labor in the polls, managing public debt is about the only thing that Australian voters seem to think they could be better at.

It might seem to work against them politically but it makes sense that Labor keeps banging on about debt, too.

A majority of voters still think the stimulus was a good idea but would now like the government to shift its focus to reducing the deficit that came with it. That’s a pretty easy wish to fulfil in the current economic climate.

And it takes the focus away from other areas in which Labor doesn’t have a viable policy for balancing the books over the long term.

There are debts and deficits that we should be worried about but they probably won’t be talked about on budget night next month or appear in the speeches of the Coalition. It’s our national neglect of all things green that really puts us in the red.

The government did a great job of sticking its $54,000,000,000 finger in the dyke when the global financial tsunami threatened to spill over into Australia’s economy. But if that number of zeroes makes you whistle, wait until you see what it costs to bail out a bankrupt ecosystem and the people whose jobs depend on it. We are liable to farmers for water licences we’ve given away that entitle them to rain that won’t fall. We’re overspending our

carbon budget so badly that we’ve already used up half of our fair share of CO2 emissions for this century.

If both sides of politics are really serious about keeping Australia in the black, they will need to find a way to balance our environmental budget.

Water is a great example. Not only agriculture but tourism, mining and many other industries also depend on secure water supplies and healthy river systems but for the state the water market is in we may as well have handed the Murray-Darling Basin over to Bernie Madoff. Australia’s water licences have been chronically over-allocated, to the point that in places where rivers have run dry, landowners can still have the legal right to run full-scale irrigation operations in their parched fields.

The Treasury secretary, Ken Henry, drew attention to this blind spot in our national balance sheet earlier this week when he pointed out that ”plunder” is not a natural resource management strategy.

He puts some of our bad habits down to the fact that we track the income that comes in when we sell off a natural resource but we don’t record that our stock of natural assets has been reduced by the same amount.

The government could make a start on this problem when it announces the next budget by including more of our environmental assets in the national accounts, along with our liabilities. And if that doesn’t happen, maybe Barnaby Joyce should jump back on the debt truck and paint the number of over-allocated water permits on the side – now that’s a Big Figure.

Miriam Lyons is the executive director of the Centre for Policy Development.

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