Burke lied—MDBA Plan will smash Basin regions, which is already happening

Following an angry confrontation with a Griffith farmer on 29^th November, Minister for Sustainability, Environment, Water, Population and Communities, Tony Burke said in an interview that farmers will only sell their water rights because of increasingly efficient agricultural practice; therefore, water buybacks will have no impact on the productivity of farms and the local towns. However, the 2010 Rizza Report, a banker’s analysis commissioned by the MDBA prior to the October 2010 release of their Guide to the proposed Basin Plan, revealed that banks had already tightened the purse strings in advance of the MDBA’s intended decimation of agriculture, to such a degree that farmers would have to sell their water rights in order to remain financially viable, in order to continue to exist. (In the words of the Rizza report: “…a common result being the sale of water as a means of working through the farmers’ financial difficulties.”)

The Rizza report also revealed that the MDBA’s Plan would create economic conditions in the Basin equivalent to permanent drought. It was admitted that with the MDBA Plan this status will likely become permanent—“the equivalent of drought conditions and the resultant cash flow consequences may become the normal operating environment.”

“Despite the resilience demonstrated by farmers and communities throughout the drought, the consistent feedback received from financiers is that a permanent reduction in water for consumptive use would decimate a number of towns economically dependent on irrigation…” the report went on to say.

As a consequence, covenants that exist in virtually every bank loan covering “Material Adverse Events”—any event which may affect the ability of an enterprise to make an income—could be triggered at any time, empowering the banks to immediately call in loans, and even invoke immediate foreclosure. Rizza admitted that banks had already begun taking action to reduce their lending exposure to the Basin. (Read more about this, and about Rizza’s background here.)

“Due to the debt levels, there has been substantial pressure applied by some banks to particular borrowers to reduce debt through the sale of water assets and raising of equity. As time passes … this pressure increases.”

Then comes the self-fulfilling downward spiral:

Forcing such sales drives down the prices of water and land across the board. “The banks will view the neighbour’s water assets as only worth as much as the recent water sale. The application of Accounting Standards will likely require reduction in recent water sales to be reflected the accounts [sic] of co-located businesses.”

Thus the banks are effectively forcing the shutdown of entire towns by forcing an initial sale of land/water to collect on their debts.

“With a reduction in asset value, gearing increases, putting further pressure on borrowers to reduce debt. In addition, with the uncertainty in water entitlements, banks may be increasingly reluctant to make new loans except at lower debt levels.”

Selling water rights to repay debt, etc., sends money primarily back to the banks, and so “is no longer available to generate income in the community.”

Many farms will be forced to restructure once they have sold water rights, but as Rizza relays from interviews he conducted with the relevant banks: “Many banks interviewed would not seriously contemplate lending to a farm to restructure their business …”

Property values will continue to fall and earnable cashflows from these properties (and their associated towns) will be much reduced as a result of the MDBA Plan, Rizza admits. Falling property values will drive down rates, collapsing local council revenues, and affecting the whole region.

Therefore, “towns with a population less than 25,000 people, which predominantly rely on irrigation for its economy, are not sustainable in the longer term as a population centre without a thriving irrigation industry”. (Emphasis added.)

The effect on food production of the shutdown of key regions of Australia’s primary irrigation farmland is patently obvious.

Tony Burke cannot deny the genocidal consequences of what has been openly admitted and endorsed by the Rizza Report and the MDBA which commissioned it.