Discussion paper

Dam the expense: the Ord River irrigation scheme and the development of northern Australia

28 Jul 2017
CREATORS
Attempts to develop northern Australia by subsidising capital-intensive industries like irrigated agriculture have a long and unimpressive history.

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Description

Australian governments have been trying to develop northern Australia for a long time, with the latest policy papers and Northern Australian Infrastructure Facility just the most recent in a long tradition of generally unsuccessful attempts to entice more people to the continent’s north with the promise of jobs and prosperity.

The Ord River irrigation scheme in the east Kimberley region of WA, near to the NT border, is one of the longest running, most expensive and best known attempts to increase agricultural development in the north. With further Ord expansion proposed under current northern development policies, this paper summarises the history of the Ord and the economic assessments of its development:

· Over $2 billion has been spent on developing irrigation agriculture in the Ord region. Over $1.5 billion of this has been public money.

· Between 1959 and 1991 the public accrued a financial loss of $939 million in 2016 dollars, representing a return of 17 cents for every public dollar invested. Private investors made modest gains of $32 million during that period.

· Since 2009 a further $364 million has been spent by taxpayers on expanding areas of irrigation by 1,600 hectares, a subsidy of $227,500 per hectare. This has created around 60 jobs, a cost of about $6 million per job.

Despite this investment,

· Irrigated agriculture employs just 260 people in the region

· The irrigated area of the Ord scheme represents just 1% of irrigated land in Australia. By contrast, the investment in social development through health, education and community projects in the last Ord–East Kimberley Development package has been delivered on-budget and well received by the community.

The history and economics of the Ord demonstrate a basic reality: public subsidy of irrigated agriculture does not lead to large increases in employment or social development. Irrigated agriculture in northern Australia is capital intensive, using machinery and infrastructure rather than labour.

We need to work out what sort of development we want in northern Australia. Investing in health, education and services that improve the lives of existing communities would make these places more likely to keep and attract residents and businesses. Agriculture should be a part of northern development, but investment must be directed towards viable enterprises that pass a cost benefit analysis.

There is no shortage of industries, infrastructure and community projects that can help develop northern Australia in a way that is economically viable, community-oriented and sustainable. Long experience shows that expansion of the Ord River Irrigation Area is not one of them.

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APO URI: http://apo.org.au/node/100186
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