Damning water report slams NSW, irrigators to pay the price

Ken Matthews review of Four Corners allegations slams NSW water managers

National Issues
An independent investigation of allegations of water theft and failed regulation in NSW recommends significant reforms, including more onerous complinace measures for irrigators.

An independent investigation of allegations of water theft and failed regulation in NSW recommends significant reforms, including more onerous complinace measures for irrigators.


State regulation failures risk farmers' social licence, Ken Matthews says


IRRIGATORS’ social licence to operate has been put at stake by systemic failure in the Department of Primary Industries’ Water division, according to a damning independent report.

The interim report by experienced former water bureaucrat Ken Matthews could have far-reaching impacts not just on government, but on irrigators everywhere, in the form of increased compliance and regulation.

NSW Regional Water Minister Niall Blair commissioned Mr Matthews to review the state’s water management and compliance, after a controversial report by  ABC’s Four Corners program.

Four Corners alleged water theft by cotton irrigators in the Barwon Daring system and widespread meter tampering as well as state regulators failing to enforce compliance regulations and colluding with irrigators to access water recovered for the environment by the Murray Darling Basin Plan.

Deputy Director General of Water Gavin Hanlon was recorded in an exclusive meeting with a small group of irrigators offering to provide confidential information to guide their lobbying efforts in Murray Darling Basin Plan consultation.

Mr Matthews has “serious concerns” about DPI Water’s poor performance in compliance, enforcement and transparency.

He took aim at the competency of DPI Water officers and senior management and questioned its fairness when managing the competing interests of various stakeholders.

“The industry’s ‘social licence to irrigate’ is at stake,” Mr Matthews said. “A systemic fix is required.”

The question for irrigators everywhere is how far will the fallout from NSW’s mismanagement flow?

Mr Matthews recommended significant reforms to DPI Water and called for an “assertive” roll out of a range of compliance techniques, including remote sensing of crop growth and water holdings; back to base and remote meter reading and telemetry and; targeted covert operations.

In a statement issued today Mr Blair agreed with Mr Matthews principles and said he is already looking to establish a new Natural Resources Compliance Unit to monitor water users. It would function separately of DPI Water and report to an independent board.

There are now five federal and NSW inquiries into irrigation compliance - including the Murray Darling Basin Authority, a Senate Committee, National Audit Office, NSW Mr Hanlon has been referred to the Independent Commission Against Corruption (ICAC).

The Matthews report revealed corruption watchdog will also investigate all the allegations in Four Corners program.

The findings reinforce negative perception of the Nationals party, which holds the water portfolio in a tight grip.

Negative media has fueled allegations of water administration in NSW that Dracula is in charge of the bloodbank and strengthened the case for increased regulation across the irrigation sector.

Irrigators argue the failure lays with government’s compliance regime, and the vast majority of water users are metered and accountable.

But the question remains: how far will the fallout from NSW’s mismanagement flow?

The overwhelming number Murray Darling basin irrigators already use modern meters to measure the water they extract - Steve Whan

“Poor performance”

Mr Matthews’ report details a litany of failures by the Department of Primary Industry Water to properly regulate alleged breaches by irrigators.

Metering, monitoring and measurement of water extractions, especially in the Barwon–Darling river system, are not at the standard required “for sound water management and expected by the community”.

Ken Matthews.

Ken Matthews.

Mr Matthews said DPI Water officers failed to progress their investigations of several allegations of water theft and illegal irrigation works in the Barwon Darling system and senior staff had failed to monitor their lack of progress.

Four Corners included allegations from a former former Manager of the DPI Water strategic investigations unit Jamie Morgan, who said he had been barred in his request for a targeted investigation.

Mr Matthews found no evidence Mr Morgan had made a formal request for the investigation, or that senior managers had actively rejected it.

Departmental restructure “churn” had created “confused processes that led to the ‘non-decision’”.

But Mr Matthews said despite the internal disruption, “there was no record” that senior managers had acted on the Mr Morgan’s allegation of widespread non-compliance and they “should have taken more decisive moves to either take action, or to satisfy themselves that action was not necessary”.


Another incident investigated by Mr Matthews prompted an assessment of DPI Water which is repeated throughout the report.

Cotton grower Peter Harris’ property, Rumleigh, Brewarrina was issued with a stop work notice under s327(2) on 23 February 2016 to cease the allegedly “unlawful use of water management works”, the report said.

“But as at 24 July 2017 there is no information within the case management system to indicate what action was taken to monitor or enforce this notice.,” Mr Matthews said.

