Water buybacks for the Murray Darling basin will be capped at 1500 gigalitres after Labor joined with the Coalition to pass a bill in the Senate on September 14.
The bill was backed by the National Farmers' Federation and means the government will be able to buy back only 1500 gigalitres of water entitlements from farmers each year.
But the volume of water taken out of the basin for human purposes, such as agriculture, industry or town water supplies, needs to be reduced further to ensure there is enough water to sustain healthy ecosystems in rivers, lakes and wetlands.
The Murray Darling Basin Authority set this reduction target at 2750 GL. This means another 1250 GL has to be saved through measures other than through direct government buybacks.
The government says it can reach the rest of this target by implementing water efficiency measures on farms.
But parliamentary secretary, Bob Baldwin, said the figure was “a ceiling not a target”.
The Greens opposed the bill and Greens water spokesperson Lee Rhiannon accused the government on September 10 of caving in to “hardline Nationals”.
She said: “All introducing a legislated cap will do is make it impossible for farmers to sell their water entitlements once the government has reached the arbitrary 1500 gigalitre cap.
“Environment groups and Indigenous groups spoke out strongly against this bill, so it is disappointing to see Labor cave to pressure from some state governments and line up with the Coalition.”
Recent portfolio changes mean the Nationals are in a strong position to keep the cap at its current level.
In a deal struck between new Prime Minister Malcolm Turnbull and the Nationals, responsibility for matters relating to water has been moved away from the environment department and the Murray-Darling Basin Authority and given to Nationals deputy leader and Agricultural minister Barnaby Joyce.
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