The parlous state of the Coorong and Lower Lakes in South Australia has been confirmed — yet again — by a new collaborative study produced by the CSIRO which identified extreme hyper-salinity, the disappearance of a crucial seagrass and declines in fish and waterbird numbers and diversity in the area.

While the issue has slipped from attention outside South Australia since last year, the Federal Government came under intense pressure in late 2008 to urgently find water for the Coorong and Lower Lakes through purchases of entitlements. But that was only one of a number of environmental emergencies throughout the Murray-Darling Basin. And Penny Wong produced some high-profile purchases: Toorale Station, with the NSW Government; 240 GL from the Twynam Agricultural Group, as well as a dramatic scaling up of the Government’s ongoing purchasing of water entitlements to address decades of over-allocation, drawing on a $3.1b fund.

The Commonwealth had already significantly increased its environmental purchasing activities, but after February, when Nick Xenophon demanded and got a bring-forward of more funding as part of the price for supporting the second stimulus package, the Government’s purchasing accelerated further. By 30 June, the Government had purchased just over 400 GL of water entitlements, compared to 24 GL in 2007-08.

So, credit where it is due: people demanded that Penny Wong get cracking and buy water, and she did. There has been justified criticism that many of the entitlements purchased in the last 12 months are general security — meaning, more or less, you have to have a flood of Biblical proportions to get any actual water under them — but even when that is taken into account, the Government has still secured 248 GL, about ten times what was secured in the first year of the program.

The Murray-Darling, though, remains in crisis, as the CSIRO report indicates, and which Wong herself noted in June. The Basin remains in the grip of a severe drought.

But it’s also 12 months since COAG signed an Inter-Governmental Agreement on the management of the Murray-Darling that was lauded at the time by the Prime Minister as an “historic agreement” that established the “vehicle for the long term reform of the much challenged Murray-Darling Basin system.”

But 12 months on, there are major problems with the IGA and the management of the Murray-Darling, and they extend way up the river from its mouth down in South Australia. Many of them were outlined in a recent Senate report — the tail-end of the Coorong emergency push last year.

As many commentators noted in March last year, when the nature of the COAG deal on the MDB — and the extent to which John Brumby had outfoxed the Prime Minister and his interstate counterparts — became clear, the structure of the new management arrangements for the Basin is deeply flawed. Rather than a full referral of powers to the Commonwealth and its new Murray-Darling Basin Commission, the structure preserved most of the states’ current veto rights and, worse, kept intact their current water allocation plans, which don’t expire until some years hence or, in Victoria’s case, 2019.

The deal also left intact the Victorian Government’s anti-competitive rort which limits out-of-district water purchases to 4% in any one year and caps at 10% the amount of water in any system that can be purchased without being associated with land. The Victorians have agreed to a long-term lifting of those caps, but for the moment they remain in place. The Senate committee heard that in some areas the cap was reached within a matter of days of the start of the water year, and that some major purchases faced extensive delays due to the caps.

The Victorian caps were indirectly behind the NSW Government’s decision, in the wake of Rudd and Wong’s announcement of the Twynam purchase, to block for the time being any further water trading in NSW. The Twynam purchase illustrated that the Commonwealth’s accelerated water purchasing would be focussed almost entirely on NSW, and NSW was not prepared to carry the full burden of environmental purchases.

At the time of Xenophon’s stimulus package deal, Andrew Gregson of the NSW Irrigators’ Council told Crikey the accelerated buyback would target NSW because of the Victorian cap, and cause immense damage to the NSW water market. Gregson yesterday told Crikey he believed the accelerated buyback had ensured that the Victorians would hang on to their cap for the time being, when they might otherwise have been inclined to negotiate a substantial increase. “They only have to keep it for a couple of years knowing that the accelerated buyback will target NSW. Thereafter the threat of Commonwealth purchasing will be much smaller.”

In contrast to the acceleration of water purchasing, the concomitant — and in fact much larger — component of the Government’s water initiative, funding for investment in improving irrigation infrastructure, has been severely delayed. Some observers and environmentalists object to the Government’s focus on irrigation infrastructure, which they say does nothing to address over-allocation and in any event will reduce groundwater that is making its way back into the system from leaking infrastructure. The Wentworth Group of Concerned Scientists wants the infrastructure program halted and redirected into water buybacks, particularly because, it says, most infrastructure projects aren’t justified economically.

But the rollout of funding has barely got under way.

“There has been an unforgiveable delay with the infrastructure funding,” shadow Environment spokesman Greg Hunt said.

“There is an enormous fund there to be used for the replumbing of rural Australia — doesn’t have to be borrowed, it is there now.”

The Commonwealth has blamed the tardiness of the States in bringing forward appropriate projects but Hunt thinks Wong’s own preference for buybacks rather than supporting farmers could be behind the delay. Gregson believes that delays at both levels of government, and especially within the bureaucracies, are the problem. Gregson is also very critical of the complete lack of coordination between the water buyback and irrigation infrastructure investment and the broader lack of a strategic approach to the Commonwealth’s initiatives — a concern widely shared by participants right across the debate. He says that he remains unclear on what exactly the Commonwealth is seeking to achieve beyond an ill-defined goal.

“If they tell us what environmental outcomes they’re trying to achieve we’re prepared to work with them to achieve it. But there is no detail at all and it’s not coming.”

There are other, structural issues that mean the goal of unitary management of the MDB is as far away as ever. A comprehensive governance diagram of the Basin would be a Knowledge Nation-like spaghetti diagram of Commonwealth, State and local government entities, catchment authorities and water trading bodies. The Committee heard that even the Commonwealth had not yet harmonised programs between the new MDB Authority and other natural resource management programs run by the Department of the Environment.

Despite the complexity of the governance structure, community input into water purchasing is atypical, a potentially crucial omission. There are also substantial threats to the system from external sources. The growth of mining in the northern area of the Basin has meant more and more developments are considered”“projects of state significance” and exempt from restrictions such as those on water management or land-clearing, which continues to occur extensively throughout the Basin.

The committee also identified the regulation, or non-regulation, of overland flows — on which much of the northern Basin depends — as a key risk to the Basin. Despite COAG agreeing in March 2008 that addressing interception of water from overland flood events was a priority, floodplain water is still being diverted into dams and channels without authorisation, causing real problems for floodplain farmers who rely on that water. The NSW Government advised the committee that it had discovered a small number of unlicensed “water diversion structures” in the last 18 months and its response was to advise the owners that they were “not approved”. No other action was apparently taken.

And in a couple of weeks’ time, the Queensland Government will release its annual figures showing water allocations in that State, which are likely to show, yet again, that Queensland irrigators are continuing to extract significant amounts of water from both cross-border rivers and floodplains that feed into rivers in northern NSW. Cubbie Station, that vast cancer on the Culgoa developed by Queensland Labor mates, remains available for sale “at market prices” according to its owners.

The Coorong and Lower Lakes are only one end of a vast, Basin-wide crisis that stretches from the vast reservoirs of Cubbie down to the mouth of the Murray. Penny Wong has made some advances with environmental water purchasing, but there are serious structural problems with the way we are managing the Basin.

Tomorrow: what should be done to fix the management of the Murray Darling Basin — and why a Commonwealth takeover may not be the answer.