Where they do not exist, urgent installation of water meters for all large users in NSW within 12 months will be a top priority - Niall Blair

“Again, from an administrative point of view, DPI Water’s handling of the issue has not been good.”

Mr Matthews also said DPI Water failed to properly investigate allegations of illegal pumping at Rumleigh.

“There has been a long delay without progress. No serious case has been assembled to enable an informed decision whether to proceed… There are gaps in the case management record. There is no evidence that senior management along the chain of command monitored the lack of progress and pressed for action to resume.”

Reform agenda

Mr Matthews said NSW must implement structured, documented processes for initiating, progressing and determining compliance actions.

“Some of these reforms may not be welcomed by the current beneficiaries of an inadequate system. However, to rebuild public confidence will require more than incremental change. No change is not an option,” he said.

Mr Blair agreed that NSW should establish a Natural Resources Compliance Unit, and acknowledged a need for increased compliance for irrigation.

“Where they do not exist, urgent installation of water meters for all large users in NSW within 12 months will be a top priority,” Mr Blair said.

“It’s imperative that larger users have adequate, functioning water meters installed, given the volume of water needed to support farming and the impact this has on smaller users.”

NSW should assertively adopt new compliance technologies - remote sensing of crop growth and water holdings; remote meter reading and telemetry; targeted covert operations and also; removal of self-reporting, such as logbooks - Ken Matthews

Mr Matthews said NSW should “assertively adopt” new compliance technologies - remote sensing of crop growth and water holdings; remote meter reading and telemetry; targeted covert operations and also; removal of self-reporting, such as logbooks

Differences between Northern and Southern Murray Darling Basin should not be an excuse for different compliance regimes unless “differences can be convincingly demonstrated,” Mr Matthews said.

National Irrigators Council “broadly endorsed” Mr Matthews recommendations and said irrigators were keen to ensure accurate extraction measurement.

“Water-users in NSW already fund compliance and we want the money spent effectively and efficiently. It does not appear to have been the case,” chief executive Steve Whan said.

“It needs to be clear that the overwhelming number Murray Darling basin irrigators already use modern meters to measure the water they extract.

NSW Farmers president Derek Schoen welcomed Mr Matthews focus on public confidence in compliance.

“The Association has zero tolerance for illegal water take.  It’s theft from all other water users, basin communities, taxpayers and the natural resource base, and it’s unacceptable,” he said.

“What’s important is that the NSW government takes the necessary action to rein in any illegal behaviour without punishing the rest of the irrigation sector and farming community that does the right thing.”

Legal action

The report’s terms of reference did not instruct Mr Matthews to investigate prosecution allegations of theft or wrongdoing. But public servant were encouraged to provide evidence, under whistleblower protections, by the Department of Primary Industries Secretary and the WaterNSW chief executive.

The state-owned corporation supplying bulk water, WaterNSW, said today it had taken the six most serious allegations in the Barwon Darling system to the point where prosecution briefs are before independent legal counsel.

The Secretary advised Mr Gavin Hanlon he had started misconduct procedures as set out in the Government Sector Employment legislation.

The Secretary said failed compliance and enforcement action would be addressed by an investigative taskforce with specialists in law enforcement.

Mr Matthews endorsed Mr Hanlon’s referring of himself to the ICAC.

Mr Hanlon told the inquiry he established a “key stakeholder group” to discuss the Basin Plan.

Four Corners aired a recording of one meeting when he offered to “de-badge” government documents marked confidential for distribution among group members, and discussed lobbying to extract a favourable outcome under Commonwealth water reforms.

Mr Hanlon said this group provided feedback to help ground-truth policy and denied others were excluded, given he “held discussions with any group that requested it”.

Mr Matthews said Mr Hanlon showed poor judgement in establishing the group, and risked policy distortion and inequitable access for other groups to government.

Opponents pile on

NSW Greens water spokesman jeremy Buckingham said the Nationals should be stripped of the water portfolio.

NSW’s water and agriculture portfolios should be also be separated, he said.

“We cannot have the fox in charge of the henhouse, especially when National Party donors are getting favourable treatment by ministers, MPs and senior public servants.

“The current government made a massive mistake in putting the Department of Primary Industries in charge of water. There is an inherent conflict of interest of making water allocations subservient to the interests of the agricultural industry.

Nature Conservation Council chief executive Kate Smolski said the water portfolio should be returned “to the Environment Minister where it belongs”.

Ms Smolski reiterated calls for a comprehensive  judicial review of implementation of the Basin Plan, which was echoed by Labor water spokesman Tony Burke.

Mr Matthews is a former Commonwealth department head who served as the foundation chairman of the National Water Commission.


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