By Boyd Champness

THE change of government in Victoria has not only put dairy deregulation back on the agenda – with Labor promising a farmer vote on deregulation before Christmas – but has also jeopardised the future of Australias rice-growers.

Last week, Labor formed a minority government in Victoria, ending the seven-year reign of the Liberal/National Party coalition.

But with 42 seats to the coalitions 43, Labor required the support of the three independents to force the coalition out of office – which meant striking deals with the independents.

But Labor may end up rueing the day if it agreed to the demands of Craig Ingram, member for Gippsland East, who wants water flows to the Snowy River restored to 28%.

The Snowy Mountains hydroelectric scheme – Australias largest engineering feat – was built in the 1950s to provide electricity and store water to irrigate vast tracts of land throughout southern New South Wales.

But the Snowy River – which winds its way through the Gippsland region of south eastern Victoria – was a victim of the scheme, with only 1% of its original water volume allowed to trickle through to Victoria.

Water flows to the Snowy have recently been increased from 11% to 15% following an independent report, but Mr Ingram – who has the support of environmentalists and his electorate – says flows of 28% are needed to restore the river to its former glory.

The problem is, water harnessed by the hydroelectric scheme has turned southern NSW into one of the most successful rice-growing regions in the world.

With value-added through processing, rice generates A$500 million (£200m) a year for Australia in export trade.

But this year, following eastern Australias third dry winter in a row, ricegrowers in southern NSW have had their water allocation reduced to less than 17% of their entitlement.

Australia usually grows about one million tonnes of rice a year – but is expected to reap less than half that this year.

In addition, irrigators have accused the NSW Government of hoarding water to get a better price for the Snowy Mountains Scheme, which is being corporatised in December. The more water in storage the higher the value of the asset.

Last week, ricegrowers in southern NSW called on the NSW Government to release a further 330,000 megalitres so they could save a portion of their plantings.

The government agreed to the extra 330,000 megalitres, but is forcing farmers to pay upfront for the water they propose to use.

Whatever they use will be taken from next years allocation without them getting their money back – a double whammy.

This latest development was the final straw for many rice farmers. Thousands of rice farmers, irrigators and sympathetic country folk blocked the Hume Highway – which connects Sydney to Melbourne – for a number of hours last week, bringing attention to their plight.

Ironically, 330,000 megalitres is the exact amount needed to restore flows to the Snowy River to 28%.

The Australian Bureau of Agricultural and Resource Economics recently completed a study on the economics of increasing flows to the Snowy to 25%.

It said the annual impact on agriculture in NSW would be A$6.5 million, but power generators would incur the biggest losses, losing up to A$45 million.

Not the sort of thing the NSW Labor Government wants to hear as it moves to sell the Snowy River Hydroelectric Scheme, especially now that the survival of its political ally in Victoria hinges on reviving the once-great Snowy River.