If the idea of Peter Dutton becoming the warlord in charge of all things security and immigration worries you, reflect on this for a moment.
Barnaby Joyce is now our Deputy Prime Minister, Minister for Agriculture and Water Resources, and Minister for Resources and Northern Australia.
These are far more relevant and important responsibilities than Dutton will ever hold, given to a man who would rather listen to the guys in the public bar (with beer in hand) than read anything experts have to say.
Last week, Matt Canavan’s former employer, the Productivity Commission, released its annual report on industry assistance and its effects on the economy and it shows just how much influence Barnaby’s Nationals are exerting over the government while sounding a dire warning about their reckless ad hoc decisions.
“The lack of transparency to date and the promotion of certain projects by politicians (in the absence of credible supporting investment data) has raised concerns about the viability of future investments under the NAIF.”
Their assessment of Barnaby’s dam fetish was most revealing.
“The very low likelihood of private sector finance for large scale irrigation dams in Northern Australia means that these projects would pass the market gap criteria. However, based on experience with large water catchment activities in northern Australia, there is a real question of whether any new dams would be sufficiently commercial to be able to repay a loan.
Of the eleven large dams that have been built for irrigation in Northern Australia only three are still in operation. These surviving irrigation dams were built by government and continue to require operational subsidies. This explains the Queensland Government’s reluctance to support the building of more dams.
Currently the Ord 2 and the Burdekin dam have excess capacity, so building new dams is unlikely to deliver the boost to irrigated agriculture that proponents claim.
Moreover, recent research by CSIRO casts doubt about the economic viability of expanding irrigation in Northern Australia. The CSIRO analysis suggests that on-farm dams can offer a more viable economic prospect, and there may well be proposals of this nature made to the NAIF. However, to justify industry assistance, on-farm (private) dams must deliver on the criteria of providing a public benefit.
Clause 15 of the NAIF Act indicates that the approvals required by a Project Proponent could include the implementation of water arrangements under the National Water Initiative. Requiring such compliance should reduce the probability that local communities and state and territory governments will be left with the bill for poor water infrastructure choices.
There is a history of industry assistance for major infrastructure investment in regional areas resulting in ongoing public support. Governments have ended up providing industry assistance to those firms that are established to make use of the infrastructure investment.
For example, the success of Ord Stage One is questionable with a number of notable failures (Gosford 2014). These include the demise of the cotton industry once subsidies for fertilizer were removed in 1974, failed rice crops due to magpie geese in the 1980s, and later sugarcane which failed to produce enough to sustain a mill. In 2013, fungal blast disease destroyed the promise of new rice varieties. Given these experiences, stage 2 expansion and proposed Stage 3 have been described as ‘good money after bad’ (Gosford 2014).
The costs of building the infrastructure can also be underestimated. The Western Australian government audit of Ord Stage 2 reported that the expanded irrigation took 3 years longer than expected and cost $334 million, which was $114 million more than budgeted. The use is less than anticipated as of the planned 8 000 ha of land at Goomig proposed for a sugar development, only 1 600 ha, was under crop (mainly chia) as at June 2016 (OAG 2016).
While the WA audit concluded that ‘the sustained social and economic benefits underpinning the decision to proceed with this $529 million investment have not been realised,’ they also noted that ‘Nor is there a plan to track and assess them’ (OAG 2016). From the perspective of accountability for public funding, such plans are critical.”
The report contains many other interesting observations.
When discussing the dubious eligibility of an Adani loan, and the future commercial viability of coal, they cast doubt on claims about the jobs that will be created.
History suggests that there is systemic ‘optimism bias’ in assessments of the spillovers and flow-on effects, not least in how much employment is generated. For example, the Alice Springs to Darwin rail line was mooted to create 7000 jobs during construction (Landline 2000), but the peak number employed at any time during construction was 1500 (ABS 2005).
The report was also scathing about the reregulation of Queensland sugar marketing and the special treatment afforded to lobbyists.
The extraordinary granting of charity status to Queensland Sugar Ltd, which for all purposes acts as a private sector firm, confers considerable tax advantages that are unwarranted and constitute industry assistance and violate competitive neutrality principles.
Bilateral trade agreements also came in for criticism, finding they provide little benefit.
The benefit of cheaper imports through bilateral trade preferences have been found to be less than anticipated because: − They have in some cases simply replaced other tariff concession arrangements (and viceversa); ‘rules of origin’ production transformation tests and compliance costs limit use, the tariff rent can be ‘pocketed’ by the importer/exporter, and existing trade with lower cost suppliers is diverted. At some point it must be questioned whether the incremental benefits from further bilateral goods trade reform could even cover the negotiating costs.
In fact, the entire report is critical of political decisions made with no evidence, failed attempts, incorrect estimates of cost, time, employment and benefit, lack of assessment and accountability, and a failure to recognise future trends.
Barmaby’s blatant populist political porkbarrelling, combined with a disdain for evidence-based decision making and unfettered power due to his squirrel grip on Malcolm Turnbull, is sending this country in completely the wrong direction.