Southern water prices remain low as new basin cop starts

Water prices fall sharply from the highs experienced in 2019-20, as the recent La Nina event has led to more favourable seasonal conditions and irrigation water supply, the Australian Bureau of Agricultural and Resource Economics and Sciences.

"This has allowed allocations across all major catchments and securities in the sMDB to reach levels above the historic average," ABARES' senior economist Mihir Gupta said.

"The average water price across the southern Murray-Darling during 2020-21 is currently $154 per ML, much lower than the annual average of $587 per ML experienced in 2019-20."

The Water Market Outlook provides a range of possible allocation prices for 2021-22 under wet, average, dry and extreme dry seasonal conditions.

In the wet and average scenarios, prices are likely to fall in response to improvements in water supply, with ABARES estimating average annual prices of $57 per ML and $114 per ML respectively.

"The volume of water carried over into 2021-22 is likely to be high, based on the volume of water that has been allocated but not used so far in 2020-21," Mr Gupta said.

"The additional water carried over will help keep prices below 2019-20 levels, even in a dry or extreme dry scenario, where prices are forecast to reach $284 per ML and $323 per ML respectively."

The outlook comes as the new Inspector-General of Water Compliance role officially commences.

The new office, lead by former NSW MP and Nationals leader Troy Grant, will be an independent regulator responsible for enforcing compliance of the basin plan.

New legislation provides Mr Grant with the powers to identify water compliance issues and enforce water compliance rules, including hefty fines, and criminal penalties for water theft and insider trading.

The Inspector-General's staff are based in five regional locations across the basin and a number of regional field officers will be Mr Grant's "day-to-day eyes and ears on the ground".

"So, have no doubt, I will know what's really going on when it comes to water compliance," he said.

"Most importantly, my Office is truly independent, not driven by any party's political agenda. We will do what we need to, to get the job done.

"If compliance laws are not being enforced, new legislation means my Office now has the power to act. And we will as needed."

Mr Grant has been acting as the Interim Inspector-General since the end of 2020, and has been actively meeting with basin communities and industry groups.

"I have received that message loud and clear and have already started work to make improvements," Mr Grant said.

"There needs to be a level playing field for all. I have made commitments to hit the ground running."

Mr Grant's immediate priorities are undertaking a number of assessments to ensure that all parties are working to plan and best practice water management is being delivered.

Two assessments are already underway, with the third to commence shortly.