Water trade reform slows to trickle as market crunch cranks up

Water trade reform slows to trickle as market crunch cranks up


Government reports are piling up as the five year inquiry under the Basin Plan's only formal, legislated review process sits on a shelf.


Drought and water costs continue to cripple rural towns and farming communities in the Murray Darling Basin, but governments are yet to commit to cracking down on the water market, while the list of yet more reports and inquiries grows ever longer.

Earlier this year with an election approaching the federal government moved to address concerns and pledged two new inquiries - one from the Australian Consumer and Competition Commission into water trading in the Southern Basin, the other by an independent panel into the socio-economic impacts of water reform.

Last week the Murray Darling Basin Authority, the Commonwealth authority responsible for implementing a $13 billion recovery of irrigation water for the environment, released a damning audit into water trading which reiterated the known gaps in reporting of basic trade information and lack of market transparency.

Hot water

"Communities really are hurting, there's no doubt about that," said National Farmers Federation water taskforce chairman Les Gordon.

"Will they be the same in 10 or 15 years time, I don't know but I don't think so. It depends on water availability," said Mr Gordon, a rice farmer from Barham in southern NSW.

Mr Gordon said all the reports promise valuable insights, government should respond to the findings from the Productivity Commission's five year report into the Murray Darling Basin Plan, which is the only formal review process for the $13 billion water reform.

"I expect that the government would respond to the PC, given this is the only formal review process in the Basin Plan legislation. Even if it's not the federal minister, the Ministerial Council should respond," Mr Gordon said.

The PC conducted a relatively comprehensive series of local stakeholder meetings across the Basin last year. It released interim findings in August and government received the final report in December.


The PC's findings call for drastic action - splitting the Murray Darling Basin Authority into two agencies to improve checks and balances - creating one body to provide government with advice on policy and management, as well as an independent Basin Plan Regulator to be a cop on the beat checking public money is spent wisely on the myriad of irrigation, infrastructure and environment projects underway.

Rough trade

The PC also made two recommendations on water trading which have flown under the radar.

The final report's recommendation 10.1 said trade rules were insufficient and inconsistent across Basin states and governments should find out what these gaps are and fix them.

Recommendation 10.2 said a range of community members are increasingly concerned about the effects (of the growth in trade) on third parties and the environment.

Many community and farmer groups have banded together to campaign for action to reduce the pressures on family farmers who are walking off the land.

Persistent drought has sent the cost of water skyrocketing and a range of local groups are arguing for action to curb the effect of corporate traders on water prices.

Booming nut plantations downstream around Mildura and towards the South Australian border are a new pressure the river system, requiring water to be shunted in bulk hundreds of kilometres away from established irrigation schemes located near NSW and Victoria's dams.

The PC said Basin governments should make the MDBA responsible for identifying and managing risks related to changes in water use and trade in shared resources and connected systems.

Response pending

Federal Water Minister David Littleproud said a response would come, but the states needed to pitch in.

"I anticipate a response to the PC report before the end of the year, but ultimately it is a matter for all Basin ministers and the commonwealth to respond to," he said.

"I have met with Basin communities who wanted greater confidence and accountability in water markets which is why I will commission the ACCC inquiry.

"I am open to the recommendations of the PC report but they need to be carefully considered with the states to make sure there are no unintended consequences that could leave Basin communities worse off."

The MDBA said Basin governments would need to form a consensus on solutions.

"We welcome the PC's call for stronger and more effective collaboration between all Basin governments because we'll get more success working together rather than working in isolation," MDBA said in a statement.

Muddy water

Mr Gordon said Basin governments could use the PC report, backed up by ACCC inquiry and the Commonwealth socio-economic study, to act on concerning water market trends.

"The chickens are coming home to roost now. Maybe it's because of drought, the Basin Plan, a shift away from viability of lower value industries. We don't exactly know," he said.

"My own industry, rice, has continued to work hard on improving water use efficiency. Dairy is the same.

"But we've got no quantum or understanding of what is really happening to the market. That is what recommendation is about, to understand what all this means."

The Almond Board of Australia recently took an unprecedented step and called for a moratorium on water allocations for new irrigation development, including the booming nut industry, until there had been a review of the the river's capacity to support it.

SunRice chairman Laurie Arthur said new development was a risk to a sustainable and diverse irrigated agriculture sector.

"There's been a marked movement of water from traditional areas and a dramatic shift from annual cropping to permanent plantings. I believe we have passed the threshold and highly profitable annual irrigation industries might be the big casualties unless action is taken now."


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