Federal take over of Australia's largest river system

The Federal Government is to take control of Australia's largest river system, the Murray Darling from the  NSW, Victoria, South Australia and Queensland Governments.

The take over is one of the most ambitious grabs of power by Canberra since it proposed the GST and confirms the electoral concern over the future of water ahead of this years federal election.

Mr Howard said State governments had to recognise that the "old way" of managing the basin had "reached its use-by date".

"The tyranny of incrementalism and the lowest common denominator must end," Mr Howard told the National Press Club in Canberra.

Mr Howard also unveiled  a $10 billion spend on water including an immediate

Mr Howard flagged a government buyout of water entitlements in the Murray-Darling basin, saying the over-allocation of water in the parched river system had to be confronted.

"Enhancing the overall viability of irrigation districts will require structural adjustment,'' he said.

"The Government stands ready to provide structural assistance and, if necessary, to purchase water allocations in the market.

"We could muddle through as the states have been doing but, frankly, that gets us nowhere.

"Without decisive action we face the worst of both worlds - the irrigation sector goes into steady but inevitable decline while water quality and environmental problems continue to worsen.''

But Mr Howard rejected suggestions that irrigated agriculture in the basin should be abandoned, branding the idea "wrong and defeatist''.

"Anyone can come up with a plan to withdraw and do less. Our goal is to do more with less - to increase agricultural production with less water use,'' he said.

Improving water efficiency in the Murray-Darling was crucial, Mr Howard said, but he admitted it would not be economically viable to pipe or line all channels.

"I will therefore be writing to all relevant state and territory leaders requesting that they refer to the Commonwealth their powers of water management within the Murray-Darling Basin.

South Australian Premier Mike Rann has said the federal Government has too many industry interests along the river to effectively manage the system.

"If the federal Government takes over that means that the Government that is politically beholden to the cotton and rice industries, and the upstream irrigators, would be in control of water," he said on ABC radio this morning.

Before the announcement the State Governments all exporessed serious reservations about tunring over the management of the river basin to the Federal Government.  

Queensland Premier Peter Beattie has accused Mr Howard of sparking a water war with the states, branding today's announcement as merely a vote-buying exercise.

"This is about trying to get re-elected.  It's not about water and Australians shouldn't be deluded about this," he has said.

Victoria's Water Minister John Thwaites said Mr Howard should have consulted the states before moving to announce the plan.

"Simply having a Commonwealth takeover doesn't necessarily solve anything. What the outcome is for the rivers, farmers and the regional towns is what really matters.

NSW Environment Minister Bob Debus has said the states and the Federal Government should work cooperatively on water issues.

He has said inflows into the Murray River had dropped to the lowest levels ever recorded and governments should not use the issue as an excuse for political point-scoring.