Public interest or political interest?

The Prime Minister has proposed taking over the responsibility for the management of the water resources of the Murray-Darling basin from the states.

The presumption that the Federal Government will manage things better than the states is one you would expect from the most centralist government in the history of federation which used the corporation power to centralise workplace relations, and has had ministers argue for uniform testing of year 12 students and for the takeover of public hospitals - traditional state responsibilities.

That said, the idea the basin should be a federal responsibility appears sound.

It is a living organism that crosses a number of state borders, with a number of different interests to be balanced - from the needs of the environment, to those of the irrigators in New South Wales and Victoria, to those of the people of Adelaide who need a secure supply of drinking water.

Because of this fact, it seems to make sense in the circumstances for the central government to have the political responsibility for managing the basin.

However, it will be interesting to see whether in 10 years time the idea that the federal government is a better water manager - simply because it is the federal government - is sustained.

When he addressed the National Press Club last week, the Prime Minister was fairly clear in his view that many of the problems with water management were because of state mismanagement and capital underinvestment - that the states simply haven’t done a good job.

As he said in his speech:

“The fact that today the Commonwealth has offered to assume responsibility for a problem created entirely on the watch of state governments around Australia, namely the over-allocation of water in the Murray-Darling Basin.”

So therefore, the Feds are promising to spend $10 billion on capital infrastructure over 10 years, on things such as encasing open water canals in pipe.

Because of vertical fiscal imbalance - the fact that the federal government collects the vast majority of taxes in Australia – it has the money available to invest in infrastructure the states don't have.

So it sounds pretty good.