Water trading caps that Victorian farmers wanted kept in tact are likely to be relaxed within 18 months, but environmental groups are adamant that it won't be enough to revive the health of the Murray River.
Following speculation that the Federal Government wanted to remove the caps to speed up its $3.1 billion buy-back of irrigation water, yesterday's meeting agreed to retain the 4pc trading caps for another year.
But Victoria agreed with other states to lift the cap to 6pc late next year on the grounds that affected communities would receive financial support.
The agreement came despite Premier John Brumby vowing upon his arrival in Sydney that "we won't be supporting any increase in that cap".
Late yesterday, Mr Brumby said he had struck the best possible deal for rural Victorians.
"In terms of irrigation communities, you won't get a better outcome than that," he said.
The cap is designed to protect rural towns from the socio-economic devastation that some believe would occur if large amounts of water were traded out of specific regions.
But environmental groups were dismayed by the decision, saying the caps needed to be removed to hasten the Federal Government's purchase of water, which would be flushed down the Murray to boost its health.
Australian Conservation Foundation spokesman Paul Sinclair said the Victorian Government had stood in the way of urgent action to help the Coorong and the lower lakes of the Murray.
"The Victorian Government announces a new coal-fired power station one day, then they obstruct the buy-back of water for the Murray. What's next - killing Santa Claus?" he said.
Yesterday's COAG agreement included $200 million to improve the health of the Coorong, but the Government confirmed that no decision had been made on how to spend the money.
Peter Cosier, of the Wentworth Group of Concerned Scientists, said Australia had failed a test of its federation.
"There was an expectation before this agreement that we would get substantial acceleration of the purchase of environmental water, and that hasn't happened," he said.
The short-term retention of the 4pc cap is unlikely to trouble the Rudd Government.
Under the Murray-Darling Basin agreement, only $170 million of the $3.1 billion in water buy-backs is scheduled for the 2008-09 financial year.
That means the district caps are likely to have been relaxed, or possibly abolished, by the time the Rudd Government begins to buy the bulk of its environmental water.
Victorian Farmers Federation president, Simon Ramsay, said Premier Brumby had struck a good balance in his dealings over the 4pc cap, and farmers knew the issue was not going to disappear.
"I think there's an expectation that pressure will be exerted over time for that cap to be extended or removed at some point," he said.
The meeting gave final agreement to the memorandum of understanding that was reached in Adelaide in March on the management of the Murray-Darling basin.
Victoria was granted $103 million in federal money for irrigation upgrades in the Sunraysia district as part of the Basin agreement.
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