Federal Water Minister Tony Burke will meet his Victorian counterpart Peter Walsh today as they try to break the deadlock over $1 billion in water-saving irrigation works for the state’s north.
The talks follow meetings between federal and state bureaucrats last week to try to break the months-long impasse over a final contract to fund the second stage of the Goulburn Valley food bowl modernisation project to upgrade old irrigation systems.
Last November, Prime Minister Julia Gillard committed $953 million to fund the second stage of the project, expected to save 200 billion litres of water a year across 7600 properties in the valley.
Under the deal, half the litres saved would be given to the Commonwealth to return to the Murray-Darling’s environment, with the rest going back to local irrigators.
But the Victorian government has since sought to revise the deal, offering the Commonwealth the entire 200 billion litres a year in return for $1.2 billion, including paying off $200 million of irrigator debt resulting from both stages of the project.
The revised deal would slash the costs per megalitre of water saved under the project from $9530 to $6000, but leave the savings still more expensive than water bought via voluntary buybacks on the market.
Mr Burke said yesterday the food bowl stage two funding had been available for many months. ”The Victorian government wants to vary the way the project works and we are actively trying to find common ground,” he said.
Federal bureaucrats are believed to be skeptical about the value for money represented by several big water infrastructure projects proposed by state governments for funding via a $5.8 billion infrastructure kitty.
In recent months federal and state governments have agreed to develop new arrangements to fund water-saving infrastructure, following frustration at the state level over slow project progress. The Commonwealth-Victorian negotiations are expected to provide in part a template.
The Commonwealth is believed to be insisting that other states must be able to access whatever agreement is struck. It also wants recognition of cost efficiencies in processing large volumes of water in one transaction when determining a market price.
