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The Productivity Commission’s scathing assessment of Barnaby’s boondoggles

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.

 


14 comments

  1. pamelac65

    Thankyou Kaye- you have nailed it – Dutton as Warlord is so apt and too scary.
    Barnaby follows…

  2. Miriam English

    Barnaby, minister for Boondoggles.

  3. Terry2

    Dutton didn’t turn up for the security scare roll out : what’s going on there ?

  4. John Holmes

    “The North will not be Mocked” was the call to morning tea one morning when I was working in the Darwin. The Chief Agronomist had come across a story of how a small copper mine had failed after 10 years in the early 1900’s, due to a series of misadventures which resulted in the loss of all product at sea, malaria, failure to cope with the wet season, fighting the Aborigines etc etc. At the time I was conducting some work on Tipperary in the sorghum project of the early 70’s on how to control an introduced pasture grass that was wiping out large areas of crop.

    We had a project being run by people with little experience in managing agriculture in the area. At least the monies lost was American, but there were some huge environmental issues left behind.

    I it very easy to get carried away with big projects, yet as the mango farms about Humpty Doo shows, good reactive LOCAL management is needed to make a success.

    Projects developed by promoters/politico’s who do not live in the area, using non local/inexperienced labour will fail. Consider the history of Victoria, on the Cobourg Peninsula from 1838. That’s where Water Buffalo went feral.

  5. diannaart

    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.

    Don’t know if it was a typo, Kaye Lee, but loving Barm-aby

    As for this Northern Development trope from the LNP. Am left thinking why are we not maintaining and repairing our existing arable land? Oh, wait. fracking for gas.

  6. townsvilleblog

    Northern Australia has been ignored by Labor and Liberal governments forever except for the Hawke government who between 1983-87 built the mighty Burdekin Falls Dam but sadly did not finish the project which encapsulated a hydro electricity scheme as well as a gravity feed pipeline to Townsville’s Ross Dam which is almost dry currently. We have more people in northern Queensland alone than they have in Tasmania yet we don’t get the same political representation nowhere near it. We need a separate State of North Queensland and we need it now.

  7. OPPOSE THE MAJOUR PARTIES

    excellent kaye. and yes statehood for north queensland. Viva the new state of Capricornia i say

  8. Ricardo29

    When is someone going to resurrect the idea of the Grand Imperial Canal, a Suez-type development that was to link the Top End to the arid regions of the south, create an inland sea and cause the deserts to flourish? This is the type of big thinking we expect from Barnaby. Arm a bunch of 457 visa holders with picks and shovels and set them to it. It need only take a century, or two.

  9. Kaye Lee

    Ricardo, I see the potential for future residential canal developments with large boats sitting in front of retired farmers’ Mcmansions.

    On a less balmybaby note, we should be doing a lot more to recycle our waste water and to use our storm water. Our drainage system could be far better utilised.

  10. bobrafto

    Terry
    Perhaps Dutton has lost all credibility, not that Malcolm has any either and they wanted a better actor to announce the staged raids. That’s the problem with the LNP they have told so many lies one can’t believe anything they say.

  11. pierre wilkinson

    I suppose that after the disaster that was Tony, Malcolm seems almost couth, but despair that any of the other government ministers are worthy of such respect. The Potato, the Tomato and the self titled ScoMo are beyond belief with their arrogance and hubris.
    Excellent work Kaye, respect for you is easy.

  12. paul walter

    Sorry, wanna throw up.

    Organised corruption on this level while welfare dependents and other targets are persecuted to perpetual bankruptcy, nervous breakdowns and even suicide?

  13. Matters Not

    Presumably the identity of the water thieves is now established. That these water thieves also donate to political parties can be assumed. It follows therefore that such political donation connections are also well known. That’s why we have the MSM.

    Can anyone provide me with an illustrative link? Because I didn’t notice same?

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