New water market rules

New water market rules

Politics
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The Victorian government has announced new measures to crack down on what it says is water market monopoly behaviour and speculation. Water Minister Lisa Nevi...

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GOVERNMENT RESPONSE: Water Minister Lisa Neville said the government was responding to concerns raised by Victorian irrigators in releasing new guidelines on market transparency.

GOVERNMENT RESPONSE: Water Minister Lisa Neville said the government was responding to concerns raised by Victorian irrigators in releasing new guidelines on market transparency.

The Victorian government has announced new measures to crack down on what it says is water market monopoly behaviour and speculation.

Water Minister Lisa Neville said the government was responding to concerns raised by Victorian irrigators.

"Victorian irrigators have made it clear they have concerns about speculators distorting the water market and that greater transparency is needed to provide confidence the market is working as it should," Ms Neville said.

The new measures reflected community feedback, boosting transparency and reassuring irrigators, while ensuring any questionable or irregular behaviour would be detected and reported.

Last month, Department of Environment, Land, Water and Planning (DELWP) bureaucrats reported at forums in Melbourne and Moama, NSW, that there was little appetite for full disclosure.

The consultation paper contained three options - full market transparency, releasing the names of the top 100 water market participants and improving real-time information on price.

Ms Neville said DELWP had been directed to:

  • Publish the names of companies who own 2 per cent or more of water in a system on the Victorian Water Register, to address monopoly behaviour
  • Report on non-water users in the market by tracking how they use their accounts and pursue legal changes to allow publication of information about allocation accounts with more than 20 trades per year
  • Introduce new requirements to provide more clarity on different types of trade, so it was clear what kind of purchase or transfer had occurred and at what price

Ms Neville said she believed the recommendations struck a balance between greater openness and accountability, while dealing with concerns raised about full market transparency and its impact on irrigators going about their normal business.

Right direction

Katunga dairy farmer Paul Stammers said the new rules were a small step in the right direction.

"We want transparency and we want to know why these trades are happening," Mr Stammers said.

"We want to know if these trades are ruining our local communities."

He said northern irrigators understood farmers, particularly those who had retired, should have the ability to trade water as they were using it as an investment.

"But 20 trades is a lot, someone who does 20 trades is playing the market, it wouldn't be mums and dads doing that," he said.

But 20 trades is a lot, someone who does 20 trades is playing the market, it wouldn't be mums and dads doing that. - Paul Stammers, Katunga dairy farmer

"Whether it does anything, time will tell, there is still a lot to come from it.

"But it's good they are finally coming to realise maybe the water market has been manipulated by big corporations."

Australian Water Brokers Association president Ben Williams said the changes did not overly concern his members, although there could be unintended consequences.

"I think what they are doing is a halfway house, in terms of transparency," Mr Williams said.

"It makes little difference to us, other than providing a little bit more information, which we may, or may not, have had, as a result of our commercial operations."

But he said some allocation holders could be aggrieved by the move.

"Twenty trades is not in the scheme of things, an enormous volume," he said.

"Does that include transfers between related entity accounts?

"There would be a lot of family farms [out there] who would do 20 trades or more.

"It has the potential to expose people's details that perhaps the government hadn't intended to expose."

He said the trading behaviours of many so-called "water barons" were on record, through their annual reports to the stock exchange.

"My take on it was that the general consensus was that transparency levels were relatively okay, in terms of these sorts of things," he said.

Strathmerton dairy farmer Greg Brooks said he felt the changes would help bring transparency to the markets.

"The further they go, the better," Mr Brooks said.

"I went to the Australian Competition and Consumer Commission and told them they had to not only understand what is happening now, but what's possible.

"The train is going to continue and are we going to allow big business to control our food and fibre industries?"

He said a cautious approach may not work.

"If they have the courage, they will really step in; all the water rules need to be in favour of growing food and fibre," he said.

He said if corporations felt there was enough money in water, they would buy up temporary allocations "on a massive scale", and dictate the price.

Interim measures

Shepparton Independent MP Suzanna Sheed agreed it was a good start.

"Without transparency, we are left to guess at what has been happening and how the price of water is being determined," Ms Sheed said.

"The current opaque state of the water market would not be tolerated in any other market sector.

"We simply do not know who is trading what and if the system is being abused."

She said the measures went part of the way to providing a better understanding of the behaviour of so-called speculators.

The interim measures would provide an opportunity to assess the situation and determine whether further change might be needed.

"Now if only we can address a whole range of other issues such as carry-over, inter-valley transfers and the damage they can do to the environment, the Lower Lakes and alleged Northern Basin corruption we will be much better placed," he said.

The story New water market rules first appeared on Stock & Land.

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