At the centre of the long history of policy development in the Murray- Darling Basin is a complex debate about the role of governments. During recent decades there has been a pull back from the highly interventionist role that all Australian governments – state and Commonwealth – played in the economy and society during the first 150 years of European settlement. Indeed, during the past 20 or so years thinking worldwide about the delivery of government services has shifted. The resulting transformations have involved many variations, but common is increasing emphasis on market-orientated arrangements such as purchaser–provider contracts with payments tightly linked to milestones and targets. In essence the call is for governments to become umpires between competing interests, addressing market failures, removing bureaucratic impediments, identifying options and disseminating information so that entrepreneurial non-government actors can develop innovative responses. Described as ‘steering not rowing’, this is based on a vision of a stable, settled society in which mature, confident citizens are to be allowed to work out what is best for them. It is in stark contrast with the conception of government as the leader and driver of change. This chapter argues, however, that ‘government as umpire’ is an inadequate response to the challenge of our times. Worldwide and in the Murray-Darling Basin (MDB), there is a need to move to policies and management systems that will halt declining resource security and environmental conditions. To steer towards sustainability is to push back against the powerful forces driving economic growth and consumption. Yet steering will not be enough. A source of energy to support reform is also needed.

The Australian context

In Australia this worldwide change in thinking about the delivery of government services has come together with the evolution of the nation's federal system. As was recognised early in the history of the Australian federation by the constitutional drafter and Prime Minister, Alfred Deakin, the process of allocating powers between the national government and the states resulted in a division of responsibilities that left the national government with most of the growth taxes. This meant that over the course of the 20th century the redistribution of tax revenues from the national commonwealth government to the states has emerged as a major component of the federal political process.